In August, both houses of Congress passed a $3.5 trillion budget resolution to fund policies to help working families recover from a pandemic recession. Though the proposal is subject to further tinkering, the need for it is undeniable.
The expansion of the child tax credit, part of an earlier approved spending package, is already showing huge returns for families, saving 3 million children from poverty in just its first month. New data from the Niskanen Center show that extending this policy could generate an estimated $27.6 billion in consumer spending in just one year.
According to new data from the Niskanen Center, more than $90 million has been added to consumer spending in Maine as a result of the expansion of the child tax credit, supporting more than 1,700 jobs. Dreamstime/TNS
Making permanent a program that has already proven to be a success sounds like a no-brainer. But some conservatives say it’s too expensive. What they mean is, if we spend more on children, there will be less left to line their wealthy friends’ pockets.
Big business from PhRMA to Exxon are lobbying to remove tax increases on the ultra-wealthy and policy changes to lower prescription drug costs from the reconciliation package. They decry the price tag of the reconciliation package while ignoring that a tax stimulus targeted to lower income or unemployed people, like the expanded child tax credit, is two to three times more effective in increasing spending than one targeted to the upper class.
That’s because families receiving the checks put a portion of that into consuming goods and services and a portion into their savings or toward their financial health. Their dollars spent at local businesses become income for the owners and workers, who now also have more disposable income to bolster the local economy.
In contrast, despite claims of “trickle-down economics,” policies that offer tax credits and cuts to the rich do not similarly boost the economy. Rich people already have all the money to buy goods and services. A tax cut for them serves only to further concentrate their wealth.
But for average Americans struggling to make ends meet, a monthly, flexible-use cash advance allows them to finally afford a laptop or new clothes for school, that car repair or maybe even a dinner out. That’s why it’s so critical that Congress got rid of minimum earnings requirements and made the child tax credit fully refundable, so that the benefits went to parents who needed it the most.
Organizers at Community Change Action, the national nonprofit based in Washington, D.C., for which I serve as co-president, work every day with people in need to make sure they get the payments for which they are eligible. We hear stories of folks like Gisella, a farmworker from western Massachusetts who will use the payments to sustain her family in the off season. Or Mary Rheinhold from West Virginia, who is using her monthly checks to buy basics like toiletries and special treats like ice cream for her 7-year-old daughter.
The implications are significant for state and local economies that have been gutted by COVID-19 layoffs and shutdowns. In Gisella’s home state of Massachusetts, more than $460 million has been added to consumer spending, supporting more than 6,600 full-time jobs. In Mary’s state of West Virginia, it’s more than $145 million in consumer spending and more than 3,000 jobs. (In Maine, it’s more than $90 million in consumer spending and more than 1,700 jobs.)
For conservatives worried about budgetary costs, simple math tells us that continuing these payments to families is the best way to cut the child poverty rate and generate revenue to help local businesses bounce back.
The debate comes down to this: Should we lift children out of poverty and give them the chance at a bright future, or continue to bankroll billionaire space races?
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