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Families Slip Back Into Poverty After Pandemic-Era Child Tax Credit Expires

PBS Newshour

March 25, 2024

Watch the full video here.

During the pandemic, lawmakers dramatically, but temporarily, expanded the social safety net, including more money for families with children. The impacts of those changes are still being felt and debated to this day. Amna Nawaz and producer Sam Lane report on that for our series, America’s Safety Net.

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Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors.

William Brangham: We now continue our series America’s Safety Net about the government programs that help Americans in need. Tonight, we look at the pandemic, when lawmakers, dramatically, but temporarily, expanded the social safety net, including more money for families with children. Amna Nawaz and producer Sam Lane report on how the impacts of those changes are still being felt and debated to this day.

Dafnee Chatman, Mother: Some days are better than others, but it can be, pretty, pretty overwhelming.

Amna Nawaz: Her family of five can stretch 35-year-old Dafnee Chatman pretty thin.

Dafnee Chatman: The responsibility as a parent is on you to provide food, clothes, water, gas.

Amna Nawaz: Providing for 13-year-old Whitnee (ph), 5-year-old Rowen (ph), and 3-year-old twins Trinitee (ph) and Legaciee (ph) in their hometown of Ville Platte, Louisiana, is a challenge. Of the town’s 6,200 residents, more than 40 percent live in poverty.

Dafnee Chatman: In this rural area, we don’t have access to much.

Amna Nawaz: Ville Platte has been called the state’s poorest town and its where Chatman has spent most of her life. Back in early 2020, Chatman was working at a local community college, a job she loved. She was also pregnant with the twins. And then:

Judy Woodruff: The COVID-19 outbreak as a global pandemic.

Amna Nawaz: Its biggest one-day jump in both new cases and deaths.

John Yang: Widespread economic damage is becoming clearer.

Amna Nawaz: As the nation shut down, Chatman lost her job.

Dafnee Chatman: The best way I can explain it is that I felt like someone took my air.

Amna Nawaz: What do you do? How do you provide for your family?

Dafnee Chatman: You don’t. You’re choosing between making sure you have lights or making sure you have food. You’re robbing Peter to pay Paul. And, eventually, Paul runs out and Peter, so you’re left with nothing.

Amna Nawaz: Chatman resorted to selling things around the house, books, jewelry, pictures, just to make ends meet. She developed anxiety and panic attacks. Her kids, especially Whitnee, started feeling the stress too.

Dafnee Chatman: You could see in her eyes that she felt like “I can’t help my mom and my mom can’t help me right now.”

Joe Biden, President of the United States: Thank you for being here.

Amna Nawaz: Then, in March of 2021, President Biden signed the American Rescue Plan. The nearly $2 trillion relief package passed with only Democratic votes extended unemployment benefits, sent stimulus checks to individuals, ramped up food stamps and housing assistance, and significantly expanded the federal child tax credit, or CTC. Pre-pandemic, that credit gave parents up to $2,000 per child. It came with an earnings requirement, and was paid in one lump sum at tax time. But the Rescue Plan raised the credit to $3,600 per child under 6 and to $3,000 for kids under 18. Half the amount came in monthly payments. And for the first time, even parents with no taxable income were eligible for the full amount.

Dafnee Chatman: It was like I was able to come up for a little air.

Amna Nawaz: Would you say that the benefits kind of took care of all your problems?

Dafnee Chatman: I wouldn’t say it took care of all of them, but it took care of enough for me not to worry as much.

Amna Nawaz: Families across the country felt that relief. Laura Douglas lives with her husband and their two kids in southern Minnesota. Their younger son, Daxton (ph), has a rare condition that causes seizure-like episodes. So, sometimes, Laura has to miss work.

Laura Douglas, Mother: I might be out of work for two weeks, and I have already used all my PTO. That’s hundreds of dollars not coming into our account to cover our bills.

Amna Nawaz: The CTC payments started before Daxton turned one.

Laura Douglas: That was nice to know that there would be money if I had to stay home due to being sick or if he was sick. It was nice to have that security.

Amna Nawaz: In 2021, the national child poverty rate dropped to its lowest level on record, 5.2 percent, down from almost 10 percent in 2020. The poverty gap between white children and children of color also shrank dramatically. The Census Bureau estimated that, in total, the CTC expansion lifted more than two million children out of poverty.

Bradley Hardy, Georgetown University: I think, in a policy sense, that’s a resounding success.

Amna Nawaz: Bradley Hardy is a professor of public policy at Georgetown University.

Bradley Hardy: We had a highly salient and disturbing public health crisis that actually provided some clarity for policymakers to plug holes in the nation’s social safety net that were already in existence.

Amna Nawaz: Research from Hardy and his colleagues found the CTC expansion had the greatest impact in states with low costs of living and high poverty rates, states like Louisiana. Nearly every single child in the state of Louisiana, an estimated 94 percent, benefited from the expansion of the child tax credit. According to one study, the state saw a 56 percent decline in child poverty.

Joyce James leads The Middleburg Institute.

Joyce James, Founder, The Middleburg Institute: Did you all know about the child tax credit?

Amna Nawaz: A Louisiana nonprofit that helps low-income residents. The organization traveled the state educating families about the CTC.

Joyce James: Unlike what was said, that people would not know how to manage the money, they would not spend it on the children, we talked to parents, who were able to buy school supplies. They were able to feed them healthy meals, vegetables, fruits.

Amna Nawaz: But just as families were getting their last monthly CTC checks in 2021, a fight was brewing in Congress. Legislation to extend the payments died in the Senate. West Virginia Democrat Joe Manchin, concerned about the cost and how parents spent the funds, dealt the final blow. By tax time in 2022, as the second half of the CTC hit bank accounts, the expansion was over.

Dafnee Chatman: I remember my response was, oh, wow, what am I going to do now?

Amna Nawaz: Chatman had already been working any odd job she could, food delivery for DoorDash, writing resumes for $35 apiece, as she looked for steady work.

Dafnee Chatman: I counted it somewhere about 1,100 job applications.

Amna Nawaz: Eleven hundred job applications?

Dafnee Chatman: Eleven hundred job applications.

Amna Nawaz: In 2022?

Dafnee Chatman: In 2022.

Amna Nawaz: What is that like for you in that moment, not knowing when you will have a steady job again, knowing the benefits have just gone away?

Dafnee Chatman:

It’s indescribable. It makes you feel undervalued.

Amna Nawaz: In 2022, the child poverty rate more than doubled to 12.4 percent, the largest year-to-year increase on record.

Matt Weidinger, American Enterprise Institute: The 2021 changes, I think, were somewhat of a mistake.

Amna Nawaz: Matt Weidinger is a senior fellow at the conservative American Enterprise Institute. He says even, when child poverty rebounded in 2022, it was still below pre-pandemic levels.

Matt Weidinger: We have continued to make strides. We obviously didn’t make as many strides as when the government was literally forcing cash into families’ pockets in the name of pandemic relief, But the progress against poverty has continued over time.

Amna Nawaz: Weidinger argues the key problem was making the CTC available to those with no taxable income.

Matt Weidinger: Democrats in 2021 said, let’s just eliminate any connection of this benefit with work and say everybody gets the same benefit no matter what. That eliminates a work requirement. And, in effect, it revives a welfare system that was eliminated a generation ago. I think it’s appropriate that benefits like the CTC that have always been connected to work remain connected to work.

Amna Nawaz: But some experts and advocates say the 2021 CTC didn’t discourage work at all.

Joyce James: Some of the families actually were working two or three jobs when getting the child tax credit and still did not make enough money to take care of the children.

Amna Nawaz: The CTC expansion was also problematic, Matt Weidinger says, because of its cost.

Matt Weidinger: During the pandemic, government policy was designed to spend money, which, by the way, was all added to the deficit, all borrowed from the future, and families will have to repay with higher taxes, interest and inflation in the future.

Bradley Hardy: I think we have to think about the cost of doing nothing. We have this long body of social science evidence that these investments in children lead to improved educational outcomes, health outcomes, higher incomes in adulthood.

Amna Nawaz: That idea has since led 15 states to implement their own CTC. The largest passed last year is in Minnesota. Families can receive up to $1,750 per child. There’s no minimum income, but it starts phasing out when families make more than about $30,000 a year. Laura Douglas sees her state’s new CTC the same way she saw the 2021 federal payments.

Laura Douglas: Not really life-changing, but it was definitely helpful. It wouldn’t be able to, like, replace my income or my husband’s income. We still need that.

Man: The House will be in order.

Amna Nawaz: In January, the U.S. House passed a bill that would again expand the federal CTC, not as large as the 2021 expansion and it would still have some income requirements. But estimates say it could lift about 500,000 kids out of poverty. The legislation has yet to pass the Senate. Meanwhile, Dafnee Chatman is keeping her faith that she can keep providing for her family. In January, she found a steady job with the state’s Department of Children and Family Services, but says she’s always uneasy. What if her car breaks down? What if Rowen needs new shoes? She says lawmakers in Washington don’t seem to understand that stress.

Dafnee Chatman: But, in 2021, I felt like somebody started to feel our pain or started to feel like those — they matter, you know?

Amna Nawaz: It doesn’t feel that way anymore?

Dafnee Chatman: Not really, not to me.