How the US can reduce child poverty with a simple policy change

Child poverty is a serious and persistent problem in the United States. According to the latest data from the Census Bureau, more than 5 million children fell into poverty in 2022, doubling the rate from 2021. This is the largest increase on record and a tragic consequence of the decision by Congress not to renew the enhanced child tax credit that provided extra cash aid to the nation’s lowest-income families.

The impact of child poverty is not only economic, but also social and psychological. Children who grow up in poverty are more likely to suffer from poor health, lower educational attainment, and fewer job opportunities than their peers. They are also more likely to experience violence, abuse, and neglect. These disadvantages can have lasting effects on their well-being and life chances.

How the US can reduce child poverty with a simple policy change
How the US can reduce child poverty with a simple policy change

The solution of the enhanced child tax credit

The best vehicle for addressing child poverty is right before our eyes: the enhanced child tax credit. This policy, which was introduced as part of the American Rescue Plan Act of 2021, provided monthly payments of up to $300 per child to families with children under 18. The payments were fully refundable, meaning that even families with no or low income could receive them. The policy was estimated to lift nearly 10 million children out of poverty in 2021, cutting the child poverty rate by more than half.

However, the enhanced child tax credit was only authorized for one year and expired at the end of 2021. Congress failed to extend it, despite bipartisan support and overwhelming evidence of its effectiveness. As a result, millions of families lost a crucial source of income and millions of children fell back into poverty.

The benefits of making the enhanced child tax credit permanent

Making the enhanced child tax credit permanent would be a smart and humane investment in the future of America. It would not only reduce child poverty, but also improve child health, education, and development. Studies have shown that cash transfers to low-income families can have positive effects on children’s cognitive skills, academic performance, mental health, and behavior. They can also reduce maternal stress, family instability, and child maltreatment.

Moreover, making the enhanced child tax credit permanent would be affordable and cost-effective. According to the Center on Budget and Policy Priorities, extending the policy would cost about $110 billion per year, or less than 3% of the federal budget. This is a modest price to pay for reducing child poverty by more than half and improving the lives of millions of children. The benefits of the policy would also outweigh its costs in the long run, as children who grow up in better circumstances would contribute more to society and the economy as adults.

The urgency of acting now

The US cannot afford to delay or ignore the problem of child poverty any longer. The pandemic has exposed and exacerbated the vulnerabilities and inequalities that affect millions of American families and children. The enhanced child tax credit was a lifeline for many of them during a time of crisis, but it should not be a temporary or one-time measure. It should be a permanent and universal feature of the US social safety net.

The US has an opportunity and a responsibility to end child poverty once and for all. The enhanced child tax credit is a proven and popular policy that can make a difference for millions of children and families. Congress should act now to make it permanent and ensure that every child in America has a fair chance to thrive.

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