Analysis

The Left Promised This Biden Policy Would Slash Child Poverty. Here’s What Really Happened.

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Ironically, President Joe Biden’s panoply of failures have had one beneficiary: Joe Biden. Amidst such conspicuous failures as runaway inflation, an uncontrolled border, a deadly urban crime spree, and his inability to “shut down the virus,” President Biden has not been held accountable for his mundane missteps and broken campaign promises. He vowed to end partisanship, then branded outraged parents and right-of-center soldiers as potential domestic terrorists.

He promised his economic policies would create “millions” of jobs, but they did not add a single job to the U.S. economy in 2021. Biden promised that recrafting the Child Tax Credit as a monthly welfare program would decimate child poverty, but — as we shall see — that, too, disappointed. Nonetheless, left-wing ideologues privately admit that they continue to support the Child Tax Credit, because they see it as a way to turn the United States into a European welfare state or a socialist nation.

How Biden turned the Child Tax Credit into a welfare check

Congress created the Child Tax Credit in 1997 to help support parents, recognizing that the government has an interest in discouraging a low fertility rate, which is strongly tied to economic stagnation. The CTC began as a minimal ($400 a year) nonrefundable tax credit, which meant parents could only collect the full amount if they owed at least $400 in federal income taxes. That also meant parents had to work in order to receive this tax reduction. But the CTC has steadily expanded under presidents of both parties. President Donald Trump increased the amount and scope of the Child Tax Credit as part of the Tax Cuts and Jobs Act of 2017, but recipients had to earn at least $2,500 a year to qualify, and parents could collect only a part of the total credit if the CTC exceeded their IRS bill.

In 2021, Joe Biden’s American Rescue Plan transformed the Child Tax Credit into a monthly welfare check. The ARP severed the CTC’s original connection to work or its status as a tax reduction. Parents received 100% of the “tax credit,” even if they owed no federal income taxes, and the plan contained no work requirement. Perhaps most transformatively, recipients no longer had to wait until the end of the year to receive the credit with its tax refund. Starting last July, families making up to $150,000 a year could bank a “tax credit” of $300 a month for every child under the age of six and $250 for each child aged 6 to 17, deposited directly into their bank accounts, even if they did not work one hour that year.

By one estimate, 80% of the new Child Tax Credit’s benefits go to people who owe no federal income tax.

Boosting unemployment to fight poverty?

The new Child Tax Credit’s advocates insisted the new CTC would decimate child poverty. The CTC “has the potential to reduce monthly child poverty by up to 40 percent on its own,” according to a group of scholars at Columbia University’s Center on Poverty and Social Policy. While they estimated the CTC greatly reduced child poverty, they admitted their numbers are speculative.

That led another group of scholars at the University of Notre Dame’s Lab for Economic Opportunity to use real numbers. Whiel they acknowledged November’s “promising” reduction in child poverty — of 1.8 percentage points — they concluded, “we still do not see the sharp decline in the poverty rate for children that had been forecasted.” Poverty analyst Angela Rachidi of AEI noted, “It appears from the preliminary data that the claims on the effects of the CTC on child poverty might have been oversold.”

A street-level analysis of the CTC bears this out. A Politico/Morning Consult poll found that 61% of Americans said the CTC had little or no impact on their lives. A majority (52%) of Americans opposed extending the CTC, with only 18% saying lawmakers should “definitely” make the program permanent.

Part of the problem lies in the way the U.S. measures poverty. The official U.S. poverty level does not include“noncash benefits (such as public housing, Medicaid, and food stamps).” The Cato Institute found that the median value of welfare benefits in all 50 states is $28,500 a year — in 2013. That’s higher than the 2022 poverty level for an average family of four.

Since the U.S. poverty level does not measure consumption but income, that means the poverty problem is really an income problem.

By that measure, Biden’s CTC made America’s poverty problem systemically worse.

President Ronald Reagan once said, “The best social program is a job.” Conservatives warned at the outset that giving money to non-working families “will increase the number of families that rely primarily on government benefits as a replacement for work.” Biden’s CTC “will subsidize nonworking families, increasing the likelihood that the most vulnerable will remain outside the workforce. It also will subsidize single parenthood, including among teens, thereby weakening the probability that children will be raised by a married mother and father,” wrote Leslie Ford of The Heritage Foundation.

Some people would make more money from the CTC than they could earn at work; others will be willing to trade a little income for 40 hours of leisure. In all, the CTC “would lead 1.5 million workers (constituting 2.6% of all working parents) to exit the labor force,” according to a study from the University of Chicago.

What happens when that many people leave the workforce? “The decline in employment and the consequent earnings loss would mean that child poverty would only fall by 22% and deep child poverty would not fall at all with the CTC expansion,” they found. (Emphasis added.)

Erasing the Success Sequence

Any program seeking to deal with the “root causes” of child poverty would encourage people to get a full-time job — any full-time job — and keep it. In 2019, the poverty rate for people who worked full-time all year was just 2.4%. “Full-time workers remained much less likely to be among the working poor than part-time workers,” according to the Biden administration’s Bureau of Labor Statistics.

The same pattern holds true in the United Kingdom and Canada. The Fraser Institute, a Canadian free-market think tank, found that the poverty rate for Canadians who graduated high school, worked full time, and waited until marriage to have children stood at 0.9%. The poverty rate in a home where at least one person works full time is just 1.7% in the Great White North.

The Success Sequence, originally propounded by Isabel V. Sawhill and Ron Haskins of the Brookings Institution, found that people who finish high school, work full time, wait until age 21 to get married, and do not have children outside wedlock have a tiny likelihood of living in poverty. Biden’s CTC takes aim at full-time work and thus systemically undermines bona fide anti-poverty efforts.

Why does the Left still love the new “Child Tax Credit”? It paves the way to the welfare state

If the CTC failed to deliver in overall poverty reduction, and most Americans don’t want the program extended, why do left-wing politicians and ideologues remain so committed to it? They admit the reason in their journals and op-eds: The new CTC is a form of wealth redistribution. A child subsidy figures into every European social welfare state (where the native-born birthrate has been cratering for a generation). They believe making families dependent on government handouts will increase the desire to ratchet up wealth redistribution. Robert Kuttner of The American Prospect — who once also wrote, “To be an effective liberal today, you need to be a socialist” — praised “the simple, radical, Rooseveltian idea of giving people money.” (Emphasis in original.) “It’s not enough, but it’s one hell of a leap forward—that will create momentum for more leaps,” he wrote. After all, “This is free money, and word will spread.”

In true Rooseveltian fashion, they also hope one three-letter government program will replace another: Left-wingers believe the CTC will pave the way for UBI, a universal basic income. Reuters admitted last July, “The Child Tax Credit is being likened to a universal basic income for children.” The Los Angeles Times went further, declaring, “The new child tax credit being paid out to American parents will prove the virtues of universal basic income.”

The Left sees the fact that the CTC convinces people to stop working as a feature, not a bug: A wealth-transfer payment gets Americans used to collecting a government check for doing nothing. Studies show welfare dependents are more likely to vote for the party that expands those benefits, namely the Democrats (as Kuttner alluded).

In short, the Democratic Party is buying the votes of unproductive Americans with your tax dollars and trying to fundamentally transform America into a socialist nation. Don’t let them pretend it’s about anything else, especially “the children.”

The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.

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