Child Poverty Spiked After Tax Credit Expired, Early Research Suggests

A new study shows child poverty increased 40% in January after the monthly payments lapsed because of congressional inaction.

WASHINGTON – Low-income parents faced more hardship in January after Congress failed to continue the monthly child tax credit payments that slashed child poverty last year.

Child poverty increased 40% without the payments, according to the Columbia Center on Poverty and Social Policy. The payments amounted to $300 per child under 6 and $250 per child under 18 for the vast majority of American families.

“The monthly child poverty rate increased from 12.1% in December 2021 to 17% in January 2022, the highest rate since the end of 2020,” the Columbia researchers said in their latest monthly report. That means an additional 3.7 million children were living in poverty last month, according to the report.

The boosted child tax was one of the key pillars of the American Rescue Plan. For 2021, Democrats increased the credit from $2,000 to as much as $3,600 per child, and made it so the benefit was paid out in monthly increments. Notably, families with no income at all became eligible for the benefit.

Democrats failed to extend a credit late last year, due to the opposition of Sen. Joe Manchin (D-W.Va.). The last monthly check was paid out to parents on Dec. 15. After this tax season, the credit will return to its previous $2,000 level and parents with no income will no longer be eligible.

Manchin told colleagues and constituents he thought parents wasted the money on drugs. Though he avoided taking a clear public position on the policy, he suggested it should have a “work requirement.”

Except for Manchin, Democrats and the Biden administration for months hailed the program as one of the biggest anti-poverty policies passed in a generation.

Now it appears a massive increase in child poverty is happening on their watch.

Democrats have tried to shift the blame toward Republicans, who have uniformly opposed the benefit and are forcing Democrats to pass all their social policies on party lines.

“Putting the blame on the Democrats is the way politics is, I understand, but it really is 50 Republicans taking it and saying no to all this,” said Sen. Sherrod Brown (D-Ohio) one of the policy’s biggest champions.

Senate Majority Leader Chuck Schumer (D-N.Y.) has said Democrats are still working to win Manchin’s support. Manchin has repeatedly said there are no “organized” negotiations happening.

Brown and other Democrats also have been talking to Sen. Mitt Romney (R-Utah), who proposed a similar monthly child benefit last year. But Romney is alone among Republicans favoring such a child allowance.

Even Republicans’ biggest proponents of a child tax credit, like Sen. Marco Rubio (R-Fla.), who fought to increase the benefit under Republicans’ 2017 tax bill, has panned Democrats’ expansion as a bridge too far and welfare under a different name.

The U.S. officially measures poverty on an annual basis. Columbia produces its monthly estimates by extrapolating from monthly employment data and setting a poverty line that’s one-twelfth the size of the government’s annual threshold. Many experts have argued that the annual poverty measure obscures wild income swings, such as the infusion of cash many families receive during tax refund season.

This tax season may feature unusually large refunds. Families that file tax returns and received the monthly child tax credit last year can still get refunds for the first half of 2021 amounting to as much as $1,800 per child. The loss of income in January and February will give way to a big boost in the coming months.

Several Democrats have said the child tax credit protected families from inflation.

“In Colorado, people were receiving on average $445 a month,” Sen. Michael Bennet (D-Colo.) told HuffPost. He noted that Republicans this week lamented rising prices from inflatiocosting families an extra $276 per month.

“If we extended the child tax credit, that would almost cover twice what the cost inflation is,” Bennet said.

House Speaker Nancy Pelosi attends a press conference on the newly expanded child tax credit on July 15 in Los Angeles.
House Speaker Nancy Pelosi attends a press conference on the newly expanded child tax credit on July 15 in Los Angeles.
Mario Tama via Getty Images

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