Towards the End of Child Poverty

If you’re living in poverty in America, it almost certainly isn’t your fault. Instead, argues our latest guest Mark Rank, you’re a victim of a system that doesn’t have enough opportunities to go around. 

“What we’re doing in this country is basically playing a large-scale version of musical chairs,” he told Mila. “And the question is whether we want to focus on who loses out at the game or why the game produces losers in the first place.”

Among the worst casualties of America’s unfortunate version of musical chairs are our children. An estimated 13 million children live in poverty in the US, a massive figure equating to roughly every sixth American child. If that number seems insane, it’s because it is. The US—the wealthiest country in the history of life on Earth—consistently reports one of the highest child poverty rates in the developed world, and COVID exacerbated this already tragic issue. 

As Rank points out in his interview, American poverty doesn’t just impact an unfortunate few—we all end up paying for it. 

“The overall economic cost of childhood poverty on an annual basis was around $1 trillion,” he said. “We’re spending our money on the back end of the problem rather than the front end of the problem. So, we also estimated that for every dollar we would spend reducing childhood poverty, we would save somewhere between $7 and $12 down the road in those other costs.”

Based on these shocking figures, we have both a moral and economic imperative to eradicate child poverty—and the Biden Administration understands that. 

The American Rescue Plan, Biden’s promise-fulfilling relief package, builds on something we’ve known here at Future Hindsight for years: giving money directly to citizens in the best way to pull them out of poverty. 

The Plan is ambitious and poised to reduce childhood poverty in America by half. This legislation allocates $800 million to combatting childhood poverty, meaning that 88% of households with children will start receiving checks when the money hose turns on in mid-July. 

The main benefit to parents comes in the form of an advanced tax credit, currently known as the Child Tax Credit (CTC). It provides eligible parents and guardians with up to $2,000 in the form of a tax rebate, provided they meet certain requirements, like a taxable income of $2,500 or more. Stringent regulations meant that some families were too poor to qualify, while many received only a fraction of the maximum. The Plan’s expansion of the CTC removes many of the eligibility requirements and boosts the payout to $3,600 per child for children up to age six, and $3,000 for children ages seven and up. In practice, this expansion creates a nearly universal childcare allowance, impacting an estimated 23 million children it failed to cover in previous iterations, including some of the poorest children in the country and millions of middle class kids. The American Rescue Plan also pays out that tax credit to families monthly, meaning most households with children in America will start to receive about $300 per month, per child—a dramatic and much needed update. 

This Plan is poised to pull more than 5 million children out of poverty and address longstanding racial inequalities within poverty. The Plan will reduce poverty among African-Americans by 52%–a truly staggering number. Poverty rates among Hispanics are projected to fall by 45% and among Whites by 39%. 

According to Sen. Sherrod Brown, the expanded tax credits in the American Rescue Plan are “the biggest thing Congress has done since the New Deal.” That may sound like political hyperbole, but this time it’s true. We are poised to truly better our nation in a way not seen in decades. 

The American Rescue plan has one fatal flaw, however. It expires in a year. If we are to commit to eradicating poverty in America, it needs to stay. President Biden has already expressed support for its permanence, and it’s critical he succeeds in enshrining it—for all Americans. 

WORKS CITED:

“ What the American Rescue Plan Means for Children Experiencing Homelessness .” Poverty Solutions at the University of Michigan, poverty.umich.edu/2021/03/15/what-the-american-rescue-plan-means-for-children-experiencing-homelessness/. 

“American Rescue Plan.” The White House, The United States Government, 4 May 2021, www.whitehouse.gov/american-rescue-plan/. 

“Biden Wants to Make Child Tax Credit Permanent, White House Says.” Reuters, Thomson Reuters, 16 Mar. 2021, www.reuters.com/article/us-usa-biden-taxes-idUSKBN2B8309. 

Haider, Areeba. “The Basic Facts About Children in Poverty.” Center for American Progress, www.americanprogress.org/issues/poverty/reports/2021/01/12/494506/basic-facts-children-poverty/. 

“Inequality – Poverty Rate – OECD Data.” TheOECD, data.oecd.org/inequality/poverty-rate.htm. 

“IRS, Treasury Announce Families of 88 Percent of Children in the U.S. to Automatically Receive Monthly Payment of Refundable Child Tax Credit.” Internal Revenue Service, www.irs.gov/newsroom/irs-treasury-announce-families-of-88-percent-of-children-in-the-us-to-automatically-receive-monthly-payment-of-refundable-child-tax-credit. 

Mark Wolfe and Bob Lehrman, opinion contributors. “American Rescue Plan: Ending Child Poverty – Let’s Make It Permanent.” TheHill, The Hill, 26 Mar. 2021, thehill.com/opinion/finance/544976-american-rescue-plan-ending-child-poverty-lets-make-it-permanent?rl=1. 

“Michael Faye.” Future Hindsight, www.futurehindsight.com/episode/michael-faye/. 

“Poverty in America and the Childhood Equity Gap.” Save the Children, www.savethechildren.org/us/charity-stories/poverty-in-america. 

Tankersley, Jim, and Jason Deparle. “Two Decades After the ‘End of Welfare,’ Democrats Are Changing Direction.” The New York Times, The New York Times, 13 Mar. 2021, www.nytimes.com/2021/03/13/business/economy/child-poverty-stimulus.html. 

Join Our Community

Discover Inspiring Citizen Changemakers
It's free, simple and secure