Ending Child Poverty in America: An Impossible Dream?

For several months in 2021, it was possible to believe that this nation had figured out the solution to child poverty and the many ills that accompany and result from it. The magic that would drastically improve lives by cutting in half the number of American children living in poverty was a piece of legislation bureaucratically named the Expanded Child Tax Credit (ECTC). It was proclaimed by Senator Michael Bennet of Colorado, “the single best policy of the Biden era.” Senator Cory Booker called it “the most transformative policy coming out of Washington since the days of FDR.”

The Expanded Child Tax Credit: A revolution in social policy?

Signed into law on March 11, 2021, as part of The American Rescue Plan, the ECTC legislation provided a monthly child allowance to families that added up to annual sums of $3,000 for every child aged 6 to 17 and $3,600 for every child under age 6. There were no strings attached. It was just money. It could be used for childcare, food, clothes — for anything. It treated parents, even poor parents, as the experts on their family’s finances, a quietly radical idea in American social policy. It improved on the earlier Earned Income Tax Credit (EITC) by increasing the amount of the payments, by making them monthly, and by including some 27 million children, disproportionately children of color, who had been excluded by the EITC because their families’ incomes were too low.

One and a half months after payments started to go out, data from the census showed that the number of parents who said their children didn’t have enough to eat fell by one third. A Columbia University study found that the first ECTC payments, made in July 2021, already kept 3 million children from poverty; the second payments reached more families, keeping 3.5 million children from poverty in August 2021.

As Ezra Klein declared in The New York Times, “It was a huge experiment, it was studied exhaustively, and we can now say this definitively: It worked.” It promised to furnish millions of families with monthly funding that would significantly increase the chances that their children would grow up healthy, well educated, and prepared for a productive adulthood.

The passage of the legislation reflected a profound political change. Jason DeParle, who covers poverty for The New York Times, described the ECTC as “a big deal philosophically, because it really shifts the way government thinks…about what children need and what the government’s responsibility is in providing it.” What was virtually unprecedented, almost entirely unexpected, and worthy of celebration in March 2021 when the ECTC was enacted, was the US government’s posture that “there’s just a level beneath which no child should be able to fall in the United States.” The Democrats, explained DeParle — before we knew it would have such a short life — saw the legislation as “a seed that plants what they hope will be a revolution in social policy.”

A revolution in social policy that didn’t last

Although the ECTC was widely lauded, and its powerful impact was rapidly documented, the Congress allowed it to lapse abruptly — before either its recipients or its sponsors could celebrate its first anniversary. More than thirty six million families got their sixth payment in December 2021, but it was their last. By failing to extend the ECTC, we allowed nearly 10 million children to slip back below the poverty line. How did that happen? Why has the ECTC not become — so far — the beginning of a revolution in social policy? Why did we revert to policies that provided the least help to the children who need it most? Why did we allow the progress in narrowing differences in child poverty rates by race and ethnicity to be reversed?

Ranking high among the several theories to explain the demise of the ECTC was the difficult Congressional politics of the time, which included an evenly divided Senate and the pressures to bundle everything pending on the Administration’s domestic agenda into a single piece of legislation — one that was so complex that it was hard to mobilize strong backing for each of its separate ingredients. By the end of 2021, the prospect of extending the ECTC had dropped to a low priority amid calls for allocating resources and political influence to what seemed like more urgent matters.

One other crucial explanation for the weak support for the extension of the ECTC brought me back almost sixty years, to the mid-1960s and the beginning of President Lyndon Johnson’s War on Poverty.

On January 8, 1964, in his first State of the Union Address, President Johnson called attention to “the many Americans who live on the outskirts of hope.” I had already been working in Washington for six years at that point, but I decided this campaign was the one I wanted to sign up for when I heard the president declare “unconditional war on poverty in America” and that we would “not only relieve the symptoms of poverty but cure it and — above all — prevent it.” That’s how I became part of the Office of Economic Opportunity (OEO) and witness to the earliest debates that would shape the new poverty program. Many of these debates focused on the causes of poverty: Was poverty the result of individual defects that created a culture of poverty? Of a scarcity of effective social services? Of a lack of well-trained people equipped to be employed at good jobs? Were the inequities in how the nation distributed its considerable resources primarily a product of racism?

As the poverty program took shape under the leadership of its director, Sargent Shriver, several distinguished economists were recruited. They soon presented Shriver with an ambitious agenda, which was aimed at eliminating poverty in 10 years.

Among the economists’ recommendations, the biggest and most expensive component was what they called a negative income tax — an early version of a basic income. It was a bold proposal that was never acted on in the OEO era. It was considered too expensive even before funds to fight poverty were marginalized by the cost of fighting in Viet Nam. More important, President Johnson was adamantly opposed to making payments to poor people. It was programs, not cash, that would end poverty. He told Bill Moyers, his closest aide, “You tell Shriver, no doles.” He instructed economist Lester Thurow to remove from the Economic Report of the President “anything that could be construed as putting cash in the hands of poor people.”[1]

Johnson’s animosity toward addressing the poverty problem with cash turned out to have bi-partisan appeal. Ron Haskins, who ultimately became a senior advisor for welfare policy to President George W. Bush and the primary engineer of the Clinton era “welfare reform,” declared that mounting an effective war against poverty required “changes in the personal decisions of more young Americans to get more education, work more, and stop having babies outside marriage.”

The line of thinking that preferred behavioral solutions over economic supports was also a good fit with the popular sentiment that a significant part of the problem that needed fixing lay in the behavior of minorities. Indeed, Zachary Parolin of Bocconi University was able to show that the states with higher proportions of African Americans in their population were less likely to allocate welfare funds to the provision of cash assistance, and more likely to allocate these funds toward efforts to “encourage the formation of two-parent families” and “reduce the incidence of out-of-wedlock pregnancies.”

The predominant theory of the 1960s that the problems of the poor could be solved by programs aimed at changing individual behavior rather than by changing structures and providing income support had deep roots and held sway for several more decades. Other developed countries were changing their thinking and policies, but the United States wasn’t budging. At least not until many years later.

It took nearly six decades for the US public policy mindset to become even slightly more permeable.

Growing race-based tensions, unresolved political divisions, unprecedented inequality, and the spread of COVID all contributed to loosening some long-held rigidities around what constituted an acceptable social contract. Two sets of forces were becoming more influential:

• Greater awareness of the dire consequences of the large number of children growing up in poverty, accompanied by new experiments at the state and local level.
• Increasing realization that much of the resistance to promising solutions was founded on myths.

Greater awareness of the dire consequences of the large number and high proportion of children growing up in poverty.

We now know that income poverty itself causes negative child outcomes, especially when it begins in early childhood and/or persists throughout a large share of a child’s life, which makes the large number and high proportion of children growing up in poverty particularly alarming.

Today, one in seven US children live in families with incomes below the poverty line — significantly more than in other countries at comparable stages of development. Although the United States is one of the world’s wealthiest countries, child poverty has remained stubbornly high for decades. Across the 37 countries that make up the Organization for Economic Cooperation and Development, the United States is consistently ranked as one of the worst in child poverty rates. This is the result of a much weaker social safety net than that of most countries and the relatively low wages of US workers at the bottom of the income distribution scale.

The problem is compounded by the fact that Black, Hispanic, and American Indian/Alaska Native children are disproportionately represented among children living in poverty. The disparities are greatest between Black and White populations: While around 14 percent of children in the United States are Black, they make up more than 25 percent of children suffering the consequences of living below the poverty line.

The temporary Child Tax Credit expansion enacted in March 2021, which was estimated to cut child poverty by more than 40 percent, took full account of these disparities, and was designed to particularly benefit Black and Latino children, whom the EITC (the prior version of the credit) disproportionately left out.

The growing awareness of the how profoundly the futures of children growing up in poverty are threatened has created a new interest in income supplement experiments at the state and local level. Recently and sporadically, the notion of a universal basic income has gained currency in cities and states in the face of worries that automation will lead to widespread layoffs, and the concerns of racial-justice advocates who are dubious that the existing failing income support system would soon be reformed through federal action.

The earliest of the local basic income experiments was piloted in Stockton, CA, in February 2019, by then-mayor Michael Tubbs. It was financed with private funds, mainly by the Economic Security Project, and gave $500 a month to 125 people who lived in a census tract at or below the city’s median household income. After the first year, the recipients when compared to a control group were found to be “healthier, showing less depression and anxiety and enhanced wellbeing.” Tubbs went on to found Mayors for a Guaranteed Income, which now includes 40 mayors advocating for direct, recurring cash payments in cities from Seattle to San Antonio to Pittsburgh.

According to a December 2021 Reuters tally, 16 cities and counties were currently handing out no-strings-attached payments to small, defined groups of low-income residents. St. Paul targets families with newborn children, but most of the other cities are not focused on children as beneficiaries. Pittsburgh expects half of its 200 participants to be Black women; Durham, North Carolina, will provide checks to people getting out of prison; and Jackson, Mississippi, focuses on Black mothers in public housing. Advocates tell Reuters that they hope these efforts will be instructive to additional cities, and will ultimately convince Congress to set up a national basic income program.

Since the time of the Reuters tally, Los Angeles County has implemented a new large-scale Guaranteed Basic Income Program called “Breathe” which will give 1,000 low-income residents $1000 a month for three years. The longest and largest pilot program in the country, it will have the research capacity to calculate how much money it will take for people to change the trajectory of their lives when they have “a chance to ‘breathe’ easier, knowing they are more financially secure.”

States too are experimenting with expanding the Child Tax Credit, often with bipartisan support. The National Conference of State Legislatures points out that state child tax credits, like the federal child tax credit, are a strategy for improving family economic stability beyond the Earned Income Tax Credit. Since 2019, California, Connecticut, Hawaii, Illinois, Iowa, Kansas, Michigan, Missouri, Oregon, Vermont, and West Virginia have introduced legislation to create and/or supplement state-level child tax credits.

Growing realization that much of the resistance to promising solutions was founded on myths.

The most entrenched resistance to establishing a children’s income floor is now — and always has been — the belief that no one should get something for nothing.

Although this belief has been a matter of long standing, Senator Joe Manchin gave it new life in 2021 and 2022. His opposition to the expanded child tax credit was based on not wanting to see our society turned into “an entitlement society.” This meant making sure that financial support for families with young children would be constrained with both work requirements and income ceilings. Despite evidence to the contrary, he insisted that giving money to poor people who weren’t working encouraged them to remain unemployed or leave jobs they already had. “I’ve shown him the evidence that countries with higher childhood allowances have higher work force participation rates than our own country, and I’ve not persuaded him,” a clearly frustrated Senator Michael Bennet said.

To evaluate actual employment effects of the child tax credit, the Center on Poverty and Social Policy at Columbia University analyzed data from April through September 2021. The researchers found that the ECTC had no or statistically insignificant employment effects on labor force participation.

Further analysis of the data during the brief period that the new child allowance was in effect suggested it could actually lead more people to work by making it easier for parents of young children to afford childcare. “There’s every reason to believe that in the current labor market, the child tax credit is work-enabling, and no evidence to the contrary has been presented,” says Samuel Hammond, director of poverty and welfare policy at the Niskanen Center.

Work requirements are particularly damaging to the most vulnerable families. The Center for the Study of Social Policy has pointed to the history showing that work requirements are inherently racially tinged, and that when work requirements are enacted, they harm Black people most. The Center on Budget and Policy Priorities (CBPP) has also studied federal and state economic security programs to help families meet basic needs, and has identified design features influenced by racism and sexism. CBPP found that these design features have long created an inadequate system of support that particularly harms Black families and other families of color, and warns that they must be guarded against in future legislation.

The belief that no one (especially no poor people) should “get something for nothing” is deeply embedded in convictions about who deserves government help. Evidence that well-designed government help can make all lives better has not been universally persuasive. Wide ranging surveys suggest that many legislators and large numbers of ordinary Americans are skeptical of programs that provide cash without conditions — except in the case of the aged (hence no work requirement attached to Social Security and Medicare).

The fear that families who receive funds as part of a new children’s income floor would spend these funds irresponsibly is another source of resistance.

Americans harbor a deep suspicion that if you send money to poor people — especially to poor people of color — they’ll spend it on luxuries and booze. Such fears are consistent with the observation of Andrea L. Campbell, an MIT political scientist who studies public opinion and social policy, that “People wildly overestimate the amount of abuse and fraud in various kinds of social programs.” Studies of the actual spending patterns of families receiving the ETCE allowance found no basis for this fear. One recent survey found that among low-income families, more than 90 percent of the supplement was spent on food, utilities, shelter, clothing or education.

A third source of resistance is the fear that the cost of a new children’s income floor would outweigh the benefits and contribute to inflation.

Under the separate auspices of the National Bureau of Economic Research, and the Columbia University’s Center of Poverty and Social Policy, Irwin Garfinkel and colleagues undertook a comprehensive accounting of potential benefits and costs of three forms of a US child allowance. They found that each produced high net returns, and that the benefits outweighed the costs in each. When it comes specifically to the ECTC as enacted in the 2021 American Rescue Plan, their estimates indicate that making that form of child allowance permanent would cost $97 billion per year and would generate social benefits of $982 billion per year. The reasons for this high benefit-cost ratio of eight-to-one is mainly from the calculation of the long-term effects of helping children do better at school, experience better health outcomes, and earn more in adulthood.

Two former Secretaries of the Treasury, Robert E. Rubin and Jacob J. Lew, addressed the question of whether a permanent ECTC would contribute to an increase in inflation. They wrote in a New York Times op-ed on May 3, 2022, that the expanded child tax credit would be “a critical investment in our nation’s economic future,” and concluded that fears that such measures could increase inflation are misplaced.

A New Era: Hard evidence for assuring a basic income for families with children

The force that was most important in the 2021 passage of the ECTC, and will be most important in enacting a permanent version of a basic income for families with children, is the increasing availability of hard evidence that can guide policymaking because it shows that we now know how to end child poverty.

This hard evidence brings us into a new era. I remember when those engaged in efforts to improve the lives of children growing up in poverty were guessing, perhaps intuiting, that the quality of the early years predicted later outcomes, and that there was a close connection between children growing up in poverty and how they fared as adults. The idea that the number and proportion of children growing up in poverty reflected policy choices more than the choices made by individuals was just beginning to take hold.

But now there is evidence.

There was a period in my long career when I spent enormous amounts of time and energy trying to persuade funders and decision-makers that their demands for clear evidence of “what works” were often unhelpful and misplaced. That was because so many interventions that had been identified as highly promising[2] could not produce the clear proof of effectiveness that comes from randomized trials. The most valued evaluation practices were not a good fit–in large part because so many of the most promising interventions required daily adaptation and unique front-line responses to succeed. They could not be manualized and did not lend themselves to easy measurement and replication.

But here we are dealing with interventions about which the researchers have provided solid proof of what works — now there is relevant evidence, hard evidence on a crucial point: how family income support can change outcomes for children growing up in poverty. So I find it doubly frustrating now — that so many of the skeptics still remain unpersuaded.

But with the evidence becoming stronger every day, the skeptics’ forts begin to crumble. Here are a few highlights of the evidence that provides clear guidance to action:

What we learned about the effects of reliable income support during the brief reign of the ECTC in 2021:

• That it is possible for the US Congress to pass legislation based on the conviction that there is “a level beneath which no child should be able to fall in the United States.”
• That among low-income families who received income supplements, more than 90 percent of their expenditures went to food, utilities, shelter, clothing or education.
• That just one and a half months after payments started to go out, data from the census showed that the number of parents who said their children didn’t have enough to eat fell by more than three million.
• That by September 2021, the income supplements cut child poverty by more than 25 percent, pulling 3.4 million children above the poverty line, despite the raging COVID pandemic.

Extensive research demonstrates clearly the powerful negative impact on short-and long-term outcomes of children growing up in poverty:

• As adults, children who experience poverty in childhood have lower levels of educational attainment, lower earnings, higher likelihood of being arrested, and poorer health. [3]
• Income poverty itself causes negative child outcomes, especially when it begins in early childhood and/or persists throughout a large share of a child’s life. [4]

Research that demonstrates the powerful impact of income support on children’s short-and long-term outcomes:

• Evidence of the significant long-term impact of income comes from a national sample of U.S. children who were followed from birth into their 30s. The University of California’s Greg Duncan and colleagues found that compared with children whose families had incomes above twice the poverty line during their early childhood, children with family incomes below the poverty line during this period completed two fewer years of schooling and, as adults, worked 451 fewer hours per year, earned less than one-half as much, and were more than twice as likely to report poor overall health or high levels of psychological distress.
• A unique source of evidence emerged when the Eastern Band of Cherokee Indians in North Carolina opened a casino in 1996. The tribe elected to distribute a portion of the profits equally among its 8,000 members, with no conditions attached. Thanks to a large longitudinal study of both Indian and non-Indian families that had begun long before the opening of the casino, researchers were able to compare the impact on the children in the Native American families with their non-Native American neighbors, who received no cash supplements. The impacts on the Native American children were striking: An increase of $4,000 per year in family income was associated with an increase of roughly one year of additional educational attainment, fewer psychiatric disorders, and a 22 percent reduction in arrests and minor crimes committed in adolescence. Long-term follow-up found that the children who were youngest and had the longest exposure to the increased family income showed the largest effect.
• A recent and dramatic piece of evidence demonstrating the beneficial effects of monetary support on child development comes from a six-university collaboration that provided cash stipends to families in their babies’ first year of life. Researchers found that, compared to a similar control group, the year of financial support actually changed the babies’ brain activity in ways associated with greater cognitive development.

Evidence that shows that fears of negative effects of income support (including its costs) are unfounded:

• Evidence from the work of Samuel Hammond of the Niskanen Institute that giving money to poor people does not encourage them to remain unemployed or leave jobs they already had, and that in the current labor market, a child tax credit is actually work-enabling.
• The insights of two former Secretaries of the Treasury that an expanded child tax credit would be “a critical investment in the nation’s economic future,” and that fears that such measures could increase inflation are misplaced.
• As we have seen in the discussion of the fear that the cost of a new children’s income floor would outweigh the benefits, Columbia University’s Irwin Garfinkel and colleagues, calculated that making permanent the child allowance enacted by the US Congress in March 2021 would generate a benefit-cost ratio of eight-to-one.

Evidence that radically reducing child poverty in an entire nation is an achievable goal.

• Just two decades ago, child poverty rates were similar in the US and Great Britain. Then, in March of 1999, Prime Minister Tony Blair announced his intention to cut child poverty in half within 10 years. He would “reform the welfare state and build it around the needs of families and children.” While many poverty-related policies had been similar in the US and Great Britain, Columbia University’s Jane Waldfogel’s book about the British approach pointed to an important difference. Whereas American welfare policy had always (with a brief exception in 2021) made support for children contingent on parental employment, British lawmakers broke from the American tradition in a fundamental way when they decided to increase financial support for all families with children, whether or not the parents worked. By 2007–2008, the number of poor children had fallen by 50 percent.

One more piece of evidence from what is probably the widest review of causal studies over the last 50 years, is the finding by Harvard economists Nathaniel Hendren and Ben Sprung-Keyser of a “clear and persistent pattern” that investments in children, from birth up to their teen years, consistently yield the largest long-run gains for society of any form of social spending.

Reversing “an abominable policy choice”

Before we become discouraged or impatient by the latest setback, when the 2021 ECTC was allowed to end, we should note that it was almost 20 years ago that Congresswoman Rosa DeLauro of Connecticut, now Chair of the House Appropriations Committee, became convinced by the research that was slowly accumulating that we had immense new opportunities to improve lives of the children too often left behind. She spread the word about what we were learning about the clear connection between growing up in poverty and the results that manifested in ill health, inadequate education, and harshly circumscribed life prospects.

The evidence that had so impressed DeLauro was soon strengthened by the groundbreaking 2019 report from the National Academy of Sciences, A Roadmap to Reducing Child Poverty. Further evidence supporting strong and streamlined government action to reduce poverty became even more salient as awareness grew of the outsize damage that the COVID-19 pandemic imposed on poor and minority families. The maze of eligibility requirements that accompanied earlier legislation had excluded too many children, including a high proportion of children in poor, Black and Hispanic families.

Over the years, Rep. DeLauro’s advocacy of a basic income for families with children has been joined by advocates and by equally enthusiastic and influential Senators Bennet, Booker, and Sherrod Brown and — as part of the new administration — White House economist Jared Bernstein and the President. It had taken two decades to get us to the passage of legislation aimed at ending child poverty in March 2021 — and that lasted only six months.

The eminent journalist and political observer, Ezra Klein, summed it up brilliantly: “We saw how well it worked, how many people it helped. It may or may not be revived this year, but it now sits firmly in the realm of the politically possible. It has made clear what we have always known: In a country as rich as our own, this much child poverty is a policy choice, and an abominable one.”

The American public is catching up with the experts. In May 2022, a nationwide poll found that, by a 6 to 1 margin, likely voters say the federal government should increase our investments on children. Support for specific programs, including the Child Tax Credit, crossed race, gender, and party lines.

Given the weight of the evidence, the support and the experience we have gathered over the last two decades, ending child poverty in America is no longer an impossible dream. It is a realistic objective that all of us who care about America’s future can be working toward every day.

[1] Nicholas Lemann, The Promised Land (New York: Vintage Books, 1992), 149.

[2] Schorr Lisbeth B. (with Daniel Schorr). Within Our Reach: Breaking the Cycle of Disadvantage. New York: Doubleday, 1988. Schorr, Lisbeth B. Common Purpose: Strengthening Families and Neighborhoods to Rebuild America, New York: Doubleday, 1997.

[3] NAS, Roadmap to Reducing Child Poverty,(2019), p. 67

[4] NAS, Roadmap to Reducing Child Poverty,(2019), p. 89