Child Tax Credits and Stipends

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    From Cradle to Grave, Democrats Move to Expand Social Safety Net

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    The $3.5 trillion social policy bill that lawmakers begin drafting this week would touch virtually every American, at every point in life, from conception to old age.WASHINGTON — When congressional committees meet this week to begin formally drafting Democrats’ ambitious social policy plan, they will be undertaking the most significant expansion of the nation’s safety net since the war on poverty in the 1960s, devising legislation that would touch virtually every American’s life, from conception to aged infirmity.Passage of the bill, which could spend as much as $3.5 trillion over the next decade, is anything but certain. President Biden, who has staked much of his domestic legacy on the measure’s enactment, will need the vote of every single Democrat in the Senate, and virtually every one in the House, to secure it. And with two Democratic senators, Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, saying they would not accept such a costly plan, it will challenge Democratic unity like nothing has since the Affordable Care Act.That is largely because the proposed legislation would be so transformative — a cradle-to-grave reweaving of a social safety net frayed by decades of expanding income inequality, stagnating wealth and depleted governmental resources, capped by the worst public health crisis in a century.The pandemic loosened the reins on federal spending, prompting members of both parties to support showering the economy with aid. It also uncorked decades-old policy desires — like expanding Medicare coverage or paid family and medical leave — that Democrats contend have proved to be necessities as the country has lived through the coronavirus crisis.“Polls have shown for a very long time that these issues to support American families were important, and were popular, but all of a sudden they became not a ‘nice to have’ but a ‘must have,’” said Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers who has been developing such policies for decades.Democrats say they will finance their spending with proposed tax increases on corporations — which has already incited a multifaceted, big-budget effort by business groups working to kill the idea — and by possibly taxing wealth in ways that the United States has never tried before.“We’re talking about free or affordable child care where no one pays more than 7 percent of their income; we’re talking about universal pre-K programs with two years of formal instruction; we’re talking about two years of postsecondary education,” said Representative Jamaal Bowman of New York, a former teacher and principal who is vice chairman of the House Education and Labor Committee. “This is how you build a strong nation.”To Republicans, who are readying a counteroffensive, the Democratic plans are nothing short of socialism. They say they are concerned that the plan is financially unsustainable and would undermine economic growth, by rendering Americans too dependent on the government for their basic needs.“What are Democrats trying to do to this country?” Representative Bruce Westerman, Republican of Arkansas, asked on Thursday, as the House Natural Resources Committee began drafting its portion of the sprawling bill.Senator Joe Manchin III of West Virginia said he could not support the bill at its current size. Stefani Reynolds for The New York TimesTo grasp the intended measure’s scope, consider a life, from conception to death. Democrats intend to fund paid family and medical leave to allow a parent to take some time off during pregnancy and after a child’s birth.When that parent is ready to return to work, expanded funding for child care would kick in to help cover day care costs. When that child turns 3, another part of the bill, universal prekindergarten, would ensure public education can begin at an earlier age, regardless of where that child lives.Most families with children would continue to receive federal income supplements each month in the form of an expanded child tax credit that was created temporarily by Mr. Biden’s pandemic-rescue law and would be extended by the new social policy bill. School nutrition programs, expanded on an emergency basis during the pandemic, would continue to offer more children free and reduced-price meals long after the coronavirus retreats.And at high school graduation, most students would be guaranteed two years of higher education through expanded federal financial aid, geared toward community colleges.Even after that, income supplements and generous work force training programs — including specific efforts to train home health and elder-care workers — would keep the government present in many adult lives. In old age, people would be helped by tax credits to offset the cost of elder care and by an expansion of Medicare to cover dental, hearing and vision services.“Many of us feel that this is the biggest opportunity we will have in our careers to do something deeply structural and transformational to our economy,” Representative Donald S. Beyer Jr., Democrat of Virginia, said, “and we should not miss it.”To critics, the legislation represents a fundamental upending of American-style governance and a shift toward social democracy. With it, they worry, would come European-style endemic unemployment and depressed economic dynamism.“There’s always been difference of opinion on the role of government in people’s lives, and the United States has long taken a different approach than Western Europe,” said N. Gregory Mankiw, a Harvard economist who was chairman of President George W. Bush’s Council of Economic Advisers. “This is clearly designed to take a big step toward the Western European model.”Defenders shrug off such concerns. Representative Robert C. Scott of Virginia, chairman of the House Education and Labor Committee, said the legislation would promote economic growth, with child care subsidies that would get parents back into the work force, education spending to more equitably prepare all Americans to work, and job training to improve labor mobility.“We are making the American economy more dynamic and more globally competitive,” he said.Besides, in the longstanding struggle to balance economic growth against equality and equity, Democrats are ready to shift toward the latter.“The route we’ve taken has led to the concentration of wealth in the hands of a very few people while the rest have just struggled to survive,” Mr. Bowman said. “It’s time to try something else.”“This is how you build a strong nation,” said Representative Jamaal Bowman, a former teacher and principal who is vice chairman of the House Education and Labor Committee.Desiree Rios for The New York TimesIn a mechanical sense, the legislation is not as much of a sea change as the creation of Medicare and Medicaid in the 1960s, or Social Security in the 1930s. Even the Affordable Care Act of 2010 created an entirely new government infrastructure, a federally operated or regulated exchange where Americans could buy private health insurance that has to conform to government strictures on coverage and cost, noted Michael R. Strain, an economist at the conservative American Enterprise Institute.In contrast, the new legislation would largely augment existing programs. Childcare support would come through the Community Development Block Grant to states, cities and counties. Universal pre-K would be secured through block grants and expanded funding to Head Start. Two years of higher education are supposed to become accessible through more generous Pell grants and other existing financial aid programsBut if it passes, Mr. Strain said the legislation could fundamentally change the relationship between the state and its citizens: “Its ambition is in its size.”Most Americans traditionally have seen the federal government’s involvement in their finances once a year, at tax time, when they claim a child credit, get a write-off for the truck they may have bought for their business, or receive a check for an earned income credit, to name a few.That would change profoundly if the social policy bill were enacted. The expanded child tax credit has begun to provide monthly checks of up to $300 per child to millions of families, but is slated to expire in 2022. Its extension for as long as a decade could make it a fixture of life that would be very difficult for future Congresses to take away. The same goes for the Child and Dependent Care Credit, which now offers up to $8,000 in child care expenses but also expires in a year.And the federal government, not private employers, would pay most of the salaries of people qualifying for family and medical leave.“If we get this passed, a decade from now, people are going to see many more touch points of government supporting them and their families,” Ms. Boushey said.One major difference between the social economy that Mr. Biden and congressional Democrats hope to create and the welfare state in Europe is how it would be paid for. Most European countries ask their citizens broadly to fund their social welfare programs, largely through a value added tax, a sales tax levied at each stage of a consumer good’s production.At the president’s insistence, the House and Senate tax-writing committees are to finance the bill’s spending with taxes on corporations and individuals with incomes over $400,000 a year.To that end, the Senate Finance Committee is considering groundbreaking ways to tax wealth, including changing how estates are taxed so that heirs must pay more taxes on inherited assets. The committee is also looking at taxing the accumulated wealth of billionaires — things like homes, boats, stocks and other assets, regardless of whether they are sold — a new frontier of tax policy that would be difficult to achieve. Senator Ron Wyden of Oregon, the Finance Committee chairman, said such measures are the only way to ensure that the superrich must pay their fair share of taxes each year. “I’m going to bring the caucus into that discussion, but I believe billionaires ought to pay taxes every year, just like nurses and firefighters do” out of each paycheck, Mr. Wyden said. More

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    Covid Aid Programs Spur Record Drop in Poverty

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    WASHINGTON — The huge increase in government aid prompted by the coronavirus pandemic will cut poverty nearly in half this year from prepandemic levels and push the share of Americans in poverty to the lowest level on record, according to the most comprehensive analysis yet of a vast but temporary expansion of the safety net.The number of poor Americans is expected to fall by nearly 20 million from 2018 levels, a decline of almost 45 percent. The country has never cut poverty so much in such a short period of time, and the development is especially notable since it defies economic headwinds — the economy has nearly seven million fewer jobs than it did before the pandemic.The extraordinary reduction in poverty has come at extraordinary cost, with annual spending on major programs projected to rise fourfold to more than $1 trillion. Yet without further expensive new measures, millions of families may find the escape from poverty brief. The three programs that cut poverty most — stimulus checks, increased food stamps and expanded unemployment insurance — have ended or are scheduled to soon revert to their prepandemic size.While poverty has fallen most among children, its retreat is remarkably broad: It has dropped among Americans who are white, Black, Latino and Asian, and among Americans of every age group and residents of every state.Poverty Rates Have Fallen for Every Demographic Group More

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    Child Tax Credit Monthly Payments to Begin Soon

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    The Biden administration will send up to $300 per child a month to most American families thanks to a temporary increase in the child tax credit that advocates hope to extend.WASHINGTON — If all goes as planned, the Treasury Department will begin making a series of monthly payments in coming days to families with children, setting a milestone in social policy and intensifying a debate over whether to make the subsidies a permanent part of the American safety net.With all but the most affluent families eligible to receive up to $300 a month per child, the United States will join many other rich countries that provide a guaranteed income for children, a goal that has long animated progressives. Experts estimate the payments will cut child poverty by nearly half, an achievement with no precedent.But the program, created as part of the stimulus bill that Democrats passed over unified Republican opposition in March, expires in a year, and the rollout could help or hinder President Biden’s pledge to extend it.Immediate challenges loom. The government is uncertain how to get the payments to millions of hard-to-reach families, a problem that could undermine its poverty-fighting goals. Opponents of the effort will be watching for delivery glitches, examples of waste or signs that the money erodes the desire of some parents to work.While the government has increased many aid programs during the coronavirus pandemic, supporters say the payments from an expanded Child Tax Credit, at a one-year cost of about $105 billion, are unique in their potential to stabilize both poor and middle-class families.“It’s the most transformative policy coming out of Washington since the days of F.D.R.,” said Senator Cory Booker, Democrat of New Jersey. “America is dramatically behind its industrial peers in investing in our children. We have some of the highest child poverty rates, but even families that are not poor are struggling, as the cost of raising children goes higher and higher.”Among America’s 74 million children, nearly nine in 10 will qualify for the new monthly payments — up to $250 a child, or $300 for those under six — which are scheduled to start on Thursday. Those payments, most of which will be sent to bank accounts through direct deposit, will total half of the year’s subsidy, with the rest to come as a tax refund next year.Mr. Biden has proposed a four-year extension in a broader package he hopes to pass this fall, and congressional Democrats have vowed to make the program permanent. Like much of Mr. Biden’s agenda, the program’s fate may depend on whether Democrats can unite around the bigger package and advance it through the evenly divided Senate.The unconditional payments — what critics call “welfare” — break with a quarter century of policy. Since President Bill Clinton signed a 1996 bill to “end welfare,” aid has gone almost entirely to parents who work. Senator Marco Rubio, Republican of Florida, recently wrote that the new payments, with “no work required,” would resurrect a “failed welfare system,” and provide “free money” for criminals and addicts.Senator Marco Rubio, Republican of Florida, is among those who argue the new payments will erode the desire of some parents to work. Erin Scott for The New York TimesBut compared to past aid debates, opposition has so far been muted. A few conservatives support children’s subsidies, which might boost falling birthrates and allow more parents to raise children full-time. Senator Mitt Romney, Republican of Utah, has proposed a larger child benefit, though he would finance it by cutting other programs.With Congress requiring payments to start just four months after the bill’s passage, the administration has scrambled to spread the word and assemble payment rosters.Families that filed recent tax returns or received stimulus checks should get paid automatically. (Single parents with incomes up to $112,500 and married couples with incomes up to $150,000 are eligible for the full benefit.) But analysts say four to eight million low-income children may be missing from the lists, and drives are underway to get their parents to register online.“Wherever you run into people — perfect strangers — just go on up and introduce yourself and tell them about the Child Tax Credit,” Vice President Kamala Harris said last month on what the White House called “Child Tax Credit Awareness Day.”Among the needy, the program is eliciting a mixture of excitement, confusion and disbelief. Fresh EBT, a phone app for people who receive food stamps, found that 90 percent of its users knew of the benefit, but few understand how it works.“Half say, ‘I’m really, really ready to get it,’’’ said Stacy Taylor, the head of policy and partnerships at Propel, the app’s creator. “The others are a mix of ‘I’m worried I haven’t taken the right steps’ or ‘I’m not sure I really believe it’s true.’”Few places evoke need more than Lake Providence, La., a hamlet along the Mississippi River where roughly three-quarters of the children are poor, including those of Tammy Wilson, 50, a jobless nursing aide.The $750 a month she should receive for three children will more than double a monthly income that consists only of food stamps and leaves her relying on a boyfriend. “I think it’s a great idea,” she said. “There’s no jobs here.”While the money will help with rent, Ms. Wilson said, the biggest benefit would be the ability to send her children to activities like camps and school trips.“Kids get to bullying, talking down on them — saying ‘Oh your mama don’t have money,’” she said. “They feel like it’s their fault.”Families receiving groceries at a food pantry in Queens. Experts estimate that the monthly payments will cut child poverty by nearly half.Shannon Stapleton/ReutersBut in West Monroe, a 90-minute drive away, Levi Sullivan, another low-income parent, described the program as wasteful and counterproductive. Mr. Sullivan, a pipeline worker, has been jobless for more than a year but argued the payments would increase the national debt and reward indolence.“I’m a Christian believer — I rely on God more than I rely on the government,” he said.With four children, Mr. Sullivan, who has gotten by on unemployment insurance, food stamps, and odd jobs, could collect $1,150 a month, but he is so skeptical of the program he went online to defer the payments and collect a lump sum next year. Otherwise, he fears that if he finds work he may have to pay the money back.“Government assistance is a form of slavery,” he said. “Some people do need it, but then again, there’s some people that all they’re doing is living off the system.”Progressives have sought a children’s income floor for at least a century. “No one can doubt that an adequate allowance should be granted for a mother who has children to care for,” wrote the economist and future Illinois senator Paul H. Douglas in 1925 as children’s benefits spread in Europe.Four decades later, the Ford Foundation sponsored a conference to promote the idea in the United States. The meeting’s organizer, Eveline M. Burns, lamented the “shocking extent of childhood poverty” but acknowledged strong political opposition to the payments.While hostility to unconditional cash aid peaked in the 1990s, multiple forces revived interest in children’s subsidies. Brain science showed the lasting impact of the formative years. Stagnant incomes brought worries about child-rearing costs into the middle class. More recently, racial protests have encouraged a broader look at social inequity.An existing program, the Child Tax Credit, did offer a children’s subsidy of up to $2,000 a child. But since it was only available to families with sufficient earnings, the poorest third of children failed to fully qualify. By removing that earnings requirement and raising the amount, Democrats temporarily converted a tax break into a children’s income guarantee.Analysts at Columbia University’s Center on Poverty and Social Policy say the new benefits will cut child poverty by 45 percent, a reduction about four times greater than ever achieved in a single year.“Even if it only happens for a year, that’s a big deal,” said Irwin Garfinkel, a professor at the Columbia School of Social Work. “If it becomes permanent, it’s of equal importance to the Social Security Act — it’s that big.”Opponents warn that by aiding families that do not work, the policy reverses decades of success. Child poverty had fallen to a record low before the pandemic (about 12 percent in 2019), a drop of more than a third since 1990s.“I’m surprised there hasn’t been more pushback from other conservatives,” said Scott Winship of the conservative American Enterprise Institute, who argues that unconditional aid can cause the poor long-term harm by reducing the incentive to work and marry. Research suggests that framing the payments as a benefit for children leads to parents spending it on things like diapers and school supplies rather than on themselves.Jenn Ackerman for The New York TimesGetting the money to all eligible children may prove harder than it sounds. Some American children live with undocumented parents afraid to seek the aid. Others may live with relatives in unstable or shifting care.Dozens of groups are trying to promote the program, including the Children’s Defense Fund, United Way and Common Sense Media, but many eligible families have already failed to collect stimulus checks, underscoring how difficult they are to reach. The legislation contained little money that could be used for outreach, leaving many groups trying to raise private donations to support their efforts.The Rev. Starsky Wilson, president of the Children’s Defense Fund, praised the Biden administration for creating an online enrollment portal but warned, “we really need to be knocking on doors.”Gene Sperling, the White House official overseeing the payments, said that even with some families hard to reach, deep cuts in poverty were assured.“While we want to do everything possible to reach any missing children, the most dramatic impact on child poverty will happen automatically,” because the program will reach about 26 million children whose families are known but earned too little to fully benefit from the previous credit. “That will be huge.”By delivering monthly payments, the program seeks to address the income swings that poor families frequently suffer. One unknown is how families will spend the money, with critics predicting waste and supporters saying parents know their children’s needs.When Fresh EBT asked users about their spending plans, the answers differed from those about the stimulus checks. “We saw more responses specifically related to kids — school clothes, school supplies, a toddler bed,” Ms. Taylor said. “It tells me the framing of the benefit matters.”There is evidence for that theory. When Britain renamed its “family allowance” a “child benefit” in the 1970s and paid mothers instead of fathers, families spent less on tobacco and men’s clothing and more on children’s clothing, pocket money, and toys. “Calling something a child benefit frames the way families spend the money,” said Jane Waldfogel, a Columbia professor who studied the British program.While the payments will greatly reduce poverty, most beneficiaries are not poor. Jennifer Werner and her husband had a household income of about $75,000 before she quit her job as a property manager in Las Vegas two years ago to care for her first child. Since then, she has used savings to extend her time as a stay-at-home mother.Ms. Werner, 45, supports the one-year benefit but wants to see the results before deciding whether it should last. “When you have a child you realize they’re expensive — diapers, wipes, extra food,” she said. But she added “I don’t know where all that money’s coming from.”She hopes the country can be fair both to taxpayers and to children whose parents work too hard to offer sufficient attention. “If the benefit helps parents nurture their kids, that would be a wonderful thing,” she said. More