August 23, 2022
On August 16th, President Biden signed the Inflation Reduction Act of 2022—a major piece of legislation that will address the climate change crisis, reduce health care costs, and make our tax system fairer. While these are important measures that will help many families in the United States, the bill falls short of what is needed to help those with the fewest resources. Notably, the bill did not include the expanded Child Tax Credit (CTC)—which successfully reduced monthly child poverty by 30% when it was in effect.
Enacted as part of the American Rescue Plan, the expanded CTC provided monthly payments from July to December 2021 to families with children. The CTC benefit was increased from $2000 per child to $3,600 per child aged 5 and under and $3,000 per child aged 6-17. The American Rescue Plan also closed a hole that had kept one-third of children and half of all Black and Hispanic children from receiving the CTC because their families earned too little to be eligible.
Families who received the CTC used the money to pay for necessities, such as food, rent, and clothing. Families reported increased well-being, reduced stress, and more time to spend with their families. Yet, politicians allowed the expanded CTC to expire in 2022 and have, once again, failed to extend it. In many ways, this is not surprising.
Much of what made the expanded Child Tax Credit successful—automatic, no-strings-attached payments that disproportionately benefited Black and Latino people and those with the fewest resources—left it vulnerable.
At behavioral science non-profit ideas42, we’ve found that people hold a host of narratives about poverty—stories we have gained from the media, our schools, our families, and our communities—about why people are poor. People are more likely than not to believe incorrectly that there is a lot of fraud among people who receive public assistance and they are roughly split on whether public assistance programs “make people lazy.” Although these beliefs are demonstrably false, they nevertheless continue to hold sway, particularly when it comes to policymaking. Programs that benefit people living in scarcity and people of color have a hard time garnering support. And people often want to add unnecessary hurdles that make the process of getting these benefits even harder.
Senator Manchin, who had outsized power in deciding what was included in the Inflation Reduction Act, tends to hold fast to these false narratives. Manchin refused to support the expanded Child Tax Credit, telling CNN last year, “There’s no work requirements whatsoever. There’s no education requirements whatsoever for better skill sets. Don‘t you think if we’re going to help the children that the people should make some effort?” Despite all evidence to the contrary, he also claimed that parents would use the CTC to buy drugs. Senator Manchin is not alone among politicians to adhere to these false ideas. Politicians from Ronald Reagan to Bill Clinton to Donald Trump have expressed similar attitudes to justify policymaking and make it hard to access benefits.
As long as politicians let these false narratives about poverty drive their policy decisions, they will continue to make the lives of people living in scarcity harder.
The Child Tax Credit reduced child poverty, increased labor force participation, and would be a net gain for the economy. Yet, despite the evidence, Senator Manchin and others refused to extend it. They let their biases and beliefs about poverty get in the way of good policy making, creating barriers to economic security for people with low incomes. American families should not be held hostage by false poverty narratives. Congress can still extend the CTC and keep more families from being pushed into poverty.
Kelli Garcia is the Policy Lab Director at ideas42, a nonprofit that applies insights from behavioral science to address complex social problems.