Even in uncertainty, parents enjoy financial security
There may still be a lot unfinished business this back-to-school season, but there’s one constant news for nearly every parent with kids in America. On September 15, for the third month in a row, the expanded child tax credit will help parents pay a monthly check with no strings attached.
It will be reduce child poverty almost half, even though it helps middle-class families save for college and pay for childcare costs. And it will have an indispensable and disproportionate impact on those living in deep poverty, as well as on black, Hispanic and Native American children as a whole.
It’s an extremely effective anti-poverty program and a middle-class tax cut all rolled into one. As the recent analysis of the Urban Institute pointed out, programs such as stimulus checks and the CLC can significantly reduce poverty in a remarkably short period of time.
The first round of CTC payments made a huge difference to individual households and to the economy as a whole. Retail sales in July rose to 10.9%, nearly four times the average growth for the month of July.
And since the CTC is a nearly universal benefit, it helps people in every community in this country: urban, rural, suburban and all in between. In a recent analysis, the Niskanen Center found that when looking at states’ gross domestic product, rural states received the greatest relative advantage of advantage.
The radical common sense of these direct money programs has much to teach us about how we can rebuild our economy. The organization I co-founded, the Economic Security Project, has worked to create such opportunities and enhance these lessons. We have invested in and partnered with local organizations and cities to advocate for and learn from these direct cash pilot programs.
But not everyone is sure that all that direct money is a good thing. Under unfounded fears that the available money will discourage people from taking jobs that help our economy run smoothly, twenty-six states rushed to end federal unemployment benefits this summer, ahead of their scheduled expiration in September.
As we see, these gestures did not stimulate job searches and instead simply reduced household spending. Additionally, the most recent employment report indicated strong hiring gains, particularly in the leisure and hospitality sector, countering the notion of labor shortages
If labor force participation is a concern, there was a time when the United States invested in getting some of its relatives into the workforce. It was a short-lived effort that ended when the men returned home after the end of World War II, but the women, who benefited from this program, who were given choice and flexibility in implementing it. , protested. They demanded permanence.
Like Eleanor Roosevelt wrote afterwards, “many thought it was purely an emergency war measure. A few of us knew that perhaps this was a need that was with us constantly, but which we had neglected to meet in the past.
As American families continue to receive these payments and use them to help pay for basic needs or to save for their children’s college education, the onus is on Congress not to let the CTC expire.
The CLC found political will in a moment of global crisis. Let’s make sure we learn some important lessons from COVID-19 and be better prepared for what comes next.
Natalie Foster is Co-Chair and Co-Founder of the Economic Security Project, a network that challenges the current status quo by catalyzing ideas that empower all Americans economically.
*updated from an earlier version