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The child tax credit was a lifeline. 2 months after it ended, families are struggling


If you're a parent, you probably got some monthly deposits in your bank account last year as part of the expanded Child Tax Credit. But that ended in December after Congress failed to renew the program as part of the Build Back Better plan. In his State of the Union address, President Biden called on Congress to revive it.


PRESIDENT JOE BIDEN: And extend the Child Tax Credit so no one has to raise a family in poverty.

MCCAMMON: For many families, the money was a lifeline. And the past two months without it have pushed them back into financial instability.

AMY JEAN TYLER: My name is Amy Jean Tyler (ph), and I'm from Crestwood, Ky. Since my husband has been dealing with layoffs, the one extra source of income we can rely on had been the child tax credit. Since the child tax credit has stopped, we have about $34 left in our bank account. We are living week to week, sometimes waiting on unemployment checks that don't always arrive on time.

MARC LOISELLE: My name is Marc Loiselle (ph). I live in Flint, Mich. When the pandemic started, we had our son, and we weren't sure how exactly we were going to get by on things. My previous car had 250,000 miles on it, so we were able to purchase a newer car - that was because of the tax credit - to replace that one that had lower mileage. And we've been having trouble ever since the tax credit went away in keeping up with that payment.

CAITLYN OVERACKER: Hi. My name is Caitlyn Overacker. I live in Fairbanks, Alaska. I have five kids ages 14 to 4. I was able to use the Child Tax Credit to cover the cost of child care, having two vehicles, gas for those vehicles, extracurriculars for our children. Now we're weighing options to decide whether or not me continuing to work makes as much sense. I really like my job. It would be a real shame, but I guess we'll have to see how things pan out.

GRACE: I'm Grace (ph). I live in Central Florida. The Child Tax Credit made a huge difference in my family and my daughter's family's lives. It helped shore us up in the middle of the month when we'd be running out of food money and trying to pay bills and worrying about the kids. It uplifted us and gave us hope because we knew that money was coming into our bank account. And without the Child Tax Credit, the struggle continues as usual.

SARAH ANDERSON: My name is Sarah Anderson (ph). I live in Durham, N.C., with my husband and four children. The thousand dollars a month that we received really helped our family. I lost both of my jobs during the course of the pandemic. The money wasn't a replacement for that income, but it just helped keep everything afloat. And to lose that money, especially where the price of everything has skyrocketed - go to the grocery store, and groceries seem like they're way more, almost double what they were, you know, even last year. I just feel really abandoned by this country, honestly, and by our Congress going to bed at night, just wondering how are we going to pay all of these bills this month. And I just don't want my kids to feel that stress or to worry about it.

MCCAMMON: Grace didn't provide her last name for privacy reasons. We also heard from a mother who could no longer pay for child care and might lose her job and a property manager who said his tenants are now falling behind on rent again.

ELIZABETH ANANAT: You know, this is sort of the high cost of being poor.

MCCAMMON: That's economist Elizabeth Ananat from Barnard College. She's been tracking the effects of the Child Tax Credit since the first payment went out in July, and she said it had an instant impact.

ANANAT: Poverty fell immediately by a lot. Hunger fell immediately by a lot among families with children. Hunger has been much, much higher in the United States for families with children than for families without children. And we saw that gap shrink and, for some groups, even disappear immediately when that first check went out in July.

MCCAMMON: And after those payments stopped...

ANANAT: Those hardships went right back up. My colleagues at the Columbia Center on Poverty and Social Policy do a monthly poverty tracker. They had estimated that 3.7 million children were kept out of poverty in December by that last Child Tax Credit payment and that 3.7 million children fell into poverty in January, the first month without the check.

MCCAMMON: But what is the significance of spreading out those payments monthly as opposed to one lump sum at tax time?

ANANAT: Yeah. So particularly for lower income families - right? - there's a lot of income volatility over the year, a lot of unstable hours, unstable scheduling, a lot of churn. You know, we don't have paid family leave or paid sick leave in this country. So if your kid gets an ear infection and has to be home, you lose those wages for sure if you're a low-income worker, and quite possibly, you lose your job, right? And so then you have a month without income until you find a new job.

And that can snowball - these charges for missing payments, the need because you don't have cash on hand to buy things in these small increments, to pay a lot of interest, which causes, you know, just an incredible amount of expense in order to get things right again. And getting money at tax time is helpful, but it's hard to smooth that over the year when you don't know what's going to happen and you can't predict when you're going to be in trouble.

MCCAMMON: Is there any potential downside for these families to this approach? I mean, so often people at tax time use that big check to make a car repair, to make a home repair, you know, to pay for major expenses that they might not be able to save up for during the year. Without that, are some of these families going to find themselves in a different kind of squeeze?

ANANAT: Well, for many of the lower-income families, because the total benefit went up, they're getting more at tax time in addition to having gotten more throughout the year. It's also important to remember, you know, we're not getting rid of these tax time benefits. The Earned Income Tax Credit continues to be given out at tax time. That is a lot of what people talk about when they talk about meeting these big one-time expenses. You know, the best approach is the combination - right? - so some money that comes every month that you can count on and an infusion of cash once a year to help you meet these bigger expenses.

MCCAMMON: One of the most notable things about the program was the lack of eligibility requirements. I mean, basically, you just had to have children, right? And you would automatically get these advance payments. Why was that important for the design of this program?

ANANAT: Yeah. So that was a big change from the way the U.S. had previously done programs. The sort of historical notion had been if we put up a lot of hurdles to getting benefits, then only the people who really need them will be willing to fight through those hurdles. And that way, we'll sort of save money because we won't spend it on the people who don't really need it because they won't bother. And we'll just get it to the people who really are needy and sort of deserving.

You actually end up with those approaches backfiring where it's actually families who need help the most who don't have the resources to navigate those hurdles. And they're the ones most likely to be left out of these programs. And so this was a big change because the idea was we're going to try to make it be as low-hurdle as possible. You just need to have kids, and we will send you the check. And that way, we'll get the money to everybody. And in particular, we will get it to the families that need it most.

MCCAMMON: As you look back at this program, what lessons might policymakers who are focused on issues like addressing child poverty learn from it beyond the pandemic?

ANANAT: Well, I think one of the most important things we learned is that there was no effect on parent work. You know, this is research that we've done where we pushed and pulled on the data every which way trying to see if we could find some parents dropping out of the labor force because now, you know, they have this money, whether they work or not. And we just saw no evidence of that at all. And this had been a thing that really, I think, held policymakers back from providing this type of assistance - was the fear that it would lead to lower parent work. And we just don't see that at all. And I think now that we can see that that really just did not happen, people can proceed with a lot more confidence. And this is a great way to help families, and it won't have these unintended side effects.

MCCAMMON: Liz Ananat is an economist at Barnard College and served at the White House Council of Economic Advisers during the Obama presidency. Thank you so much for your time.

ANANAT: Thanks for having me.

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Sarah McCammon
Sarah McCammon is a National Correspondent covering the Mid-Atlantic and Southeast for NPR. Her work focuses on political, social and cultural divides in America, including abortion and reproductive rights, and the intersections of politics and religion. She's also a frequent guest host for NPR news magazines, podcasts and special coverage.
Lauren Hodges is an associate producer for All Things Considered. She joined the show in 2018 after seven years in the NPR newsroom as a producer and editor. She doesn't mind that you used her pens, she just likes them a certain way and asks that you put them back the way you found them, thanks. Despite years working on interviews with notable politicians, public figures, and celebrities for NPR, Hodges completely lost her cool when she heard RuPaul's voice and was told to sit quietly in a corner during the rest of the interview. She promises to do better next time.