The expanded Child Tax Credit cut child poverty rates in half —  now they’ve doubled

By Russell Nichols

In 2021, when federal lawmakers cut child poverty rates in half, it wasn’t a magic trick. It was the result of a policy move, an expansion of the Child Tax Credit (CTC) in the $1.9 trillion American Rescue Plan Act, which led to the largest drop in child poverty ever recorded. Lawmakers, it seemed, had found a viable solution: giving people money, no strings attached.

“That should’ve been the end of the story,” says Devon Gray, president of End Poverty in California. “It wasn’t.”

By 2022, after Congress refused to renew the enhanced Child Tax Credit — that broadened eligibility requirements, allowing more families to qualify and access income — the drastic reduction in rates had basically disappeared. According to new census data released in September, American children living in poverty reverted to pre-pandemic levels — from 5.2% to 12.4% — which analysts note as the largest spike in child poverty since the supplemental poverty measure was developed in 2009.

Of course, numbers can’t tell the whole story. Temporary pandemic assistance naturally led to a historic drop in poverty when introduced, and a massive upsurge when taken away. Beyond the data, these extreme fluctuations underscore differences in political priorities and values, often disproportionately impacting underserved populations like Black and Latino communities — particularly children —who are at higher risk of enduring long-term effects on health, education and earning due to poverty, according to the Center on Budget and Policy Priorities.

For anti-poverty advocates, Gray says, the passage of the expanded CTC was the “greatest anti-poverty accomplishment since LBJ’s Great Society.” But those who opposed the extension believed it wasn’t sustainable, citing excessive government spending and rising inflation among reasons to let the expanded CTC lapse. Since its expiration at the end of 2021, policymakers at the federal, state and local levels have made attempts to revitalize the policy in various ways. So far, nothing has stuck.

Breaking Point

The Real Cost Measure, developed by United Ways of California (the statewide association of local United Ways), zooms in to show what it takes to make ends meet in specific regions. Its recent study reveals that more than 37 million (one in three households) don’t earn enough to meet basic needs in California. In the Sacramento Region, more than half of households with children under 6 fall below the $85,525 required to meet basic needs.

In the U.S., Black and Hispanic children face some of the most elevated poverty rates. In 2019, 71% of children living in poverty were children of color, reports the Children’s Defense Fund. The expanded CTC, which provided monthly payments of $250 to $300 per child, helped ease financial burdens for struggling families. The Center on Budget and Policy Priorities highlights that “government policies helped keep 30% of all Black children and as many as 24% of Latino children above the poverty line in 2021, as well as 10% of Asian and white children.” (Many were still ineligible for the full Child Tax Credit.)

“The data highlights the pressing need for ongoing government action to fight poverty and advance a future of inclusive prosperity we know is possible,” according to a statement from GRACE & End Child Poverty CA. “Black and Brown families are disproportionately impacted by the expiration of the successful interventions, and racial inequities will only be exacerbated unless governments take bold action to combat poverty.”

Sen. Joe Manchin (D-W.Va.) showed no remorse for his opposition to the expansion — a decisive factor in letting the expanded credit lapse. Speaking to Semafor, Machin seemed unfazed by the new poverty data. “It’s deeper than that, we all have to do our part,” he said. “The federal government can’t run everything.”

Controlling Narratives

Policy decisions do appear to be “deeper than that,” digging into entrenched beliefs about what poverty in America means, according to Gray.

“What are the conditions in the culture that empower and protect policymakers who make these objectively harmful decisions?” he asks. “Our theory is that it’s narratives.”

Specifically, Gray points to the decades, if not centuries-long narratives that depict poverty as an inescapable consequence of individual failure — a belief that associates poverty with undesirable character traits and substance-use disorders. Many opponents of social assistance policies cling to the idea that people can’t be trusted with financial support. It would be “irresponsible,” Gray adds, not to acknowledge the racial undertones inherent in these narratives, which played a role in the expiration of the CTC expansion.

“The idea of welfare recipients spending money they receive from the government on drugs harkens back to the ‘welfare queen’ trope,” Gray says. “It’s, in many cases, a dog whistle.”

This notion fuels the common belief that recipients of government assistance have ill intentions. If policymakers view people in poverty as fraudsters, Gray says, the system they create will focus on fraud prevention, tangling individuals up in red tape, rendering access to the support they need next to impossible.

To change the narratives, Gray suggests policymakers actually spend time in communities affected by poverty. Without firsthand exposure beyond media stereotypes, a more nuanced understanding may never develop. Once those narratives shift, he says, policies for livable wages, affordable housing and beneficial initiatives, such as the enhanced CTC, are more likely to become priorities.

“We can’t tell the story of the failure to renew the Child Tax Credit without talking about narratives,” Gray says. “A bad stereotype is essentially killing people when it’s not based on reality.”

This story is part of the Solving Sacramento journalism collaborative. Solving Sacramento is supported by funding from the James Irvine Foundation and Solutions Journalism Network. Our partners include California Groundbreakers, Capital Public Radio, Outword, Russian America Media, Sacramento Business Journal, Sacramento News & Review, Sacramento Observer and Univision 19.