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A family is pictured at their home in Porterville, California on March 18, 2021. (Photo by Melina Mara/The Washington Post via Getty Images)

Historic Drop in Child Poverty at Risk Due to Manchin's Tanking of Key Tax Credit

"If the Child Tax Credit expansion had not expired at the end of 2021, it would have continued to push down poverty among children this year and beyond," noted one analyst.

Jake Johnson

New U.S. Census Bureau figures published Tuesday show the boosted Child Tax Credit enacted by congressional Democrats last year helped fuel a major plunge in child poverty—historic progress that is now under threat thanks to Sen. Joe Manchin's opposition to keeping the program running in 2022 and beyond.

According to the federal data, child poverty fell from 9.7% in 2020 to a record low 5.2% last year, a decline that the Census Bureau attributed largely to the Child Tax Credit (CTC) expansion approved under the American Rescue Plan. Stimulus checks and enhanced unemployment benefits also played a role in cutting poverty among children and the U.S. population overall in 2021.

If the CTC payments weren't increased, made fully refundable, and distributed to more broadly last year, the Census Bureau estimated that the 2021 child poverty rate would have been 8.1% and 2.1 million more kids would have been impoverished.

"The Child Tax Credit is our most effective tax tool for reducing childhood poverty," the Institute on Taxation and Economic Policy (ITEP) said in response to the Census Bureau report. "Congress should make the 2021 CTC expansion permanent and protect America's children."

At the end of last year, the CTC program reverted to its previous, more exclusionary, and less generous form after Manchin—who represents one of the poorest states in the U.S.—and congressional Republicans refused to support proposals to extend the boosted payments.

Many vulnerable families that benefited from the enhanced credits immediately felt the impact of the cut-off: In January, according to one measure, the child poverty rate increased by 41%—rising from 12.1% to 17% among the population—and nearly 4 million kids were hurled into poverty, an indication that last year's gains could be wiped out in 2022.

"If the Child Tax Credit expansion had not expired at the end of 2021, it would have continued to push down poverty among children this year and beyond, even as other relief measures phase out," noted Danilo Leandro Trisi, director of poverty and inequality research at the Center on Budget and Policy Priorities. "Policymakers should pursue opportunities this year to stave off a sharp rise in child poverty by expanding the Child Tax Credit."

With Manchin and the GOP opposed to expanding the poverty-slashing credit, it's unclear whether there's a viable legislative path for even a short-term extension of the program ahead of the November midterms.

Axios reported last week that "the White House is engaging with Senate Democrats about making one last push for an enhanced child tax credit this year—and in return for GOP votes, may dangle support for corporate tax credits for research and development that expired last year."

"A Hail Mary tax package would face not only a ticking congressional clock but also potential opposition from Sen. Joe Manchin (D-W.Va.)," the outlet added. "After some discussions about lowering the income caps and including it in a slimmed-down version of Build Back Better, the tax credit ultimately didn't make it into the Inflation Reduction Act that Biden signed into law in August."

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