Millions of US families could be pushed back into poverty without child tax credit extension

Critical lifeline is set to expire after slashing poverty and food insecurity for millions of families with children

Without urgent congressional action, the last federal programme providing a critical lifeline for millions of families that is on track to dramatically reduce childhood poverty across the US will expire at the end of the year.

Final payments through an expanded Child Tax Credit programme will be distributed on 15 December. If Congress doesn’t pass the Build Back Better Act, central to President Joe Biden’s domestic agenda, those larger monthly payments will end, and that relief will revert to a much-smaller pre-pandemic programme.

With passage of the American Rescue Plan earlier this year, the credit was increased from $2,000 to as much as $3,600 for families with children under age 6 and $3,000 for children between ages the ages of 6 and 17 – and the payments became monthly, giving families the option to receive a regular relief rather than an annual lump sum.

It also became fully refundable, allowing lower-income families to benefit from relief even if they did not earn enough to owe taxes.

Within six months, those payments have already sharply cut child poverty rates and reduced food insecurity.

In October, the most recent month of reviewable data, child poverty was slashed by as much as 28 per cent, marking a nearly 5 per cent reduction, keeping 3.6 million children out of poverty and reaching more than 61 million children overall, according to Columbia University’s Center on Poverty and Social Policy.

If those benefits were to continue permanently, child poverty would be reduced by as much as 40 per cent within a typical year, according to the Urban Institute.

To keep the programme running, congressional lawmakers would need to pass the one-year extension inside the Build Back Better Act, which faces stiff hurdles in the US Senate.

For payments to continue uninterrupted into next year, the bill needs to pass the upper chamber by 28 December, according to the IRS.

Otherwise, the third year of the public health crisis will be the first without major financial relief from the federal government for most Americans, who could lose thousands of dollars in aid each month.

Currently, for example, a mother with two children who works full-time at the federal minimum wage is currently receiving $6,600 in relief. Without the extended programme, that credit would fall from $4,800 to $1,800, according to the Center on Budget and Policy Priorities (CBPP).

Congress has a “historic opportunity to build on the most significant effort to cut child poverty seen in generations,” according to the Center for American Progress, a progress policy organisation.

Within the first month of the programme, roughly 47 per cent of beneficiaries reported spending payments on food, and 17 per cent with children under age 5 spent payments on childcare, the US Census Bureau reported.

But the overwhelming majority of families with annual incomes under $35,000 spent some or all of their new monthly payments on basic necessities, including housing, food, clothing, utilities and education, according to the CBPP.

With that first round of payments, food insecurity in families with children dropped by as much as 24 per cent, according to the US Department of Treasury.

If an extension fails to pass Congress, nearly 10 million children could fall back into poverty or deeper into poverty, according to the CBPP.

The organisation also estimates that poverty rates will climb among families of colour; poverty rates among Black families could rise to 22 per cent poverty rate, compared to 13 per cent with the enhanced credit, and 21 per cent among Latino families compared to 12 per cent. Poverty rates among American Indian and Alaska Native families could rise to 18 per cent, compared to 10 per cent under the relief programme.

“In short, if Build Back Better isn’t enacted, the Child Tax Credit would revert to providing the least help to the children who need it most – and some 27 million children would once again get a partial credit or none at all because their families’ incomes are too low,” the organisation reported.

The Democratically controlled House of Representatives has already passed the Build Back Better bill, and Senate Majority Leader Chuck Schumer has said he wants a vote on the measure before Christmas.

But Senate Democrats are at least one vote shy in the evenly divided chamber to secure its passage, after negotiating a lower threshold needed to pass most legislation from 60 to 50 votes, with a tie-breaking vote from Vice President Kamala Harris.

Senate Republicans universally oppose the plan. So does Democrat Joe Manchin.

The president has met with Senator Manchin, who is at an impasse with Democrats and the White House over his ongoing concerns of rising debt and inflation risks by approving $1.75 trillion legislation to expand federal safety net programmes.

White House press secretary Jen Psaki told reporters on 14 December that “our intention and our hope is to get Build Back Better done.”

Asked whether the administration would peel off elements of the legislation, such as the child tax credit programme, for a stand-alone bill, she reiterated that the administration’s focus is in securing the comprehensive bill’s passage.

House Speaker Nancy Pelosi has also dismissed calls for stand-alone bills.

“I don’t want to let anybody off the hook on [Build Back Better], to say, ‘well, we covered that one thing’,” she said on 15 December. “I think that is really important leverage.”

The potential end of that extended relief follows the expiration of pandemic-related federal unemployment aid, which came to an abrupt end on Labor Day. A key component of federal assistance included a weekly supplement to state jobless benefits, initially adding $600 a week from April through July 2020, then, after it was revived in December, dropping to $300 a week.