How Will Biden’s Fix for Child Poverty Affect Kids’ Health?
March 11, 2021
The recently passed $1.9 trillion American Rescue Plan Act includes a sweeping expansion of the child tax credit, a policy change that could protect millions of kids from poverty — and the health risks that come with it.
Listen to the full episode below, read the transcript, or scroll down for more information.
Browse some of our other reporting on safety-net policy issues.
The Problem: Child Poverty and its Health Risks
More than 10 million children in the United States live below the poverty line (around $28,000 for a family of four) and nearly three-quarters are children of color.
A large body of research has documented the short- and long-term health effects that living in poverty can have on kids. For example, children in poverty are more likely to have chronic illnesses like asthma and poor cognitive and oral health. They are also more likely to face food insecurity, which poses additional health risks.
Survey data show that the pandemic has further exacerbated low-income families’ financial stresses and their associated health risks:
Source: The Impact of COVID-19 on American Households; Marianne Bertrand, Guglielmo Briscese, Maddalena Grignani and Salma Nassa; University of Chicago; 12/21/2020
Source: Census Bureau’s New Household Pulse Survey Shows Who Is Hardest Hit During COVID-19 Pandemic; Brian Mendez-Smith and Mark Klee; U.S. Census Bureau; 6/19/2020
The Policy: Expanding the Child Tax Credit
President Joe Biden’s recently passed $1.9 trillion economic and coronavirus relief package, known as the American Rescue Plan, includes a sweeping expansion of a program known as the child tax credit.
- $2,000 maximum per child under 17
- Must earn at least $2,500 in income to be eligible
- Received once per year
- $3,600 maximum per child under 6 and $3,000 per child 6-17
- No employment or earned income required
- Received monthly
Note: The American Rescue Plan Act only includes enough funding ($110 billion) for these changes to last one year and then Congress must vote again to make them permanent.
Some estimates suggest this policy change could cut child poverty by about 40%, lifting 4 million kids above the poverty line and reducing their risk for the health harms associated with poverty. A growing body of research on the impact of another tax credit, the earned income tax credit, also suggests it could have positive health effects.
After passing a similar child tax credit policy, Canada saw the number of children living in poverty decline by 278,000 in three years. Many other countries with far lower child poverty rates than the U.S. also have some form of “child allowance” policy.
While most agree this policy would significantly lower rates of child poverty, some worry about its unintended consequences. For example, some caution that expanding government assistance discourages unemployed parents from seeking work, though quite a few studies suggest that concern is unwarranted. Others disagree that labor market participation should even be a primary metric for judging the success of policies like these. Regardless, many other developed countries with similar child benefits have higher labor market participation than the U.S.
Others have expressed concerns about the design of the benefit, which remains intertwined with our tax system, warning that it is very complex to administer and could fail to help very poor Americans that do not file income taxes.
Finally, there are those that believe other policies to address child health should be prioritized instead, such as reducing gun violence, increasing access to affordable housing and improving paid family leave policies.
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Additional Resources and Reporting on Child Poverty, Tax Credits and Health:
What The $300 A Month Child Benefit Could Mean For A Family On The Edge (Anya Kamenetz, NPR, 3/9/2021)
In the Stimulus Bill, a Policy Revolution in Aid for Children (Jason DeParle, New York Times, 3/7/2021)
The Potential Poverty Reduction Effect of President Biden’s Economic Relief Proposal (Zachary Parolin, Sophie Collyer, Megan A. Curran and Christopher Wimer; Center on Poverty and Social Policy at Columbia University; 2/25/2021)
The long-term effects of childhood exposure to the earned income tax credit on health outcomes (Breno Bragaab, Fredric Blavina and Anuj Gangopadhyayaa; Journal of Public Economics; 10/2020)
A Roadmap to Reducing Child Poverty (National Academies of Sciences, Engineering and Medicine, 2019)
The Earned Income Tax Credit, Poverty, And Health (David Simon, Mark McInerney and Sarah Goodell; Health Affairs; 10/4/2018)
Deborah Frank, MD, Founding Director of the Grow Clinic at Boston Medical Center (retired); Professor of Child Health and Well-Being (retired), Pediatrics, Boston University School of Medicine; and Founder and Principal Investigator, Children’s HealthWatch
Juell Frazier, advocate and health services professional
Tara Hayes, MPP, Director of Human Welfare Policy, American Action Forum
Hilary Hoynes, PhD, Professor of Public Policy and Economics, University of California Berkeley
Chuck Marr, MBA, Senior Director of Federal Tax Policy, Center on Budget and Policy Priorities
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This episode was reported and produced by Christine Fennessy, mixed by Andrew Parrella, and produced for the web by Leslie Walker.
Additional thanks to:
Regina Baker, Cara Baldari, Allison Bovell-Ammon, Michelle Dallafior, Megan Curran, Irma Elo, Irwin Garfinkel, Sam Hammond, Elaine Magg, Angela Rachidi, Robert Rector, Mark Stabile, the Tradeoffs Advisory Board and our stellar staff!