A Senate Majority Is Allowing Child Poverty to Nearly DoubleFederal Budget Poverty & Family Economics Tax Policy
Former Secretary Robert Reich asks a very important question:
Why has America chosen to dramatically reduce poverty among the nation’s elderly but not among our children?
He juxtaposes the positive actions that our nation has taken through the passage of Medicare and Social Security to reduce poverty for the elderly and compares it to what we have done or failed to do for children.
Reich rightfully notes the 9% poverty rate among the elderly as “still too high,” but notes that the 16% poverty rate for children is “an utter scandal.” Child poverty in this country in 2020 was more than 59% higher than that for adults.
That is a scandal.
And, as Secretary Reich says, ‘it is a policy choice.”
As an example of why this disparity has occurred, Temporary Assistance for Needy Families (TANF) was block granted in 1996 and has been flat-funded for the last 25 years, which has resulted in its value declining by 41% in an inflation-adjusted basis. As Secretary Reich points out, this has been devastating and even “shameful” for low-income children and families in this country.
Our nation also fares poorly in comparison to other wealthy nations when it comes to other investments in children, such as child care. Secretary Reich explains:
Norway spends about $30,000 per child each year on early childhood care. Finland spends $23,000. Germany, $18,000. The United States? We spend $500 per child — or 1/60th of what Norway spends on its toddlers.
As Reich adds:
. . .it’s astonishing how little the richest nation in the world has done for its kids.
In an attempt to improve the lives of all children and to reduce child poverty in America, the Child Tax Credit (CTC) was originally recommended in a report by the bipartisan National Commission on Children in 1991. The bipartisan commission explains:
The United States is the only Western industrialized nation that does not have a child allowance policy or some other universal, public benefit for families raising children. . . . Other nations that have adopted child allowances policies regard such subsidies as an investment in their children’s health and development and in their nation’s future strength and productivity.
The National Commission on Children recommended that the CTC go to all families with children. As it proposed:
Because it would assist all families with children, the refundable child tax credit would not be a relief payment, nor would it categorize children according to their “welfare” or “nonwelfare” status. In addition, because it would not be lost when parents enter the work force, as welfare benefits are, the refundable child tax credit could provide a bridge for families striving to enter the economic mainstream. It would substantially benefit hard-pressed single and married parents raising children. It could also help middle-income, employed parents struggling to afford high-quality child care. Moreover, because it is neutral toward family structure and mothers’ employment, it would not discourage the formation of two-parent families or of single-earner families in which one parent chooses to stay at home and care for the children.
The Commission’s recommendation was bipartisan, as were its arguments recognizing the hard work that is parenting, the CTC’s positive work incentives, and the CTC’s effectiveness in not punishing parents who choose to “stay at home.”
Six years later, a Republican-led Congress proposed and worked with President Bill Clinton on passage of the Taxpayer Relief Act of 1997 (P.L. 105–34), which created a $500 nonrefundable credit for children under the age of 17. This was an important step for millions of middle-class and upper-middle families with children. But by making it nonrefundable, the provision excluded and left behind millions of the poorest children and families in our society.
A subsequent expansion of the CTC signed into law by President George W. Bush made a portion of the credit refundable for the first time in 2001. However, even though future expansions of the CTC were signed by President Barack Obama in 2009 and 2015 and by President Donald Trump in 2017, 23 million children were left behind in this country with no or only partial payments because their parents made too little to qualify for the full credit.
In 2019, another bipartisan panel convened by the National Academy of Sciences, Engineering, and Medicine (NASEM) estimated that child poverty costs our nation between $800 billion and $1.1 trillion annually and recommended that an expanded and fully refundable Child Tax Credit would play a central role in cutting child poverty in half.
The NASEM report was timely, as a global pandemic and economic recession that took hold in 2020 demanded a national response. A classic John Kingdon “window of opportunity” opened.
As a result, 30 long years after the first recommendation for a fully refundable Child Tax Credit was made, and due to the incessant advocacy by Congressional Champions for Children Reps. Rosa DeLauro, Suzan DelBene, Ritchie Torres, Nancy Pelosi, Lucile Roybal-Allard, Barbara Lee, Danny Davis, and Richard Neal and Sens. Michael Bennet, Sherrod Brown, Cory Booker, Bob Casey, Ron Wyden, Tammy Baldwin, Amy Klobuchar, and Raphael Warnock, a fully refundable CTC was included in the American Rescue Plan (ARP).
That legislation was signed into law by President Joe Biden on March 11, 2021, and it has been game changing.
There are 65 million children benefitting from the improved CTC, including an estimated 4 million children lifted out of poverty this year.
The global pandemic and economic recession negatively impacted every aspect of the lives of children, but ARP made a significantly positive impact on their lives. For the poorest children and families among us, this has been particularly true.
And yet, during this holiday season, the ARP provisions are set to expire on New Year’s Eve. Consequently, the CTC will drop from $3,600 per child under age 6 and $3,000 per child over age 6 to just $2,000 per child (a 33–44% cut) in 2022, and one-third of low-income children would once again by only eligible for no (a 100% reduction) or partial payments.
A Merry Christmas? Happy Holidays? A Joyous and Prosperous New Year? Not so much children and families if Senate inaction causes child poverty to nearly double in the new year.
Beyond children, Forbes reports Goldman Sachs economist Jan Hatzius explained to clients that:
. . .”the most important” question about the near-term economic outlook is the fate of the expanded child tax credit, which is set to expire on December 31 for the families of some 65 million children who have been receiving the monthly payments since July.
Forbes reporter Jonathan Ponciano adds:
Goldman estimates the credit’s expiration, combined with the lack of new spending in the rest of the package, will push expected GDP growth down from 3% to 2% in the first quarter — the lowest level since the height of pandemic uncertainty in the second quarter of 2020.
It is baffling why a majority of the U.S. Senate does not understand or seem to care about the terrible consequences this will have on children.
From all available research, we know that the harmful effects of rising child poverty for this generation of children will be far-reaching. According to a number of studies extensively cited by the NASEM report, child poverty negatively impacts child health, education, child hunger, child homelessness, and child abuse rates, and has extensive adverse consequences well into adulthood.
So as Secretary Reich asks, why do we fail our nation’s poorest children or our nation’s future in this way?
Children Don’t Vote
Reich notes that many advocates, including myself, have cited the fact that children don’t vote as a reason for our lack of action on children’s policy issues. However, Reich argues, “Many have suggested this, but it can’t be the reason because children have parents and grandparents who do vote.”
But unfortunately for kids, the evidence is that the support that parents and grandparents have for their own children or grandchildren does not translate into political support for all children.
In fact, older voters are strong advocates for programs of importance to themselves, such as Social Security and Medicare, but express far weaker levels of support for children’s issues like education, early childhood, and child health programs. In a May 2014 poll by American Viewpoint, 27% of grandparents cited senior issues as the most important concern for their vote for Congress compared to just 0.4% for children’s issues. Therefore, grandparents rank their own policy concerns over those of children by a wide 70-to-1 margin.
Although 16% of mothers did make children’s issues the most important issue for their vote, fathers provided lower levels of support (0.7%) for making kids’ policies their top priority.
Combined, just 6% of parents and grandparents made children the most important issue in their vote for Congress in 2014 compared to 5% of all voters. Thus, there is no significant difference to the overall population. Furthermore, 14% of parents and grandparents cited senior issues as their top issue, which is more than twice the level of children.
Although these figures are disappointing, these numbers should not be misinterpreted to suggest parents and grandparents do not care about the policy issues of importance to children. There is no doubt that they care.
As an example, voters supported extended the Children’s Health Insurance Program (CHIP) by a wide 74–14% margin in that same 2014 American Viewpoint poll. It is just that issues other than kids’ issues compete for their attention and prioritization.
Therefore, I would continue to assert that children are negatively impacted by the fact they do not vote. If kids could vote, it would be more difficult for politicians to brush aside their needs and concerns.
However, Reich is correct that it doesn’t fully explain why policymakers fail to address the needs and concerns of children. Kids don’t vote in other countries, and yet, there is far greater levels of public support for children’s policies and funding than in the U.S.
Citing analysis from the Urban Institute and Organisation for Economic Co-operation and Development (OECD), economists Hilary Hoynes and Diane Whitmore Schazenbach point out:
The U.S. spends a relatively low level on children, and spending has remained relatively flat over the last two decades at between 1.5 to 2 percent of GDP. In contrast, per capita spending on the elderly in the U.S. has grown substantially over the same timeframe and in 2015 amounts to 9.3 percent of GDP. U.S. child spending is very low by international standards: the U.S. is near the bottom of OECD countries in “family benefits public spending” as a share of GDP (third from the bottom above only Mexico and Turkey) with a share less than half the OECD average.
This has consequences. According to a recent report by UNICEF, kids in the U.S. rank just 36th out of 38 nations on measures of child well-being.
So, what makes the lack of investment in children a particularly and uniquely American problem?
The Racial Generation Gap
Reich considers and yet dismisses the argument that racism plays a role because a “disproportionate percent of poor kids are children of color” because, he argues, a “disproportionate percent of the elderly poor are also people of color.”
However, the demographics of these age groups are dramatically different and that makes an enormous difference. For example, according to the U.S. Bureau of Census, children of color represent about half (50.4%) of all the children in this country compared to less than one-quarter (24.5%) of senior citizens.
Therefore, in the Census Bureau’s 2020 report, Income and Poverty in the United States: 2020, Black and Hispanic kids accounted for 7.3 million of the children (or 62.9% of the overall share) living in poverty compared to 1.8 million Black and Hispanic elderly (or 35.3% of the overall share) living in poverty — a more than 4-to-1 ratio.
Tackling racial equity issues is a critically important issue for our society, but creating a focus on children would have the greatest impact on cutting poverty in this country. For example, making the Child Tax Credit fully refundable is estimated to cut Black and Hispanic child poverty by 2.0 million in 2021, although now those gains are threatened because the improved CTC is scheduled to expire on December 31, 2021, due to Senate inaction.
Compounding this problem for children is America’s cultural or racial generation gap between generations.
A significant body of research and polling data indicates that older voters are strong advocates for programs of importance to them, but express far weaker levels of support for children’s policy needs and concerns. As noted above, grandparents make “senior’s issues” their most important concern in voting over “children’s issues” by an enormous 70-to-1 margin.
According to demographer William Frey, the changing make-up in the American public from a largely white elderly population to an increasingly more diverse younger generation has resulted in a divide between their support for various cultural and political changes in society. Frey refers to this as a “cultural generation gap” or “racial generation gap.”
Frey makes the case that it is in all our interests to invest in our nation’s youth. As he says:
Investing in the success of today’s diverse youth is critical for the entire nation, which needs a productive labor force and its attendant contributions to Medicare, Social Security and other programs.
Author Ronald Brownstein refers to this demographic divide as one between “the Brown and the Grey” and underscores this being a fundamental political challenge facing our nation. As Brownstein explains:
Over time, the major focus in this struggle is likely to be the tension between an aging white population that appears increasingly resistant to taxes and dubious of public spending, and a minority population that overwhelmingly views government education, health, and social-welfare programs as the best ladder of opportunity for its children.
The politics of this can be devastating to children.
Again, kids don’t vote and so they are marginalized in government decision-making all over the globe. But the demographic changes and the challenges America faces, in either embracing its growing diversity or doubling down on racial divisions, is particularly important to our nation’s future and our children.
For example, a 1996 study by James Poterba found generational competition for public sector resources, particularly when the elderly and children in a community or state are from different racial groups. Poterba found:
. . .an increase in the fraction of a jurisdiction’s population over the age of 65 tends to reduce per-child school spending, and that the effect is especially pronounced when the elderly residents are from a different ethnic group than the school-age population.
Poterba projected that his findings coupled with the projected growth in the percentage of elderly in America between 1990 and 2030 “would translate . . . into a ten percent reduction in per child spending” and that “the potential effects could be substantial.”
Reich is right to note that “America was most generous to the elderly way before boomers got old.” However, the boomers are rapidly aging and are projected to receive the vast majority of any new funding available to the federal government over the coming years.
On this point, the Urban Institute’s Kids Share 2020 report projects that, under current law, the share of all new federal spending through 2030 for the adult portions of Social Security, Medicare, and Medicaid will be 71% compared to just 2% for children’s programs.
Children Are Born in States That Fail to Invest in Their Future
Demographer Dowell Myers confirms this trend in states, particularly in places with the most rapid growth of children, such as in southwestern states like Texas, Arizona, Nevada, North Carolina, and Georgia. As Myers notes:
A growing number of children are residing in states with lower levels of resources devoted to them. The states that are gaining a larger share of the nation’s children provide lower levels of both health and education spending.
As noted above, TANF was block granted and frozen at 1996 levels for the last 25 years. This has been devastating to families with children, particularly those in the more rapidly growing southwestern states. As a recent ProPublica investigation co-published with the Las Vegas Sun highlights, the value of these grants are declined dramatically to families due to the combination of: (1) inflation, which has reduced the value of the grant by 41% over the last 25 years; (2) population growth, particularly in southwestern and southeastern states, which reduces the grant per child in poverty; (3) lack of fiscal capacity in those same states; and, (4) poor decisions by states.
A study we conducted at First Focus on Children in 2011 demonstrated that the TANF block grant and lack of an update was creating growing disparities between the highest and lowest funded states per child in poverty. TANF locked in past inequities in spending at 1996 levels and those disparities have only grown due due to changing demographics and poverty rates.
A more recent study by the Niskanen Center, which takes into account population growth and inflation, demonstrates dramatic differences in TANF funding per child (not just children in poverty) across the country, particularly in southwestern and southeastern states.
Although TANF is just one example, it demonstrates a pattern of declining and disparate federal and state investments in children, particularly in regions where the population of children is growing most rapidly. The results should not be surprising, but the Annie E. Casey Foundation’s 2021 KIDS COUNT report shows that money matters when it comes to improving the lives of our nation’s children.
We must do better by our children. And clearly, gridlock and inaction are the enemy of children and their future. This is why there needs to be a concerted effort by policymakers to make investments in our nation’s children, including child poverty.
Without such a change, Columnist Catherine Rampell points out that the country will “end up systematically underinvesting in an entire generation of Americans.”
Individualism, “Deservedness” and the Parent Bubble
Another barrier is that child policy is complicated because children are dependents. For children to thrive, they need affirmative support by parents (e.g., fundamental human needs and love) and government (e.g., education and a social safety net). But sometimes they need protection from parents (e.g., child abuse and neglect) and government (e.g., child detention and child rights restrictions). This sometimes leads to a complicated and confusing policy agenda that can be simultaneously affirmative and defensive.
There is no doubt that most Americans, at their core, express high levels of support for children. But that support becomes more challenging and convoluted as the public thinks about caregiving roles playing by both parents and government in the lives of children.
In the debate over an extension of the fully refundable piece of the Child Tax Credit included in the ARP, some Republicans in the Senate, who have been long-time proponents of the Child Tax Credit for middle class and wealthier families, have expressed opposition to helping the poorest of families out of some sort of bizarre notion of “deservedness” or “self-reliance.” People, like Tomas Philipson and Vance Ginn here, need to be reminded that we are talking about children here.
The underlying topic is child poverty and these out-of-touch men are arguing that we should purposely leave millions of children in poverty, as some sort of punishment for the fact their parents are not earning higher wages and wealthier.
As economist Claudia Sahm writes in the Washington Post:
No child chooses their parents; no child decides if a parent works. And this is a child tax credit, not a parental workforce credit. It is policymakers who face a choice: Do you stand by and let roughly one-quarter of Black and Hispanic children continue to live in poverty?
The choice to return to a national policy that accepted over 11 million children living in poverty (equivalent to filling Lucas Oil Field Stadium in Indianapolis, the site of the 2022 college football national championship, to capacity over 165 times) has obvious negative consequences on a whole generation of children, but it also costs our society an estimated $800 billion to $1.1 trillion a year.
In the past, West Virginia Sen. John Manchin has been a strong supporter of children’s issues, such as protecting the Children’s Health Insurance Program (CHIP) and fighting child homelessness.
Manchin also voted, on three occasions, to make the Child Tax Credit more fully refundable: first, in an amendment by Sen. Marco Rubio to the 2017 tax bill to make the CTC more refundable; second, in an amendment by Sen. Sherrod Brown in that same debate to make the CTC fully refundable; and third, in 2021 during passage of the ARP to make the CTC fully refundable, which is estimated to cut child poverty by at least 40% when fully implemented.
Surprisingly, despite this strong past support for children and the CTC, Sen. Manchin has recently expressed concern about making the CTC conditional on their parent(s)’ employment status. There is another report indicating he is concerned parents may spend the CTC on drugs, even though there is no evidence to indicate that is true. In fact, parents are decisively spending those dollars on essentials for the care of their children.
Economist Claudia Sahm recently examined the impact that the CTC has had on children and concluded:
A near-universal child tax credit, as is currently in place, is money well spent on lifting children out of poverty and supporting working parents. It is a smart investment in our current workforce — and in the next generation.
Again, the comparison to how we are treating children versus the elderly is quite striking. As Sahm notes:
Our seniors will get a 6% cost-of-living increase in their Social Security benefits in January. Likewise, we should not pull the rug out from under our kids, by cutting off the monthly credit.
Also, what happened to the notion that caring for children is the “most important job?”
Although the Public Supports Children, Kids Slip to an Afterthought Amid Competing Priorities
Finally, the public is often ahead of policymakers when it comes to supporting children. On the very issue of whether the U.S. should set a child poverty target to cut the rate in half, a 2020 election eve poll by Lake Research Partners found strong support for the accountability measure for policymakers (70–20%). Support is strong among adults with children (69–26%), but it is even slightly higher among adults without children (70–18%).
On the more specific issue of support an expanded and fully refundable Child Tax Credit, voters supported this policy by a 71–18% margin. On a “tripartisan” basis, voters widely favor rather than oppose this legislation.
- Democrats: 86–9% (76 percentage point margin)
- Republicans: 62–24% (38 percentage point margin)
- Independents: 64–25% (40 percentage point margin due to rounding)
More generally, voters have repeatedly demonstrated that they want children to be a priority of our nation’s policymakers. A May 2019 poll found that children’s issues were the top choice of voters, as 80 percent of Iowa voters said “improving the health, education, and wellbeing of children” was a high priority that presidential candidates need to address.
None of this seems to matter.
Congress has before it many competing priorities. Kids may have broad public support, but even parents and grandparents can put other issues ahead of children. That leaves pediatricians, teachers, child care workers, and other professionals serving kids as advocates, but they also have competing concerns.
And then you have politicians who are listening to lobbyists (kids don’t have them), big money campaign contributors (which isn’t kids), political consultants (who love to point out that kids don’t vote or donate to their campaigns), and other political advisors that often understand little about the concerns and needs of children.
Consequently, “windows of opportunity” for important changes in child and family policy rarely open. And as noted above, gridlock and inaction are the enemy of children because the rules of the congressional budget process are rigged against kids.
As a 2018 analysis by the Committee for a Responsible Federal Budget (CRFB) of federal programs for children found:
- While much of spending on adults is mandatory, spending on children is disproportionately discretionary and thus must be reviewed and renewed with other appropriations.
- Spending on children is disproportionately temporary, and it requires far more regular reauthorization and appropriation than programs for adults.
- Spending on adults is rarely limited while spending on children is often capped, constraining what can be spent for most major children’s programs.
- Most programs for children lack built-in growth, leading spending on children to erode relative to spending on adults and relative to the economy.
- Programs for children lack dedicated revenue and thus lack the political advantage and protection of programs for seniors that enjoy this benefit.
But a “window of opportunity” did open when the American people recognized that every aspect of the lives of children were being negatively impacted by the global pandemic and economic recession and President Biden and Congress responded with the American Rescue Plan (ARP).
After decades of a declining share of federal budgetary investments in children that were coupled with extensive cuts proposed by the Trump Administration, the federal share of spending decided to children dropped to a two-decade low in 2020.
Fortunately, the investments in children included in the ARP this past March reversed this terrible budgetary trend, significantly cut child poverty, reduced child hunger and homelessness, improved child health, and helped mitigate harm to early childhood and education programs in 2021.
And yet, this was a temporary measure and is expiring. If Members of Congress truly care about children, they must pass Build Back Better and a final congressional appropriations bill for fiscal year 2022 (rather than a continuing resolution at Trump funding levels) to prevent investments in kids from dropping back toward Trump’s historical lows.
Congress must act.
Never forget that America’s current rate of child poverty is one of the highest among industrialized nations. It really, truly, doesn’t have to be this way.
And this by the Washington Post’s Catherine Rampell:
It is time we make better choices for our children that address their best interests (e.g., denying 23 million of our nation’s poorest children the full Child Tax Credit is not in their best interest). If we actually took the time to listen to them, kids would tell us that censorship, book bans, the whitewashing of history, public school privatization, and the denial of science are not things that they want or need.
If we leaned in and listened, kids would tell us that they are “not alright.” They would tell us their real priorities include:
- Eliminating child poverty;
- Eliminating child and family homelessness;
- Eliminating child hunger;
- Eliminating child abuse;
- Combatting climate change;
- Improving educational success; and,
- Improving health coverage and care.
All these things would be significantly improved if the Build Back Better Act were to pass. And yet, whether through gridlock or inaction or a majority supporting the expiration of the improved Child Tax Credit, a majority of the Senate is choosing to make these things much worse for children.
Call your senators and ask them to do what’s best for kids. Pass Build Back Better NOW!
Our children deserve so much better. In fact, we all do.