There may be a lot that is still up in the air this back-to-school season, but there is one new constant for nearly all parents with kids in America. On Sept. 15, for a third month in a row, the expanded Child Tax Credit will be helping support parents with a no-strings-attached monthly check.
It will cut child poverty nearly half even as it helps middle class families save for college and pay for cover child care. And it will make a much-needed and disproportionate impact for those living in deep poverty, as well as Black, Hispanic, and Native American kids as a whole.
It’s an anti-poverty program that is wildly effective, and a middle class tax cut, all at once. As the recent analysis from the Urban Institute underscored, programs like stimulus checks and the CTC can dramatically slash poverty in a remarkably short period of time.
The first round of CTC payments made a huge difference to individual house households and to the economy overall. Retail sales in July grew to 10.9 percent, nearly quadruple the average growth in 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 everything in between. In a recent analysis the Niskanen Center found that when looking at states’ gross domestic product, rural states received the greatest relative benefit from the benefit.
The radical commonsense of these direct cash programs have a lot to teach us about how we can rebuild our economy. The organization I co-founded, the Economic Security Project has been in the business of creating such opportunities and uplifting these lessons. We’ve invested and partnered with local organizations and cities to advocate for and learn from these direct cash pilot programs.
But not everyone is so sure that all this direct cash is a good thing. Under the unfounded fear that cash on hand discourages people from taking jobs that help our economy run well, twenty-six states have rushed to end federal unemployment benefits this summer, ahead of their scheduled September expiration.
As we’re seeing, these actions haven’t spurred job searches and instead are likely just reducing household spending. Further, the most recent jobs report indicated strong gains in hiring, particularly in the leisure and hospitality sector, countering the notion of a labor shortage
If workforce participation is of concern, there was a time when the United States invested in getting some of its parents into the workforce. It was a short-lived effort that ended as men reentered after the conclusion of the Second World War but the women, who benefited from that program, who were given choice and flexibility from its implementation, protested. They demanded permanency.
As Eleanor Roosevelt wrote in its aftermath, “Many thought they were purely a war emergency measure. A few of us had an inkling that perhaps they were a need which was constantly with us, but one that we had neglected to face in the past.”
As American families continue to receive these payments and use them to help pay for essential needs or to save for their children’s college education, it is incumbent on Congress to not let the CTC expire.
The CTC found political will in a moment of a global crisis. Let’s make sure we learn some important lessons from COVID-19 and be better prepared for what comes next.