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Families prepare for first month without child tax payments

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Families prepare for first month without child tax payments

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“When January 15 rolls around and that $300 check isn’t there, a lot of families are going to be in tougher economic times.”

Melissa Roberts cooks dinner for her children. Roberts quit his job with an insurance company at the start of the pandemic and has struggled to find a job ever since. She was able to collect unemployment benefits until the state of Mississippi removed benefits in June 2021 and relied on the federal child tax credit to help support 5-year-old Kaylee, and her son Isaac, 7 years old. Photo for The Washington Post by Andrea Morales

The check would have arrived right away, helping Melissa Roberts hold out until the end of the month. At $550, her monthly child tax payment was not extravagant, she said, but enough to cover groceries and utilities.

Roberts, who lives in Marks, Mississippi, quit her job as an insurance agent at the start of the coronavirus pandemic when her employer wouldn’t let her work from home. She has applied for dozens of administrative and customer service positions since then, but has yet to be hired.

“This tax credit is the only way for us to keep food on the table,” said Roberts, who is raising a 5- and 7-year-old. “For a lot of the working poor, it’s given us a chance to finally breathe and not worry too much about how the bills are paid each month.”

The extended benefit, part of the Biden administration’s U.S. bailout package passed last year, distributed up to $300 per child each month to millions of U.S. families starting in July. The extra pay only lasted six months before expiring at the end of December.

A number of critics said the expanded credit was too broad and not focused enough on needy families, paying benefits to households earning $400,000 each year. But proponents say it had an immediate, positive impact: reducing child poverty rates by about 30% every month and reducing food hardship for low-income households with children by about 25%, according to researchers from Columbia University.

For now, the future of monthly payments remains in limbo, raising concerns among some economists that recent gains in household food security and stability will quickly be reversed, especially as a resurgence in coronavirus case clouds economic recovery.

“It’s safe to say that with this program gone, child poverty is definitely going to increase,” said Zachary Parolin, a research fellow at Columbia University’s Center on Poverty and Social Policy. “Parents were using that monthly payment right away — to buy food, cover rent, and pay off debt — so when January 15 rolls around and that $300 check isn’t there, a lot of families are going to be in more difficult economic conditions.”

The expansion of the Child Tax Credit last year not only increased the amount of payments – from $2,000 per year to $3,600 per child – but also began disbursing the money in monthly installments instead a lump sum during tax season.

For many households that received monthly checks, the cash had become an additional source of income on which they had become dependent. Census Bureau data shows that families disproportionately spent profits on necessities such as food, rent, utilities and child care. In interviews with more than a dozen parents, nearly all said they were already feeling the pressure of having less money on hand, especially as persistent inflation continues to drive up the prices of many basic products. Some said they were reducing their intake of fresh fruits and vegetables or relying more on local food banks. Others said they were dipping into their savings or leaving some bills unpaid.

“Families face additional financial pressure, just as an omicron surge leads to more illness, school cancellations and lost work income,” said Alix Gould-Werth, director of policy at Family Economic Security at the Washington Center for Equitable Growth, a left-leaning think tank. “I worry about the immediate implications for families, as well as the impact on the economy by cutting spending.”

Critics of the measure say making it permanent would give parents a reason to stop working or otherwise retire from the workforce. Many, including Sen. Joe Manchin, DW.Va., say they would like extended credit to be tied to a work requirement.

“The short-term impacts of the expansion are good and clear – poverty has gone down because people are getting these monthly checks,” said Scott Winship, director of poverty studies at the American Enterprise Institute, of law. “But in the long term, if people realized they could rely on their income in perpetuity, I think we would see fewer parents choosing to work.”

Back in Mississippi, Roberts – who took custody of her cousin’s grandchildren five years ago – says she’ll likely let her car insurance payments expire so she can get groceries. She only has $388 left in her bank account, but she feels lucky to own her home, which she says puts her in a much better position than many friends who are at risk of eviction or foreclosure.

“When you’re living paycheck to paycheck, you get so beat up having to watch every penny — and God forbid, your car breaks down or you need a plumber,” he said. the 49-year-old man. “For a few months we had room to breathe.”

In San Antonio, Nathaniel Miller and his wife used their monthly payments to buy gluten-free food, oat milk and diapers for their one-year-old daughter, who has severe food allergies. Without it, he says, his family of four will have to start using their savings to cover day-to-day expenses.

“We’re a single-income household, so that money has been a lifeline,” said Miller, 34, who works in communications. “Now that it’s gone, I don’t know where that extra money will come from. We have a little savings, but these are running out quickly. If anything else comes up, we’re kinda screwed.

Bruce Meyer, a professor at the University of Chicago’s Harris School of Public Policy, said policymakers have long favored anti-poverty spending targeted at specific issues, such as disability benefits for those who cannot work, the Supplemental Nutrition Assistance program (food stamps) for families who need help buying groceries, and social housing programs for the homeless. The enhanced Child Tax Credit, he said, marked a turning point in giving families money with no strings attached.

“Sending money to every family with children – whatever their needs, whether or not they were able to work – was a completely new thing,” he said. “The long-term consequences are that you encourage dependency on government and prevent people from figuring out how to support themselves.”

Research from the Niskanen Center, a moderate think tank, found that extending credit would increase consumer spending by $27 billion a year and create about 500,000 full-time jobs. The benefit has also been shown to improve household stability, reduce alcohol and tobacco consumption and provide additional tax revenue to local economies, said Samuel Hammond, director of poverty and welfare policy at the center. .

“If the child tax credit extension were to become permanent, it would be one of the most effective anti-poverty measures of this generation,” he said. “The stakes for monthly payments are so high: they provide household stability and families’ ability to plan and budget, and all of that is totally jeopardized if the next month’s payment gets caught up in political intrigue.”

Lawmakers remain deadlocked over the future of the child tax credit, which emerged as a key sticking point in the Build Back Better bill. Congressional Democrats have widely said they do not want to give in to Manchin’s demands for a work demand.

“I can’t think of another program that had such an impact so quickly,” said D-Wash Rep. Suzan DelBene. “We risk losing this progress by not extending credit.”

Even middle-class families say they’ve benefited from the extra cash — and pumped it back into the economy. Caroline Nasella, a government attorney in Sacramento with daughters ages 3 and 6, said the extra $400 a month has helped cover child care costs and provided extra flexibility during the pandemic.

“It wasn’t a game-changing policy for us personally, but it was definitely a cushion,” the 38-year-old said. “When you’re paying $1,200 a month for child care, of course any extra money helps.”

Kelly McKernan, an artist and illustrator from Nashville, used her $250 monthly checks to cover mid-month bills and buy school clothes and winter boots for her second-grader. His income was nearly halved, to around $25,000, during the pandemic.

“Not having that money is already having a really big impact,” said McKernan, 35, who is working on a graphic novel anthology with rock band Evanescence and is seeking art teaching jobs to make ends meet. . “I’m about to not be able to do it anymore.”

Families prepare for first month without child tax payments

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