Congress Allowed Millions Of Children To Sink Into Poverty

Millions of American children have fallen into poverty thanks to the inaction of our congressional politicians (especially Republicans). Economist Paul Krugman explains in his NY Times column:

I’ve been writing about economics and politics for many years, and have learned to keep my temper. Politicians and policymakers often make decisions that are simply cruel; they also often make decisions that are stupid, damaging the national interest for no good reason. And all too often they make decisions that are both cruel and stupid. Flying into a rage every time that happens would be exhausting.

But the latest census report on income and poverty made me angry. It showed that child poverty more than doubled between 2021 and 2022. That’s 5.1 million children pushed into misery, for it really is miserable to be poor in America.

And the thing is, this didn’t have to happen. Soaring child poverty wasn’t caused by inflation or other macroeconomic problems. It was instead a political choice. The story is in fact quite simple: Republicans and a handful of conservative Democrats blocked the extension of federal programs that had drastically reduced child poverty over the previous two years, and as a result just about all of the gains were lost.

The cruelty of this choice should be obvious. Maybe you believe (wrongly) that poor American adults are responsible for their own poverty; even if you believe that, poor children aren’t to blame. Maybe you worry that helping low-income families will reduce their incentive to work and improve their lives. Such concerns are greatly exaggerated, but even if you worry about incentive effects, are they big enough to justify keeping children poor?

Why do I say that this policy choice was stupid as well as cruel? Two reasons. First, avoiding much of this human catastrophe would have cost remarkably little money. Second, child poverty is, in the long run, very expensive for the nation as a whole: Americans who live in poverty as children grow up to become less healthy and productive adults than they should be. Even in purely fiscal terms, refusing to help poor children may, over time, actually increase budget deficits.

About the immediate budgetary costs: The thing about helping low-income Americans is that precisely because their initial incomes are so low, fairly modest amounts of aid can make a huge difference to their well-being.

More than half of the rise in child poverty could have been avoided by extending the 2021 enhancement of the child tax credit. Such an extension would probably have had a direct budget cost of about $105 billion a year.

That may sound like a lot to people who aren’t familiar with the sizes of both the U.S. economy and other major social programs. But it’s actually a modest sum. It’s less than half a percent of the country’s gross domestic product. It’s a small fraction of what we spend on Social Security ($1.3 trillion) and Medicare ($800 billion). It’s only a bit more than half the annual revenue loss from the 2017 Trump tax cut.

Furthermore, we could have significantly blunted the rise in child poverty by retaining just one piece of the child tax credit enhancement, the part that made the credit fully refundable — that is, allowed the lowest-income households to get the entire $2,000 credit. The estimated cost of doing this would be around only $12 billion a year — pocket change in the context of the federal budget.

But we didn’t do any of these things, again, because of conservative opposition. And the nation as a whole will pay a steep price.

The proposition that helping poor children makes them healthier, more productive adults isn’t hypothetical. On the contrary, it’s backed by solid evidence — better than the evidence that spending on physical infrastructure is good for the economy (although I believe that too) and infinitely better than the evidence that tax cuts promote growth, which is nonexistent.

How so? Historically, anti-poverty programs like food stamps and Medicaid weren’t introduced uniformly across America. Instead, they were rolled out gradually across regions, so we can compare the life trajectories of Americans who had access to these programs as children with those of Americans who didn’t. The results are clear: Aid to low-income children is a “highly cost-effective investment.” Those who received such aid ended up healthier, better educated and more economically self-sufficient than those who didn’t.

Since adults who aren’t productive or healthy are, among other things, a fiscal burden, this may well mean that even in purely budgetary terms cutting off aid to poor children is self-destructive.

Yet here we are.

Unfortunately, children can’t vote and poor adults tend not to vote either. So politicians can get away with policies that harm poor children.

But not all politicians are completely cynical; some of them care even about Americans who don’t vote or send them money. Nor are all voters purely self-interested. After all, we did make huge strides against child poverty, even if they were short-lived. And now at least we know that fighting child poverty is possible.

Realistically, the political will to undo our terrible mistake doesn’t exist at the moment. But there’s always hope that we’ll eventually do the right thing.

GOP Politicians Have Chosen To Increase Child Poverty

The following post was written by Robert Reich:

Poverty is a policy choice. We have chosen to have a significant percentage of our population impoverished, including — especially — our nation’s children. 

When I say we’ve chosen this, I mean that it doesn’t have to be this way. There is no law of nature or principle of economics or Constitutional provision that dictates such a high number of people in poverty within the richest nation in the history of the world. 

Census data released Tuesday provides clear evidence of the choice we’ve made. The number of people with incomes below the poverty line in 2022 rose by 15.3 million. The poverty rate for children more than doubled — from an historic low of 5.2 percent in 2021 to 12.4 percent in 2022.

The United States has just experienced the largest spike in child poverty since the current models for measuring economic distress were developed in 2009. All of the record gains made against child poverty over the previous two years have been erased. 

The reason for this extraordinary rise in poverty? Not the pandemic. Not a vicious recession. Not an economic depression. Not a huge increase in the numbers of people unemployed. In fact, employment is high.

 

The reason, according to the Census Bureau, is the refusal by Congress to renew the enhanced child tax credit that was developed during the Covid-19 pandemic. That expiration was a policy choice. 

Poverty has shot upwards because we as a nation (through our representatives in Congress) decided to eliminate a relatively modest monthly bump in federal support — $250 to $300 per month for households with children. 

In the previous year, that modest bump had the astounding effect of reducing the rate of child poverty by nearly half. When lawmakers expanded the child tax credit in 2021, fewer kids lived in poverty. When they failed to continue the expansion in 2022, child poverty more than doubled. 

Ergo, two policy choices by Congress — one that dramatically cut child poverty, followed by a second that dramatically increased it.

Who exactly in Congress made this choice? Republicans and a handful of Democrats such as West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema. They rejected efforts by the Biden administration and most congressional Democrats to maintain the enhanced child tax credits.

Although House Democrats backed the proposed extension of the credits, Senate Democrats needed all 50 members of their caucus to pass the legislation via the reconciliation process. Manchin refused to go along unless his colleagues accepted a scheme to penalize parents with work requirements and other restrictions.

Sinema also refused, as has been noted by the campaign of US Representative Ruben Gallego, an Arizona Democrat who is running to replace Sinema in 2024. (Let’s do everything we can to make sure he does.)

Ending poverty is not difficult, especially for wealthy nations such as the United States. We know exactly how to do it. We did it. Then we undid it. In effect, the United States is now making a concerted effort to impoverish millions of our children.

As John Nichols of The Nation reminds us, our success at reducing poverty is similar to what occurred in the 1930s, when President Franklin Delano Roosevelt responded to the Great Depression with the myriad job creation, rural development, and social safety net programs (including Social Security) that formed the New Deal. 

When FDR took office in 1933, the unemployment rate in the US was close to 25 percent. After eight years of federal interventions by the Roosevelt administration, it was down to around 10 percent when World War II began.

Similarly, just before Lyndon Johnson got Congress to enact Medicare and Medicaid in 1965, 22 percent of Americans were impoverished. When Johnson left office, it was around 13 percent. Why the drop? 

Because Medicare and Medicaid addressed a key driver of poverty among the elderly—medical costs. And other Great Society initiatives, such as expanded nutrition and housing programs, contributed to the decline. 

This is not rocket science. The expanded Child Tax Credit cut child poverty nearly in half. Sinema, Manchin, and the GOP let it expire and child poverty spiked. 

This is not only a policy choice. It is a moral choice. In the richest country in the world, it is inexcusable that millions of our children are living in poverty. They don’t have to be. 

Friends, expanding the Child Tax Credit should be the top tax policy priority both this year and during the 2025 tax debate. Period. 

Child Poverty Dropped But More Needs Done To Keep It Low

The Child Tax Credit (in combination with the Earned Income Credit) has significantly reduced child poverty in the United States. But to keep that reduction intact, the Child Tax Credit, which expired at the end of 2021, needs to be restored. Unfortunately, all Republicans and Democratic senator Manchin, oppose it. We need a blue wave in this election to keep our gains on child poverty.

Here's part of how Paul Waldman and Greg Sargent describe this in The Washington Post: 

As a new report from the Center on Budget and Policy Priorities shows, we did something extraordinary during the worst parts of the coronavirus pandemic: In the midst of a crisis that affected every part of our society and could have been economically calamitous, we drove poverty down. As economically painful as the crisis was, the aggressive public spending passed across the Trump and Biden presidencies dramatically mitigated the hardship Americans suffered.

Using just-released census figures, the group reports the results of the pandemic stimulus measures in 2021. In particular, the study looked at the expansion of the child tax credit, which was altered to give monthly payments to eligible families, including those with incomes too low to have income tax liability:

The expanded Child Tax Credit alone kept 5.3 million people above the annual poverty line and helped drive a stunning reduction in child poverty to a record low. Poverty overall also reached a record low and the uninsured rate dropped substantially, with Medicaid and Affordable Care Act (ACA) marketplace coverage reaching or nearing record highs.

The effect on minority groups was particularly dramatic: “In 2018 nearly 1 in 4 Black children lived in families with incomes below the poverty line. In 2021, fewer than 1 in 10 did.”

It’s important to remember that we define “poverty” as a line one can be over or under. The fact that a family has a bit more income than where that line is placed doesn’t mean they don’t struggle to make ends meet.

But government assistance can mean the difference between a family having enough to eat, being able to pay the rent and utilities, or becoming homeless. And it’s clear that antipoverty spending has had a tremendous impact.

This week the New York Times reported comprehensive data showing that over the past three decades, child poverty has declined dramatically, down from 28 percent of American children in 1993 to 11 percent in 2019. Much of the credit goes to the earned income tax credit and the child tax credit, which give significant benefits to low-income Americans.

Now, here’s the bad news: Sadly, the expanded CTC expired at the end of 2021. Almost all Democrats in Congress wanted to extend the expansion, but Sen. Joe Manchin III (D-W.Va.) refused; he reportedly told colleagues he worried that parents would use the money to buy drugs. Without that extra income, millions of children fell back into poverty in 2022.

Does Manchin Care About Child Poverty?

The following is part of an op-ed by Jennifer Rubin in The Washington Post:

As hard as it is to believe, Democratic Sen. Joe Manchin III reportedly blew up negotiations for the Build Back Better bill not over provisions to address climate change or tax proposals affecting wealthy Americans, but over the child tax credit that has lifted millions of children out of poverty. That makes even less sense considering Manchin’s home state of West Virginia is among the poorest states in the country.

The West Virginia Center on Budget and Policy reports: “Congress temporarily increased the Child Tax Credit (CTC) for more than 65 million children nationally, including 346,000 in West Virginia where it reaches 93 percent of children.” Reducing or eliminating it would amount to driving “50,000 of the lowest income children in the state below the poverty line or deeper into poverty.” (Manchin’s state ranks 47th in food security.)

Nevertheless, The Post reports: “Sen. Joe Manchin III last week made the White House a concrete counteroffer for its spending bill, saying he would accept a $1.8 trillion package that included universal prekindergarten for 10 years, an expansion of Obamacare and hundreds of billions of dollars to combat climate change. . . . But the West Virginia Democrat’s counteroffer excluded an extension of the expanded child tax credit the administration has seen as a cornerstone of President Biden’s economic legacy.”

Manchin was also apparently afraid that poor parents would use the money for illegal drugs, and HuffPost reported that “Manchin has also told colleagues he believes that Americans would fraudulently use the proposed paid sick leave policy, specifically saying people would feign being sick and go on hunting trips.” It’s rare for a politician to express such contempt for his own constituents, let alone poor children.

In fact, the Census Bureau reported in October that “Three in 10 families that received monthly Advance Child Tax Credit (CTC) payments spent them on kids’ school expenses, and 1 in 4 families with young children used them to cover child care costs, according to new results from the U.S. Census Bureau’s experimental Household Pulse Survey.” In addition, about 40 percent used the money to pay off debt. “The share of respondents that reported ‘mostly spending’ them increased from 27% to 33% during that period, in line with prior research that found that the CTC decreased household economic hardships, and that households with children were hardest hit during the pandemic.”

The poorer the family, the greater chance the CTC will be spent on necessities. As Bloomberg reported, “Another report from the Center on Budget and Policy Priorities found 91% of households making less than $35,000 per year used the money to pay for food, shelter, clothing and other necessities. Black and Hispanic families were more likely to use their credits on education-related costs, such as school supplies.”. . .

The senator’s take on poor children and their struggling parents is appalling — even more appalling than misleading his colleagues and the White House about his support for the bill.

About 16% Of Children Under 5 Live In Poverty - Why?

 

About 9% of seniors in the U.S. live in poverty. About 16% of children under 5 years old live in poverty. In a country as rich as the United States, neither of those facts should be true. But the numbers do pose a question -- why has this country done a mediocre job of dealing with poverty among the elderly, but a terrible job of dealing with poverty among young children?

Former Labor Secretary Robert Reich answers the question:

The current poverty rate among the elderly is 9 percent. That’s still too high, especially considering that our official measure of poverty understates the true level of hardship by failing to fully account for the high costs of housing. 

But the current the poverty rate for children under 5 years old is over 16 percent. That, if I may say so, is an utter scandal. 

The rate of child poverty in America hovered around 15 percent through most of the 1980s and early 1990s but worsened after 1996 when the Clinton administration (of which I was a member) joined Republicans in Congress to end a program called “Aid to Families with Dependent Children,” by then known as “welfare.” It had been part of the Social Security Act of 1935. I thought Clinton’s decision shameful then, and still do. 

The Build Back Better bill that has passed the House (now awaiting Manchin’s and Sinema’s nods) extends the year-long child tax credit in last year’s Covid bill, thereby reversing Clinton’s decision — but not by much. The extension is for only one additional year. Had the tax credit been made permanent, as was Biden’s original intent, it would have cut child poverty by half.

America’s current rate of child poverty is among the highest of all advanced nations. We do have a Children’s Health Insurance Program, but it’s not close to what other advanced nations give their children. Hell, we don’t even provide what other advanced nations offer by way of childcare. 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 Norways spends on its toddlers. As it stands now, Biden’s Build Back Better bill will provide additional funding. But it’s astonishing how little the richest nation in the world has done for its kids.   

Let’s be clear: Poverty is a political choice. 

So why have we chosen to reduce poverty among America’s elderly but not among America’s children? There are three dominant theories:

Because the elderly vote and children don’t. Many have suggested this, but it can’t be the reason because children have parents and grandparents who do vote. 

Because of racism, in that a disproportionate percent of poor kids are children of color. This is a common explanation as well, but it also falls short because a disproportionate percent of the elderly poor are also people of color. 

Because of demographics, in that the giant boomer generation is intent on keeping or expanding Social Security and Medicare. The timing doesn’t quite work, in that America was most generous to the elderly way before boomers got old. Besides, boomers have grandkids. 

So what’s the answer? My guess is that we as a society were simply more generous to those in need during the 1960s and 1970s, because those were years when the middle class was expanding, and most Americans were doing better. These were the years when we created Medicare and expanded Social Security, and provided a lot of assistance to poor children through Aid to Families with Dependent Children.

But we’re not as generous now. Even though the American economy is far larger than it was then, the middle class is a smaller share of it. For the last four decades America has been dividing into well-off professionals who don’t feel any connection to the poor, and a beleaguered working class that’s easily convinced any help to the poor will cause their taxes to increase. 

Hence, in 1996 even a Democratic president decided to end aid to poor kids, largely because polls showed that most Americans — including the vast majority of the working class — no longer supported welfare. Twenty-five years later — and even after the awful consequences of that decision have become apparent — a Democratic Congress has chosen not to provide permanent help to the nation’s poor kids. 

In other words, I don’t think we’ve prioritized the elderly poor over poor children. The big difference is we have become far less equal as a society, which has made us less willing to remedy poverty at all.

Poverty In The United States Got Worse In 2020

 

The chart above is from the Economic Policy Institute. It shows that poverty increased in the United States in 2020. The poverty rate rose by 0.9 points to 11.4% for the entire population. It was even worse for children -- rising by 1.7 points to 16.1%. How can the richest nation on the planet justify over 16% of its children living in poverty?

The poverty rate was also different for different groups, even though it rose in 2020 for all groups. Poverty among Whites rose by 0.9 points to 8.2%. Poverty among Hispanics rose by 1.3 points to 17.0%. And poverty among Blacks rose by 0.6 points to 19.3%. We still have a lot to do to make the economy fair to everyone.

Lifting 50% of Children Out Of Poverty Is NOT Good Enough

When the Democrats passed the COVID-19 relief bill, they included in it a child tax credit. This last week, the government started sending out those payments to the parents of children -- $300 a month for every child under 6, and $250 a month for every child between 6 and 17.

It has been estimated that the payments would likely cut child poverty in half in the United States. That's a good thing. Anytime a child can be lifted out of poverty, it is a good thing. But it's not good enough!

In the United States (the richest nation on Earth), about 1 in every 7 or 8 (depending on how poverty is defined) children lives in poverty. What about the other I in 3.5 or 4 children? Shouldn't the United States be lifting them out of poverty also?

We have the highest poverty rate among children of any developed nation. That should not be! We have the potential to eliminate child poverty. All we need is the political will to do it.

Sadly, the congressional Republicans don't care about this nation's children. They think it's more important to cut taxes on the rich and the corporations (who already pay a lower rate than many in the middle class). And especially in the Senate, they have the ability to filibuster any bill to eliminate child poverty.

We must do better. I don't know if we could actually eliminate all child poverty, but it is a moral imperative that we try to do it.

How? We could start by doing two things. First, raise the minimum wage to a livable wage -- about $15 an hour. Second, Provide decent and affordable child care for workers. These two things would go a long way toward rectifying the situation, and it would have another positive effect -- it would boost the economy as the low-wage workers spend that extra money they earn (and don't have to pay for child care). Each dollar they spend would turn over several times in the economy.

Republican economic policy is a failure. Helping the rich and corporations doesn't boost the economy, because they just hide that money in overseas accounts to avoid paying even more taxes. But Democratic policy boosts the economy. By providing help to the middle class, and especially the poor, their spending is good for everyone (even small and large businesses).

We could boost our economy and virtually eliminate child poverty with some common sense economic policies. But that won't happen until the Republicans are voted out of power.

Are We A Nation Of Child Abusers? Sadly, The Answer Is YES!

That headline may be shocking to many of you. But consider -- nearly 12 million children live in poverty in the United States (the richest nation in the world).

That is not true because we cannot afford to correct it. It's because we don't seem to want to fix that problem, or at least our leaders don't seem to want to fix it. They would rather gives tax cuts to the richest Americans instead of helping those children in poverty.

How can we call that anything but child abuse? Like me, you may say that's not what we want. But if it's not, then it is up to us to elect leaders that will solve the problem instead of ignoring it. Until we do, we will remain a nation of child abusers.

Here's just a part of an excellent article by Nicholas Kristof in The New York Times:

Imagine you have some neighbors in a mansion down the road who pamper one child with a credit card, the best private school and a Tesla.

The parents treat most of their other kids decently but not lavishly — and then you discover that the family consigns one child to an unheated, vermin-infested room in the basement, denying her dental care and often leaving her without food.

You’d call 911 to report child abuse. You’d say those responsible should be locked up. You’d steam about how vile adults must be to allow a child to suffer like that.

But that’s us. That household, writ large, is America and our moral stain of child poverty.

Some American children attend $70,000-a-year nursery schools, but 12 million kids live in households that lack food. The United States has long had one of the highest rates of child poverty in the advanced world — and then the coronavirus pandemic aggravated the suffering.

Now we could have a thrilling breakthrough: President Biden included a proposal in his $1.9 trillion American Rescue Plan that one study says would cut child poverty by half. We in the news media have focused on direct payments to individuals, but the historic element of Biden’s plan is its effort to slash child poverty.

“The American Rescue Plan is the most ambitious proposal to reduce child poverty ever proposed by an American president,” Jason Furman, a Harvard economist, told me.

A couple of decades from now, America will be pretty much the same whether direct payments end up being $1,000 or $1,400. But this will be a transformed nation if we’re able to shrink child poverty on our watch.

So the most distressing part of 10 Republican senators’ counterproposal to Biden was their decision to drop the plan to curb child poverty. Please, Mr. President, don’t budge on this.

And senators, what are you thinking? Is the supposedly “pro-family” party battling to preserve child poverty? . . .

Maybe you think this is unaffordable? One prominent estimate suggests that child poverty costs the United States about $1 trillionannually in reduced adult productivity, increased crime and higher health care costs — so the question isn’t can we afford to help children, but can we afford not to? . . .

Now we can make it our priority, too, helping children and our country alike. As Furman says, “investments in children are not just a handout but a hand up.” Let’s empower our nation’s children, and stop abusing them.