Number Of U.S. Children In Poverty Rises After Child Tax Credit Ends

According to new research released Thursday by the Center on Poverty and Social Policy at Columbia University, the number of children in poverty spiked dramatically in January after the expiration of President Joe Biden‘s expanded child tax credit at the end of last year.

The number of American kids in poverty went up by 3.7 million last month, partly due to the expiration of monthly child tax credit payments. That’s a 41 percent increase and the highest rate since the end of 2020.

Child poverty rates fell from roughly 17 percent in February 2021, before the credit was approved as part of the stimulus plan in March, to roughly 12 percent by the end of the year. Poverty rates for Black and Latino children fell sharply as well. The Columbia researchers previously found the Child Tax Credit was keeping 3.7 million children from poverty and reducing monthly child poverty rates by 30 percent.

As part of the American Rescue Plan, Congress approved an expansion of the Child Tax Credit from July to December. At an annual cost of $120 billion, the measure extended payments for children under 6 to almost all families while phasing out benefits for the wealthier. More than 61 million children in about 36 million households received the payment in December, amid a 24% drop in rates of hunger.

But the combination of Republicans and dissenting Democratic Sen. Joe Manchin of West Virginia has prevented any extension of the program, as they block the Biden Administration’s $2 trillion social and environmental budget. Manchin has insisted that the benefit discourages parents from working.

After Manchin and other Democrats met with White House Chief of Staff Ron Klain on Thursday, Manchin said there is no chance of reviving a budget with the expanded child benefit. Sen. Mitt Romney of Utah has begun preliminary conversations on a smaller version of the credit, but there is little sign of a resolution so far.

The White House said in a statement: “We can all agree that the extended Child Tax Credit is a historic tax cut for middle class, families and the key driver behind the American Rescue Plan putting us on the path to cut child poverty in half.”

The White House statement also urged families to fill out their taxes this year to ensure they receive the full benefit from the program. Half of the expanded Child Tax Credit will be paid out to Americans when they file their taxes this year, with the other half having been disbursed in monthly increments over the last six months of 2021.

“Today’s report should shake Washington to its core. … This is not a moment for staking out political positions. Congress needs to compromise on a targeted, monthly child tax credit that will reverse these grievous losses,” said Paolo Mastrangelo, head of policy and government affairs for Humanity Forward, which is pushing for the revival of the credit. “Any extension, even one that is much more targeted in size and scope, will help reduce the tragic number of families entering poverty.”

 

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