3.7 million children dropped back into poverty after the Biden child tax credit expired — and Congress isn’t fixing it soon

  • After the enlarged child tax benefit expired at the end of last year, child poverty increased dramatically in January.
  • The termination of the direct payment scheme effectively erased the transitory achievements obtained in the fight against child poverty.
  • Given the opposition from Republicans and Manchin, there is no indication that the program will be revived anytime soon.

According to new statistics revealed on Thursday, child poverty increased significantly in January after the expiration of President Joe Biden’s child stipend, which was discontinued in December.

According to a study conducted by the Center on Poverty and Social Policy at Columbia University, 3.7 million children returned to poverty when the enhanced child tax credit expired last year. 

The percentage of child poverty increased to 17 percent in January from 12 percent in December, representing a 41 percent raise.

When it was implemented, it practically eliminated all of the program’s progress in reducing the number of children living in poverty, bringing the rate back to where it was at the end of 2020. 

According to the survey findings, children of color and Latinos witnessed the greatest percentage point improvements.

Insider spoke with Zachary Parolin, one of the research’s co-authors, who said that the study was “very beneficial” regarding poverty and food difficulty reduction. 

“Now that the program has ended, we’re going to lose a lot of those advantages unless we see a fast recovery in the job market very soon,” says the economist.

Families may have greater difficulty affording food in the coming months, according to Parolin, especially when grocery costs are growing.

When combined with the fact that inflation has just reached a four-decade high, Parolin believes the benefit might offer an additional financial cushion for families.

Sophie Collyer and Megan Curran, both of Columbia University, contributed to the study’s findings.

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The Biden stimulus package, which was passed in March of this year, authorized the establishment of the child allowance.

It was changed into a one-year, almost universal cash benefit for families, expanding eligibility to include households with little or no taxable income for the first time. Families might get $250 per child aged 6 to 17 years old, or $300 for each child aged 5 and younger, depending on their income.

According to the Joint Committee on Taxation, a $120 billion price tag for the program for the year was estimated by the Joint Committee on Taxation, which corresponded to almost one-sixth of the United States’ military budget in 2022.

Dems had pushed for the credit because they saw it as an enlargement of the safety net for children in the same way that Social Security had done for the elderly earlier in the 20th century.

It was included in the Build a Back Better proposal, which the House of Representatives adopted, and the clear majority of Democrats supported it.

Sen. Joe Manchin of West Virginia, a conservative Democrat who finally destroyed the House bill, at least in part because of the child tax credit, was a stumbling block for the Republicans.

Several worries have been raised by the governor, including whether the program would discourage families from going to work and if the money will be squandered on drugs.

Manchin has also been a vocal opponent of the federal government giving direct payments to individuals with no strings attached for a long time. 

He has advocated for the reinstatement of a work requirement for the program, a move that experts believe would exclude the poorest families from receiving government help and would undermine the program’s anti-poverty impact.

There is no indication that the program will be revived anytime soon since Republicans have united in opposition to the Biden spending proposal, bogged down in the Senate’s equally split chamber. Democrats will also be unable to approve the economic plan in the upper chamber on party lines unless Manchin gives his approval.

For the time being, Congress has moved on to other matters, and it is unknown when or if the idea will be brought back up on the agenda. According to the New York Times, on Thursday evening, Rep. Alexandria Ocasio-Cortez launched a thinly disguised assault on Manchin for “nuking” the program.

However, a bipartisan agreement may be reached. Sen. Michael Bennet of Colorado, a proponent of the program, reportedly told Insider that he communicates with Sen. Mitt Romney of Utah on a “daily basis.”

It is not immediately obvious if such negotiations are intended to reinstate a child allowance. Romney drafted a rival child-benefit package that would deliver even bigger payments to families in need of assistance.

Romney has left the door open to the possibility of a bipartisan agreement in the future. He has said that he is open to discussing restoring some version of the program after Democrats have decided on the destiny of their economic plan.a