An increase in the Child Tax Credit contained in last year’s coronavirus relief package moved millions of American children out of poverty in one of the country’s most effective anti-poverty programmes.
But that expansion ended at the end of 2021, and new federal figures reveal that more and more families with children are struggling to pay basic bills, putting at risk a generation of kids who were just months away from exiting poverty.
According to a new Census Bureau study, 35% of families with children indicated they were struggling to afford basic expenses after the payments halted in late January or early February. Last year, while the payments were still being made, 30% were struggling to afford costs.
“These payments were so effective because they were such an important investment in children,” said Kris Cox, CBP’s assistant director of federal tax policy. This expansion was expected to raise millions of youngsters out of poverty.
Previously, one in every four households used the child tax credit to defray expenses. In the current study, over a third of families with children experienced food insecurity.
The extended child tax credit payments amounted to up to $600 for a household of four with two children under the age of five.
More than 36 million families got monthly payments of up to $300 for children under 5 and $250 for children aged 6 to 17, according to Katherine Giefer of the Census Bureau’s Social, Economic and Housing Statistics Division.
The Tax Credit Expired in 2021.
The expansion was part of the Build Back Better proposal that failed last year due to Republican and Democratic opposition.
Rich Besser, former director of the Centers for Disease Control and Prevention and now head of the Robert Wood Johnson Foundation, says the effects of poverty on children go well beyond their current condition.
“Poverty is linked to so many aspects of a child’s life,” Besser added. “Poverty puts a family in a stressful condition. It means a family is at risk of hunger, eviction, and losing heat in the winter.”
“Poverty’s chronic stress takes a toll on your health. “Chronic stress is incredibly harmful to one’s health,” he stated.
Over the last few months, the Census Bureau’s Household Pulse Survey examined how families used their child tax credit payments.
Economists praised the results, which showed households spending on essentials rather than savings or extravagances. Around one in four families with kids used the funds to offset expenditures. Families with children were twice as likely to utilise the payments to cover expenses, and eight times as likely to borrow money from friends and family.
“Nine out of ten low-income families used this money for daily expenses. Feed, clothe, house. “This was vital help for families struggling to make ends meet,” Cox added. “Families spend this money on essential everyday expenses.”
And the expansion aided the poorest, mainly Black and Latino kids. The American Rescue Plan expanded the child tax credit for Black and Latino families, bridging a gap that existed before.
Now, proponents of a larger credit warn that the progress gained last year could unravel, re-enslaving millions of youngsters and affecting their physical and emotional health.
There will be no reduction in child poverty or stress from not being able to pay expenses, according to Besser. “These are real, and the idea that a simple programme like this might cut kid poverty by 40% or more is unconscionable.”