Monthly federal child tax credit cash aims to cut child poverty with no-strings payments
It’s estimated the cash that starts going out in July could lift 45% of kids living in poverty above the poverty line, vastly reducing Black, Hispanic and Native American child poverty.
ALBUQUERQUE, N.M. — The check won’t arrive until mid-July, but Katrina Peters already knows what she’ll do with her federal child tax credit payments come.
The 20-year-old mother of three has applied to work as a driver with a food delivery app, and she has earmarked the extra cash for repairing, registering and insuring her car.
“I just need to make sure it’s 100%, and then I can start working and get an income,” Peters said, cradling her infant son Armani. “That’s where it starts.”
The payments are a key part of Democrats’ COVID-19 aid bill Congress passed in March. But they are more than just an attempt to help families recover from the pandemic. The monthly checks of up to $300 per child for millions of families are part of an ambitious attempt to shrink child poverty and, in the process, rethink the American social safety net.
With an emphasis on direct, no-strings cash support, the payments are a departure from a system that for decades has tried to control how Americans spend their government assistance by funneling it to food, housing or child care.
So Peters is just as free to use the cash on her car as she is to spend it on diapers.
“There’s something huge happening with the idea that the lowest-income people need cash assistance the most,” said Teague Gonzalez, public benefits director with the New Mexico Center on Law and Poverty. “The pandemic opened up a connection to the idea of giving people cash and letting them decide how to use it.”
The expanded CTC payments, which are due to begin going out July 15, are meant to last a year. But supporters say they want to make this permanent, that the coronavirus pandemic laid bare the inadequacies of America’s support system and provided the political momentum to be able to make lasting changes.
“If implemented well, this could be transformative,” said Emma Mehrabi, director of poverty policy for the Children’s Defense Fund. “This could cut child poverty in nearly half.”
Part of the American Rescue Plan, the child tax credit provisions will increase the payments and greatly expand the number of families eligible.
The practical result will be direct payments for each child to families ranging from impoverished to solidly middle class — $3,600 a year for children under 6 and $3,000 a year for older children.
About 39 million households will receive at least partial payments, covering an estimated 88% of American children.
Columbia University’s Center on Poverty and Social Policy estimates the cash infusions could lift 45% of children living in poverty above the poverty line — cutting Black child poverty by 52%, Hispanic child poverty by 45% and Native American child poverty by 62%.
In places like New Mexico, a state with one of the highest rates of children living in poverty, this is a potential crossroads. One in four children in New Mexico is considered impoverished, compared with one in seven nationally.
With three kids under 6 years old, Peters is due to get up to $900 a month, which she badly needs. Her construction worker boyfriend has been out of work due to the pandemic, she said, her government subsidized housing voucher has expired, only the national eviction moratorium has protected her, and Armani requires a special baby formula that she can’t buy with her government nutrition program benefits.
“Sixteen dollars a can, and he goes through it in two or three days,” she said.
Sen. Martin Heinrich, D-N.M., said the philosophy behind the payments is to treat child poverty as an avoidable traumatic event — one that has been proved to hurt future academic performance, emotional stability and, earning power as well as to make it likelier that child will have future problems with the law.
“It affects your ability to have positive relationships, both professionally and in your home life,” Heinrich said. “The more of these stack up, you’re more likely to have problems with the legal system, unsuccessful relationships, lower lifetime income.”
Besides a basic acknowledgement by the government that raising children is expensive for almost anybody, advocates say the payments are an expression of faith in the judgment of struggling families.
“We need to trust these families to do what’s right,” said Jeffrey Hoehn, executive director of Cuidando Los Ninos, an Albuquerque charity that provides housing, child care and financial counseling for mothers transitioning from homelessness. “We find that our single moms, they know where every single penny goes. It’s just that they don’t have enough pennies.”
Hoehn said families will have shifting needs and resources, often varying from month to month, whether it’s to put the cash toward rent, utilities or even therapeutic leisure activities. In a sprawling town like Albuquerque, it’s hard to find work without a car, and Hoehn said many families his group works with are looking to the extra cash to acquire or fix a vehicle.
For Margarita Mora, the money will help cushion her family’s transition to stability. The 36-year-old mother of three had been staying in an Albuquerque motel converted into a family shelter, soon to be getting her own subsidized apartment through Cuidando Los Ninos.
“I’ll be able to pay my utilities and basic supplies, plus gas to go look for work,” said Mora, an unemployed caregiver. “And I need to work on my debt. My credit score isn’t so great.”
The money isn’t only going to the neediest. Carissa Oswald, a stay-at-home mom in Albuquerque whose partner works for a railroad, counts herself as middle class. But having given up her work as a caregiver to raise her 11-month-old daughter, she finds that money is frequently tight.
“Kids are expensive, right?” Oswald said. “It would let us breathe a little bit easier. The tension is real. The stress is real.”
New Mexico state Rep. Javier Martinez, a Democrat from Albuquerque, calls the CTC a “philosophical shift from mid-20th century programs” like Medicaid and food stamps. “And I don’t think we’re going back,” he said.
The expanded CTC expires in 2022, though President Joe Biden has proposed extending it through 2025. Whether that happens could depend on whether proponents can demonstrate a positive impact — and whether opponents, primarily Republicans, find evidence of waste.
“There will be plenty of compelling anecdotes on either side of it,” Heinrich said. “We will have the data by then to show what a difference it has made. . . . And I suspect that, in New Mexico, this will have an enormous impact.”