In the Frontline documentary "Growing Up Poor in America," 13-year old Ohioan Shawn and his mother and baby sister were subsisting on $885 a month in benefits during the early days of the pandemic—half in food stamps and half in rent assistance for their trailer. Shawn’s mother had been diagnosed with kidney disease, yet still had to risk exposing herself to COVID-19 by “working off” hours required to receive her benefits at the local Salvation Army. Shawn tried his best to help at home as a so-called “brother-father” to his younger sibling. This included taking her to get free lunches for school-age kids at McDonald’s. “To climb out of poverty is probably a really hard struggle,” Shawn says in the course of the documentary, but he remains hopeful about his future. Shawn is one of the many children in the U.S. living in poverty, which has only been exacerbated by the pandemic.
The Biden administration’s $1.9 trillion American Rescue Plan is a complex legislative prescription for the economic hardship COVID-19 has inflicted on families like Shawn’s. The plan aims to affect a massive economic recovery by putting more money into the hands of more Americans in need. It provides:
- A one-time, $1,400 per person/$2,800 per couple economic impact payment (with an added $1,400 for each dependent)
- A 25-week extension of the enhanced unemployment benefits, providing an added $300/week
- An expanded tax credit worth up to $3,600 for every child under age 6, and $3,000 for children between 6 and 17, to be paid out over the course of 2021
- Increases in both SNAP and WIC benefits to enable more household food purchases
- Greater ease in accessing EBT funds for school-age children during public health emergencies
These legislative provisions could have a profound impact on the landscape of American poverty, particularly child poverty, after more than a year of an unprecedented health crisis.
The Center on Social Policy at Columbia University has estimated that the American Rescue Plan will cut the child poverty rate by as much as 56% this year, which would affect children of all races. The poverty rate for Black, Hispanic, and Indigenous children, who are disproportionately affected by both poverty and COVID-19, would decline by 52%, 45% and 61% percent, respectively. However, as the Children’s Defense Fund’s Director of Poverty Policy, Emma Mehrabi, cautions, “Th[is] data will only live up to its projections if families—especially the hardest to reach—know about the benefits [offered through the plan] and can easily access them. So we need to make sure that families and communities on the ground are aware of this program, and we need to work aggressively to get them signed up.”
Payments in support of children have appreciably reduced child poverty in real time, but have also produced more benefits.
The plan’s newly liberalized child tax credit (CTC), which is a cash transfer that can be spent as parents and caregivers determine, has been receiving a lot of media coverage because of its transformational potential. The plan’s CTC is fully refundable, such that it will benefit 93% of the parents of American children, or 69 million people. Before the legislation, the poorest 10% of children did not receive any benefit from the CTC and about 25% received only a partial benefit. Many of the children whose families were excluded from the original CTC were the children of single parents, Black and Hispanic children, and children who live in rural areas.
Effectively, parents who receive the CTC under the Rescue Plan are getting a small taste of what it would be like to have a guaranteed minimum income to support their children. According to a recent UNICEF report, at least 23 countries guarantee a minimum income for families with children. Canada, for example, provides a scaled yearly benefit to any Canadian residents primarily responsible for the care and upbringing of a child under its Canada Child Benefit program. The current iteration of these payments has its roots in “Family Allowances” that were introduced in the country after World War II. Germany also offers families a monthly stipend (kindergeld) paid from birth through at least age 18—and extended through age 25 should a child pursue higher education or vocational training.
Payments in support of children have appreciably reduced child poverty in real time, but have also produced more benefits. For instance, in Canada, research has shown that children with a guaranteed income improved their performance in school, had better health outcomes, and earned more income as adults. Likewise, the Stockton Economic Empowerment Demonstration, which provided $500 a month, no strings attached, to 125 low-income families for two years, demonstrated that regular payments to families can significantly reduce income volatility, and lead to improved physical and mental health and more full-time employment opportunities.
While extending cash aid to more American families in need has its benefits, it has not been without controversy in the past. The United States federal government largely moved away from cash assistance after the New Deal and the burgeoning prosperity of post-World War II. President Lyndon Johnson, invoking the idea of the Great Society for the first time, articulated a war on child poverty in his 1964 speech at Ohio University. He envisioned “a society where no child will go unfed, and no youngster will go unschooled.” However, LBJ’s top economic adviser, Walter Heller, advised against implementing a minimum family income as part of the administration’s ensuing War on Poverty. As Joshua Zeitz explains in Politico, Heller believed that such a strategy was not only cost-prohibitive, but that it would “leave the roots of poverty untouched and deal only with the symptoms.”
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Moral and ethical obligations aside, child poverty is expensive.
Accordingly, the Johnson administration opted for a combination of educational, workforce training, medical care, and food assistance programming. This was how the Food Stamp program (now SNAP), Medicare, Medicaid, and Head Start were launched, as well as an expansion of the already-existing Social Security. Woven together, these programs created a social safety net in this country for our most vulnerable. Initially, Zeitz notes, these programs had a marked impact on the national poverty rate, which decreased by 42% between 1964 and 1973, and they remain important today. But ultimately, the decline in the poverty rate began to level off.
Compounding this deceleration of the poverty decline, subsequent presidential administrations invoked the idea of deserving versus undeserving poor. Ronald Reagan condemned “welfare queens” and “con artists” who enriched themselves on the back of the federal government. President Bill Clinton enacted the 1996 “welfare reform” supported by then-U.S. Sen. Biden. “Personal responsibility” became more than a catchphrase; it became the rationale for withholding government benefits to many children and adults living in poverty in America. Unfortunately, the legacy of this welfare reform bill was that it increased poverty and further marginalized the unemployed. And instead of viewing poverty as a societal indictment, many Americans still view it more as an individual moral failing.
In 2021, the detrimental and far-reaching economic impact of the pandemic has created an opportunity for the federal government to reconsider its traditional responses to poverty and joblessness. American businesses were devastated, whole industries were endangered, and many individuals were left struggling to pick up the pieces, save their homes, and put food on the table. In response, the government’s outlook on poverty may be beginning to shift, such that socioeconomic forces and not individual initiative are highlighted as the root cause. “We need to be very clear here that the systemic issues with poverty—the racial disparities and the racial wealth gap—didn’t just create themselves. Lawmakers have divested in communities of color and put up barriers to [their] well-being,” said Mehrabi.
While the American Rescue Plan is a vital first step, it will not by itself lift children in America out of poverty. The first important obstacle to the plan’s efficacy is its temporary nature: the extra assistance offered now expires after this year unless Congress acts. Without an extension of the CTC, child poverty is projected to double in 2022. The Biden administration has recently backed away from pursuing permanency, and is instead opting to push an extension of the CTC—a path it feels is more realistic given Senate gridlock.
Second, the cash transfers in combination with more poverty-alleviating measures would have an even more aggressive impact on ending child poverty. For instance, Columbia University’s Center on Poverty and Social Policy studied the impact that refundable tax credits would have alongside an expansion of the Housing 8 Voucher Choice Program. Other key poverty-alleviating measures that would complement the CTC include free school meals for all children, baby bonds, and building and preserving affordable homes through investment in the National Housing Trust Fund. The USDA has just taken another crucial step in the right direction by extending free universal school lunch until the end of the 2022 school year.
Third, current gaps in the assistance are extended through the American Rescue Plan. For example, the 2017 Trump tax law rendered 1 million undocumented children from low-income working families ineligible for the CTC because they lack SSNs. Reversing this restriction would broaden the measure’s impact so that all children with ITINs may benefit.
Moral and ethical obligations aside, child poverty is expensive: an estimated $800 billion to $1.1 trillion annually in health expenditures, lost productivity, and higher crime. Why not spend that money investing in children such as Shawn?