“We said we wouldn’t accept the levels of child poverty we have as a permanent feature of our democracy,” Senator Michael Bennet, Democrat of Colorado, told me. “And not only did the world not come to an end, but the families I talked to, who spent the money on everything from school clothes to a bicycle, were relieved of stress. That was the word they used with me. They were relieved of enormous, backbreaking stress.”
Bennet is talking about the single best policy of the Biden era, a policy he helped design: The expanded child tax credit. It gave parents $3,000 for every child age 6 to 17 and $3,600 for every child under age 6. There were no strings attached. It was just money. It could be used for child care, for food, for clothes, for anything. It treated parents, even poor parents, as the experts on their family’s finances, a quietly radical idea in American social policy. It was a huge experiment, it was studied exhaustively, and we can now say this definitively: It worked.
A study out of Columbia found it cut child poverty by more than 25 percent, pulling 3.4 million children above the poverty line, despite the raging Covid pandemic. Data from the census shows that the number of parents who said that their children didn’t have enough to eat fell by more than three million. Conservatives warned that the benefit would discourage work among parents, but the economists watched, and there’s no evidence it did. Poor people, just like rich people, want to live on more than $3,000 per child per year.
The spending of families receiving the credit was tracked and studied because Americans harbor a deep suspicion that if you send poor people money, they’ll spend it on luxuries and booze. But among low-income families, more than 90 percent was spent on food, utilities, shelter, clothing or education. When you’re struggling, there’s no luxury quite like being able to worry a little bit less about money. This was the first policy, to my knowledge, to go viral on TikTok, and the videos are worth watching: People dancing, laughing, gleeful that their rent was suddenly easier to make or that they could get their cars fixed.
All of this was data from just a couple of months. The real power of money like this comes over time. A different paper, also out of Columbia, looked at a range of studies on the benefits of cash payments to families with young children. Here’s the takeaway: A $3,000-a-year child benefit would pay for itself 10 times over. These payments come back in higher long-term earnings, higher educational attainment, higher birth weights, lower neonatal mortality, better adult physical health and better adult mental health. They lead to less crime and higher tax revenues and longer life expectancy.
Of course they do. Sometimes economists come up with unexpected, counterintuitive findings. But there’s nothing surprising about the finding that it’s good for children to grow up with more money, that it’s good for parents to know they can get their car fixed or buy back-to-school clothes. That’s why parents work so hard, at jobs they often hate, year after year. And that’s why it’s such a moral horror that a country as wealthy as ours leaves so many children in poverty.
“It worked,” Bennet said. “And that makes it all the more confounding that we find ourselves in the position we’re in.”
Here’s the position we’re in: That expansion? It’s gone. The American Rescue Plan provided the extra money for a year. The theory was that the policy would be popular and Congress wouldn’t permit it to expire. But the theory was wrong, at least so far. The Biden administration added an extension in Build Back Better, but that bill died, and there’s no immediate hope of revival. Once again, we are accepting our prepandemic levels of child poverty as a permanent feature of our democracy.
And so the Biden administration’s single biggest policy success has turned, for now, into a signal political failure. What went wrong, and how can it be salvaged or at least not repeated? I’ve been asking that question of politicians, strategists, scholars and activists, and a few theories dominate.
One is that Democrats made a mistake in letting it expire after a year. That just wasn’t long enough to create the expectations necessary for the political pressure they were counting on. “Policies can become a part of our understanding of what government should rightfully be doing,” Jamila Michener, a political scientist at Cornell, told me. “The classic stories there are Social Security and Medicare. But a lot has to happen for those feedback effects to take hold. You need people to know where the benefit is coming from, who they should be rewarding, and then they need to be motivated — often mobilized or organized into responding in some way politically. You need time for those feedback effects to materialize.”
The Bush tax cuts show how this can work. They were set to expire after around 10 years but were mostly made permanent under President Barack Obama because Democrats feared the political consequences of tax hikes. “I’ve been around the Senate, Christmas Eve after Christmas Eve, when tax cuts were expiring for the richest people and corporations,” Bennet said. “And we have never ever had any trouble extending those tax breaks. We’ve cut taxes by $8 trillion since 2001, most of it going to the wealthiest people, and when those are expiring, nobody leaves here until it’s done, and it’s done when they’re extended.”
But one year isn’t 10 years. And 2021 was a particularly weird year, with a raft of unusual policies — stimulus checks, expanded unemployment insurance — blinking into and out of existence.
“In retrospect, it really would have been wise to have structured that first child tax credit in the American Rescue Plan to go through the midterm elections,” Sean McElwee, the chief executive of Data for Progress, told me. “We should have figured out whatever mechanism would have been necessary such that it didn’t expire. Because it turns out that expiring the child tax credit in December was not the forcing mechanism that we may have thought it would be.”
This speaks to a broader problem Democrats had, which is simple confusion about what this policy was and where it was coming from. That was a downside of passing the policy as one piece of a larger stimulus package. The fight over the Affordable Care Act, which dominated politics in 2009 and 2010, made it very clear that whether you liked the health care law or hated it, it was Democrats you had to thank for it. But there was no huge argument over child poverty in America that culminated in the Democrats’ policy.
Michener told me the story of talking to her nephew, a 22-year-old who has a young daughter. “I know you don’t agree with me, but this is one of the reasons I really liked Trump,” he told her. “Because I started getting checks when Trump was president.” That sound you hear is the sound of every Democrat who’s reading this weeping. “He didn’t really see the difference between the checks with Trump’s name on them and all the other checks that flowed in thereafter,” Michener said.
Biden’s Build Back Better plan would have extended the credit, but it also would’ve done dozens of other things. This made sense as legislative strategy, but it made messaging nearly impossible. To be for or against Build Back Better wasn’t to be for or against the child tax credit or the climate policies or the pre-K policies or the Affordable Care Act expansion or the corporate tax changes or the R&D investments or any of the dozens of other items in the bill. To the extent anything defined the package in the public mind, it was the initial price tag: $3.5 trillion.
This wasn’t some inexplicable messaging error. It’s a product of a broken Senate that now does much of its major legislating through the bizarre budget reconciliation process, the perversions of which I described in an earlier column. Two of those problems afflicted Build Back Better. First, before you can write a reconciliation bill, you need to name the bill’s price tag. “You start the debate in the wrong place,” Sharon Parrott, the president of the Center on Budget and Policy Priorities, told me.
Second, because you can do only one or two reconciliation bills a year, you have to jam together everything you fear the other side will filibuster. Getting voters to pay attention to one policy debate, and hold their representatives accountable on it, is hard enough. Getting them to track six or 12, all of them tossed into one legislative sack, is impossible. This is another way the filibuster has made government more confusing and less accountable.
Then there’s the Manchin-and-Sinema factor. If Democrats had won the 2020 Senate races in North Carolina and Maine, perhaps Build Back Better would have passed. But with a 50-50 Senate, they need a perfectly united caucus to pass anything without Republican votes, and they don’t have one. Senator Joe Manchin, in particular, was the pivotal vote, and the Democrats lost him. Whether they could have won his vote is a counterfactual I can’t convincingly answer.
But those who negotiated with him say Manchin had a particular problem with the child tax credit. He held the view that it gave too much money to poor people who weren’t working, encouraging them to remain unemployed or leave jobs they already had. “I’ve shown him the evidence that countries with higher childhood allowances have higher work force participation rates than our own country, and I’ve not persuaded him,” Bennet said, clearly frustrated.
The moral heart of this shouldn’t be lost. There are ways to make it easier for poor parents to work or, if you must, more painful for them to remain unemployed. Condemning children to poverty shouldn’t be one of them. “There is this fundamental question of when, as a country, we’ll see the humanity in every child,” Parrott said. “Leaving children in deep poverty is an unacceptable thing to do because we don’t trust, or want to punish, their parents.”
Nor is inflation a reason to leave children in poverty. Extending the expanded child tax credit would cost about $100 billion per year for the next few years — less than 0.5 percent of U.S. G.D.P. And it could easily be paired with policies raising taxes or cutting spending elsewhere, making the overall impact on spending nil.
The story isn’t over. There’s still hope that some set of the Build Back Better investments can be resuscitated, a smaller child tax credit among them. Corporations are lobbying for the extension of a research and experimentation tax credit that could be part of a deal that includes the child tax credit. Romney has an excellent child allowance plan of his own, and while he’s found few allies on his side of the aisle, hope springs eternal. And maybe Manchin will wake up one morning and decide to accept the kind of deal he’s floated in recent months. Reversing the Trump tax cuts, which he says he favors, would raise more than $1.5 trillion. He wants to put half of that toward deficit reduction — fine. Split the rest between climate investments and a permanent child tax credit targeted at the poorest families, which would be cheaper than the broader tax credit in the American Rescue Plan, which didn’t phase out completely until you reached $150,000 in family income.
Here’s my optimistic spin, though I admit I’m not in a very optimistic mood these days. A decade ago, a child tax credit this large was unthinkable in American politics. Come 2021, it was being proposed by moderates like Bennet and Republicans like Romney, and Democrats passed it into law the first chance they got. The case for it has only strengthened since: We saw how well it worked, how many people it helped. It may or may not be revived this year, but it now sits firmly in the realm of the politically possible. It has made clear what we have always known: This much child poverty, in a country as rich as our own, is a policy choice, and an abominable one.
“I think this will be permanent tax policy someday,” Bennet said. Me too. Here’s hoping someday is very soon.
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