Biden and Congress can change child poverty with the stroke of a pen
The importance of the 2020 election will be felt for generations — not only for the end it brings to four years of tumult and division, but for the policy consequences. President Biden and the Democratic-controlled caucuses in Congress will have the opportunity to enact policies that can create much-needed progress on infrastructure, health care, climate change and more.
But among the policy proposals I’m most excited about is one that could transform the landscape of child poverty as we know it. Nestled within Biden’s “American Rescue Plan” is a proposal to increase the federal child tax credit for a year and make it fully refundable. If this were to become law, data from Columbia University tell us that it could cut the rate of child poverty in the United States nearly in half.
As of 2018, 11.6 million American children lived in poverty, according to the Children’s Defense Fund. In Baltimore, where my wife and I are raising our children, 28.8 percent of families with children under age 18 live in poverty, according to a 2017 report from the city’s health department.
The Biden administration and the new Congress have a critical opportunity to change that, but Biden’s proposal does not go far enough.
In 2017, Congress increased the value of the federal child tax credit through the Tax Cuts and Jobs Act. Without this credit, more than 12.5 million children would fall into poverty. But there was a fatal flaw in the design of what amounts to the federal government’s most significant and impactful poverty-fighting program. An income phase-in to the credit means the families of 24 million children nationwide are too poor to qualify for the full $2,000 benefit.
Like so much of our inequality, the effect of this shortcoming falls across racial lines. Over 50 percent of Black and Latino children do not qualify for the full benefit, compared to 23 percent of white children. Nearly one in five Black children do not receive any credit at all.
President Biden aims to right this wrong in his rescue plan. He proposes for one year to make the credit fully refundable and increase its value to $3,000 per child ($3,600 for every child under 6).
The impact would be profound, according to researchers at Columbia University. With the stroke of a pen, this move could cut the child poverty rate nationally by 45 percent, by 52 percent among Black children, and 45 percent among Latino children, and by 38 percent among white children. Columbia estimates 4.5 million children could be moved out of poverty overnight. These estimations are based on pre-COVID-19 poverty levels. Amid this unprecedented health and economic crisis, the real need is far greater.
We can’t stop there. The change must be made permanent and the funds disbursed to qualifying families monthly. President Biden, Senate Majority Leader Chuck Schumer (D-N.Y.) and the Democratic Caucus in Congress have the opportunity to help alter the trajectories of millions of innocent American children whose fates, if they remain in poverty, are too often dire.
This isn’t simply moral or just leadership; it’s smart policy. As a nation, we are hemorrhaging human potential at an unprecedented rate. A National Academy of Sciences (NAS) panel convened by Congress to chart a course to cutting child poverty in half by the end of the decade found that child poverty costs the nation between $800 billion and $1.1 trillion annually in terms of lost adult productivity, the increased costs of crime and increased health expenditures.
At the center of their strategy to cut child poverty in half is making the child tax credit fully refundable. For example, poverty among children in families living off $2 per person, per day would nearly disappear with a child tax credit decoupled from earnings, whereas it barely budges with a policy predicated on earnings. The cost of the most impactful NAS policy package — which also recommended reforming the earned income tax credit, increasing food stamp benefits and bolstering housing vouchers — amounts to one-tenth of what our country is losing in potential economic outputs to child poverty.
As we enter a new chapter of federal leadership and a new era in American politics, we cannot afford the costs and the squandered potential brought by poverty any longer. We cannot purport to be a nation and a society that stands for opportunity while we allow millions of children to languish in devastating economic conditions that could be remedied by our tax code. President Biden and Congress can start addressing these wrongs now by catching the millions of children left behind with the child tax credit.
Wes Moore is the CEO of Robin Hood in New York, one of the largest anti-poverty forces in the nation. He is a bestselling author, a combat veteran, and a social entrepreneur.