The Child Tax Credit Was a Little Too Subtle

[Celerity]

Why doesn’t anyone care about the expanded child tax credit? A $100 billion policy—effective, important, elegantly designed, competently managed, and noncontroversial—is gone, at least for now. And nobody, save for a few politicians and wonks, seems to have noticed or to care.

https://www.theatlantic.com/ideas/archive/2022/12/child-tax-credit-democrats-inflation-postmaterialism/672543/

https://archive.ph/tCbhX



The expanded child tax credit (CTC) provided no-strings-attached cash payments to 39 million families in 2021 and 2022, lifting millions of kids over the poverty line. But Democrats have failed to get a renewal of the program into the $1.7 trillion spending bill making its way through Congress, just as they failed to get it into the Inflation Reduction Act they passed earlier this year. As a general point, the CTC has languished in policy obscurity. Did Democrats crow about it in their recent campaign ads? No. Did it sway many swing voters in the midterms? No. Have large protests pushed for the policy’s reinstatement? No. Many studies suggest, as does common sense, that handing out all that money should have helped Democrats at the polls. Somehow, it did not.

Many political stories end up being much ado about nothing. But the quiet demise of the CTC is one of the most baffling things I have witnessed in American politics: no ado about so, so much. How the policy failed to create its own constituency is the $100 billion question, of interest to the Democratic politicians hoping to reinstate it as well as to experts designing new social programs in the future. Politicians, the CTC shows, have enormous capacity to improve citizens’ lives. But don’t expect those citizens to thank them at the polls for doing so.

The expanded CTC was part of President Joe Biden’s American Rescue Plan, passed in the spring of 2021. The policy had three main features. First, it beefed up an existing tax credit paid to the parents of dependent children. Under the new provision, families got $3,600 a year for each kid under 5 and $3,000 for each kid ages 5 to 18. Second, it paid out that money in installments; parents received a couple hundred bucks per kid each month from July to December and a final, larger check this spring. Third, it made the credit fully refundable, meaning that families that did not owe any federal income tax still got the full amount.

In practical terms: Cash suddenly started showing up in tens of millions of bank accounts. The impact was enormous and instantaneous. The transfers, a kind of Social Security for kids, drove child poverty down to its lowest-ever level. The rate of food insecurity in recipient households fell by more than 25 percent. Those families were less reliant on friends and family for help, experienced fewer medical hardships, and were more on top of their utility bills. Studies showed that the recipients used the money for essentials—food, gas, rent, clothes, day care—and that the transfers did not lead parents to reduce their work hours or quit working.

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