Child Tax Credit
Childhood Poverty
Header Photo by MIKE STOLL on Unsplash
On July 13, Senator Michael Bennet (D-CO) and fellow policy makers in Congress organized public hearings to examine the benefits of the Child Tax Credit (CTC) over the 25 years of its existence.
In 2021, he and his colleagues had passed legislation which temporarily expanded the benefits of of the CTC. This was the most generous expansion since the first CTC was adopted in 1977. The expanded CTC reduced the rates of child poverty by nearly half — a stunning accomplishment.
After one of the most influential social policies adopted in the post-World War II period, Congress ended the expanded program in 2022.
Opponents of the expanded CTC cited the cost and made unfounded claims about potential fallout — that the funds would be misspent or recipients would stop looking for work.
Sen. Bennet and other advocates, like Senator Sherrod Brown (D-OH), want to reintroduce the expanded program and make clear how extraordinary the benefits were for almost all poor children.
Poor children do worse in school, are less healthy, and more prone to crime as they grow older. They eventually earn less when they enter the work force, and they are less productive, contributing less income to the overall economy.
The committee addressed four main points in their hearing:
Cash matters
Those in favor of a cash allowance per month — without conditions — argue that cash benefits help parents create the most constructive environment for their children’s progress.
Since the Reagan administration, conservatives have claimed cash welfare is destructive. They instead make the poor dependent on welfare rather than helping them be self-sufficient.
Parents can be trusted to spend the benefits not principally on themselves but on their children’s needs. Despite the common rhetoric used by opponents of cash payments, parents by and large do use the money to buy the things that their individual families need.
Sen. Bennet talks about one family in his home state who bought their child a bicycle with a cash payout — so that their child could get home after school while the parents stayed at work longer.
We must trust those who receive these payouts and treat them with dignity, rather than making negative assumptions about their lifestyle and habits. This trust is key to the program’s success.
According to opponents of these plans, work requirements are necessary to incentivize the poor to work. President Clinton even added work requirements to his welfare reform proposals in the 1990s.
But two experts who testified on July 13 found no evidence that the expanded CTC discouraged work. Nevertheless, opponents testifying insisted work requirements had to be added.
Sen. Bennet noted the large major of studies of cash payment systems found little discouragement to work. In fact, those receiving these benefits actually returned to the workforce at a higher rate compared to those excluded from these types of programs.
Investing $1 billion in young children would add up to $10 billion to the economy over time.
The total cost of the expanded CTC is an estimated $90 billion to $100 billion. Previously, Senator Joe Manchin (D-WV) voted against renewing the expanded CTC partly on the grounds that cash allowances entrusted to poor parents will be wasted and not constructively spent on children. He had cited little or no evidence.
Such claims were why Senator Bennet is determined to have a pubic conference with experts, both Democrats and Republicans, to outline the issues more objectively.
We posted the link to the full Senate Finance Committee hearing as Episode 12 of our podcast.
We also hosted Sen. Bennet on Episode 13 of our podcast, where he spoke eloquently about his passion for a program like this.
