Skip to content Skip to footer

Child Poverty Increased by 41 Percent After Monthly Tax Credits Expired

More than one in six children now live in poverty, versus one in eight children in December.

In the San Joaquin Valley, Elizabeth Elias and Jose Espinoza with their children, Gerardo, 6, and Josue, 1, at their home in Porterville, California, on March 18, 2021.

New data shows that the ending of the popular Child Tax Credit payment program due to objections from conservative Democrat Sen. Joe Manchin (West Virginia) has resulted in a massive increase in the childhood poverty rate throughout the U.S.

The program allotted payments to families with children, with families receiving payments of $300 a month for each child age 6 and under, and payments of $250 a month for each child over the age of 6. The payments began in July, and lasted through December, affecting around 61 million children in total.

Reviews of the payments showed that they had immediate and lasting impacts throughout the program’s six-month run. In the first month of payments, around 3 million children were kept out of poverty due to increases in monthly family incomes; by the last month, the number of children being kept out of poverty by the program went up to 3.7 million.

The program also had a remarkable success rate in terms of payments going toward necessities that families had previously struggled to afford. A study by the U.S. Census Bureau found that 91 percent of low-income families spent the monthly benefit on basic needs.

But new research shows the predictable outcome of ending the payment program — that millions of children across the U.S. have slipped back into poverty.

According to a research study from the Center on Poverty and Social Policy at Columbia University, the child poverty rate in the U.S. increased by 41 percent from December, when the program ended, to January of this year.

In December, the child poverty rate was 12 percent. In January, it climbed up to 17 percent — meaning that more than one in every six kids in the country are now living in poverty, versus close to one in eight last month.

The rate shows that 3.7 million children are now living in poverty that weren’t in December — the exact number that previous studies, cited above, showed were lifted out of poverty due to the child tax credit payments.

Most Democrats sought to make the tax credit payments permanent, or at the very least, to extend them beyond their December expiration date. But those efforts were dashed after Manchin derided the way the payments were being spent, parroting unverifiable claims that parents were using the payments to buy drugs in spite of evidence showing the payments were being used otherwise.

Manchin said that he wanted payments modified to exclude higher-income families, but his proposal could have lowered the threshold to families earning under $60,000, which is below the living wage for a family of four in nearly every state. Manchin also wanted to institute work requirements for people to receive the payments, a standard that has produced negative outcomes in other social safety net programs.

Critics of Manchin’s proposals said that they would be detrimental to the overall goal of helping children.

“If the point is to lift children out of poverty, then my personal opinion is that we should be designing the credit to do that as effectively as possible, rather than designing it in a way that claims it’s for the purpose of reducing poverty, but ends up being an incentive program for the adults,” said Elena Prager, an associate professor of strategy at Northwestern University’s Kellogg School of Management.

“Means testing doesn’t actually save money,” Rep. Andy Levin (D-Michigan) said in October. “It only makes programs harder to administer, forces people to jump through hoops to get needed benefits and continues cycles of poverty.”

Progressives in Congress cited the report on child poverty that was released this week as reason to reinstate the child tax credit payments.

“How did this happen?” wrote Sen. Bernie Sanders (I-Vermont) on Twitter, referencing the drastic rise in childhood poverty rates. “50 Republicans and 1 corporate Democrat allowed the $300 a month Child Tax Credit to expire. That is morally obscene.”

Rep. Alexandria Ocasio-Cortez (D-New York) also suggested that Manchin was to blame for the rise in child poverty.

“One US Senator ‘heard stories’ about people allegedly using the Child Tax Credit ‘for drugs’ without any evidence or data to back it up,” she said. “He then used that as justification to nuke the entire national program, causing millions of kids to fall into poverty in weeks. Horrifying.”

A critical message, before you scroll away

You may not know that Truthout’s journalism is funded overwhelmingly by individual supporters. Readers just like you ensure that unique stories like the one above make it to print – all from an uncompromised, independent perspective.

At this very moment, we’re conducting a fundraiser with a goal to raise $13,000. So, if you’ve found value in what you read today, please consider a tax-deductible donation in any size to ensure this work continues. We thank you kindly for your support.