Child Poverty Rate Soars as Tax Credit Expires

Child Poverty Rate Soars as Expanded Tax Credit Expires

Millions of children in the U.S. fell into poverty in January after a federal program providing expanded child tax credits expired, according to a new analysis by the Center on Poverty and Social Policy at Columbia University.

About 3.7 million children became impoverished between December 2021 and January 2022, the study found, pushing the child poverty rate from 12.1% to 17% — a 41% increase. Overall, the number of children in poverty rose from 8.9 million in December 2021 to 12.6 million last month.

The expanded child tax credit program that ended in December was part of the $1.9 trillion American Rescue Plan signed into law by President Joe Biden last March. The temporary program increased the value of the child tax credit by $250 to $300 per month per child up to the age of 17, and made the credit payable on a monthly basis for the final six months of 2021. Roughly 36 million households with more than 61 million children received payments, cutting the child poverty rate by about a third.

“While in place, the monthly child tax credit payments buffered family finances amidst the continuing pandemic, increased families’ abilities to meet their basic needs, reduced child poverty and food insufficiency, and had no discernable negative effects on parental employment,” the report’s authors say.

Plans to extend the program: Democrats sought to extend the expanded tax credit for another year through their Build Back Better bill, but resistance from Sen. Joe Manchin (D-WV) has all but scuttled that plan.

Manchin has objected to what he sees as the program’s excessive generosity, and reportedly has expressed concerns about the likelihood that the cash payments would be used by parents to purchase drugs. The conservative Democrat wants the tax credit to come with more stringent income limits, as well as clear work requirements — conditions opposed by many Democrats to his left. And he has insisted that the program be paid for in full on a realistic schedule, objecting to the short-term extension Democrats had used to limit the official cost of their $1.75 trillion spending package. The 10-year cost of the program is estimated to be $1.6 trillion — nearly as large as the entire social spending package Democrats were trying to pass late last year.

Child advocates said the increase in poverty shows that Congress needs to figure out a way to extend the tax credit, even if it’s smaller than the plan originally put forth by Democrats. “Today’s report should shake Washington to its core,” Paolo Mastrangelo of Humanity Forward, a non-profit that seeks to reduce poverty, told The Washington Post. “This is not a moment for staking out political positions. Congress needs to compromise on a targeted, monthly child tax credit that will reverse these grievous losses. Any extension, even one that is much more targeted in size and scope, will help reduce the tragic number of families entering poverty.”

Biden Admin Asks Congress for $5 Billion More in Global Pandemic Funding: Report

Biden administration officials asked congressional appropriators Friday for at least $5 billion more in funding the combat the Covid-19 pandemic internationally, Politico’s Alice Miranda Ollstein and Erin Banco report. The new funding request, they write, is “far less than agencies originally suggested would be needed to vaccinate the global population and provide funding, staff and other forms of relief to hard-hit regions.”

The request, reportedly made during a call involving House and Senate lawmakers and officials from the U.S. Agency for International Development (USAID) and other federal agencies, is far below the $19 billion USAID requested earlier this month for its Covid-19 efforts in 2022, and it’s also well shy of the $17 billion in funding progressives have said is needed for global pandemic aid efforts.

Health and Human Services Secretary Xavier Becerra earlier this week told Congress that his department needs at least $30 billion more for its domestic Covid-19 response, including vaccine distribution and testing.

How Build Back Better May Rise Again

President Biden earlier this week again pitched his Build Back Better agenda, telling a gathering of the National Association of Counties that his plan would help middle-class families “getting clobbered by the cost of everyday things” by capping child-care expenses and cutting the cost of prescription drugs. In a tweet Thursday, the president again touted that 17 Nobel Prize winners in economics have said the plan will ease inflationary pressures. “We can get this done,” Biden said.

But as The Washington Post’s Sean Sullivan and Seung Min Kim report, “it’s not clear such a plan exists anymore, at least in any recognizable form.” Talks between the White House and key lawmakers about the plan “have virtually evaporated,” they report, even as “Biden sometimes makes it sound as though Build Back Better is on the cusp of passage.”

In reality, the plan is still clouded by questions about what any new version might look like: “It’s far from evident what, if any, version of Biden’s once-sweeping proposal could pass this year and what it would include,” Sullivan and Kim say. “Would it be a climate plan? A prescription drug initiative? A health-care bill?”

The plan, and any potential answers to those questions, hardly came up during a Senate Democratic lunch Thursday attended by White House Chief of Staff Ron Klain, further evidence that the legislation remains stalled and has been shifted to the back burner. Sen. Joe Manchin (D-WV), whose objections to the House version of the Build Back Better Act effectively iced it, said this week that “there have been no formal talks for quite a while.”

The Democrats at Thursday’s lunch reportedly focused instead on broad steps to cut costs in the economy, like a temporary gas tax holiday. Others in the party have pushed narrower efforts to lower the price of insulin and other prescription drugs.

The outlook for a new plan: Lawmakers’ attention has shifted to other priorities, but Democrats haven’t ditched Biden’s agenda.

White House spokesman Andrew Bates said in a statement to the Post that “the president and his team are working hard with a wide range of lawmakers on cutting costs for American families, including with regard to prescription drugs and energy.” He also emphasized that the plan would “reduce the deficit.”

Punchbowl News notes that, while Senate Majority Leader Chuck Schumer and others are still working to reach some compromise with Manchin, the acknowledgment that Build Back Better is stalled helped Democrats and Republicans reach a deal on topline government funding levels for the full year and make progress toward an omnibus spending bill. “Democrats’ push to pass BBB had been the biggest impediment to such a bipartisan agreement,” Punchbowl says. “House and Senate appropriators are now rushing to put together an omnibus spending package by the new government funding deadline of March 11. That package will include billions of dollars in earmarks for lawmakers in both chambers, an added bonus heading into November.”

The bottom line: Talk about elements of the Build Back Better plan is likely to ramp up again in coming weeks. The Post notes that a number of Senate committees are tentatively planning hearings about potential parts of a revised spending package, taking some steps to appease Manchin, who has insisted that any new plan go through the regular legislative process.

Quote of the Day: California’s Step Toward Normalcy

“We are moving past the crisis phase into a phase where we will work to live with this virus.”

– California Gov. Gavin Newsom (D) at a news conference Friday announcing a plan for his state to become the first in the nation to treat the coronavirus as endemic. “The approach for California’s almost 40 million residents could herald similar changes throughout the United States,” The Washington Post notes, “but widely varying vaccination rates mean some areas may be better prepared than others.”

• Biden Signs Stopgap Spending Bill Averting Shutdown – Associated Press
• Biden Shifts Inflation Message to Show He Feels Americans’ Pain – Wall Street Journal
• The White House Throws Cold Water on a Restaurant Industry Bailout – Politico
• Fed Officials Push Back on Rapid Interest Rate Hikes – Associated Press
• Summers Blasts Gas-Tax Holiday as ‘Plumbing Depths’ of Bad Ideas – Bloomberg
• The Making of a New Government-Funded Moonshot Model – Bloomberg
• Only 4 States Still Have Indoor Mask Mandates; Fauci Sees Crisis Stage Exit – Newsweek
• U.S. Surgeon General Tests Positive for Coronavirus – Washington Post
• Unproven Covid Drug Use Tracked Along U.S. Party Lines, Study Says – Bloomberg
• State Department Gives Preliminary Approval to $6 Billion Tanks Sale to Poland – The Hill

• A Gas-Tax Holiday Is a Terrible Idea – Bloomberg Editorial Board
• This Is the Difference Between a Family Surviving and a Family Sinking – Bryce Covert, New York Times
• Advocates Seek Other Pathways to Lower Drug Prices– Rachel Roubein, Washington Post
• The 2% Inflation Target Should Be Consigned to History – Marcus Ashworth, Bloomberg
• Mr. Biden, Your Good Economy Won’t Sell Itself– Paul Krugman, New York Times
• Taxpayers Will Pay an Enormous Price for the IRS Not Using Facial Recognition – Stewart Baker, Washington Post
• Just What Democrats Need, Another Self-Defeating Round of Self-Flagellation – Paul Waldman, Washington Post
• Could Wages and Prices Spiral Upward in America?– Jeanna Smialek, New York Times
• The Great Resignation Is Also the Great Retirement of the Baby Boomers. That’s a Problem – Helaine Olen, Washington Post
• A Critique of Government That Progressives Need to Hear – Ezra Klein and Alex Tabarrok, New York Times (podcast)
• New Covid Variants Complicate the Question of Vaccine Mandates – Faye Flam, Bloomberg
• America Can Get Back to Normal and Get Better at Fighting COVID – Eric Levitz, New York