What the Biden administration can do to fight child poverty
Juanita Dominguez (whose real name has been changed to protect her privacy) is an immigrant from Venezuela and a single mother of two living in Queens, New York. Dominguez was earning a comfortable salary of $70,000 as an engineer at a construction company until the pandemic hit and she was laid off.
It took three months for her to start receiving unemployment benefits. Meanwhile, her ex-husband stopped making child support payments, and with family court hearings significantly curtailed during the pandemic, Dominguez had little legal recourse.
“My first fear was, how am I going to buy food and make rent?” she remembered after she approached Urban Upbound (an organization Suraj has a volunteer board position with that provides financial counseling along with banking and job placement services to help end cycles of poverty in New York). With no income, she dipped into her savings and had no choice but to stop making student loan payments. She also maxed out five credit cards — leaving her credit score shot — just so her family could survive.
No family should have to live on the brink in the United States. We can help improve the financial security of families like Juanita’s by providing direct monthly payments to families with children. The American Rescue Plan, the $1.9 trillion Covid relief bill which passed in the Senate on Saturday, includes a one-year child tax credit of $3,600 for each child under 6 and $3,000 for each child under the age of 18. While this is a good first step, benefits for children must be made permanent.
Even before the pandemic, more than 4 in 10 children lived in households that struggle to meet basic expenses, and the United States has one of the highest child poverty rates of all developed countries, according to the Economic Policy Institute. Poverty can have a lifelong impact on kids, negatively affecting their learning and development, their physical brain composition, and their earnings in adulthood.
The Covid-19 pandemic has only exacerbated the problem of child poverty. In New York, where we both live, roughly 2.1 million children no longer had access to free and reduced-price meal programs once schools shut down, leading the state to issue an additional $880 million in food assistance. Many students here and across the country are also falling behind in school — or failing to show up entirely — due to the lack of internet connection, laptops or stable home environments that allow them to fully engage in online learning.
But this child poverty crisis existed long before the pandemic hit. It’s in part a case of our misbegotten political priorities. Currently less than 10% of the federal budget is spent on children, even though government investment in children generally pays for itself and then some.
The crisis is also a product of simple economics: Having children increases the risk that a family will fall into poverty: more children mean more mouths to feed. And because many parents have children relatively early on in their working lives their lower salaries leave them less able to pay for the new expenses that come with child rearing. Without government support, many young families are scraping by with no financial security.
This mirrors the problem the elderly faced after the Great Depression. According to the Social Security Administration, more than half of the elderly in America lacked sufficient income to be self-supporting in 1934. The government responded to that social crisis by creating Social Security to provide the elderly with a decent and dignified retirement.
We ought to do the same at the other end of life. That’s why, when I ran for Congress last year, I wrote and championed a policy that would streamline our complicated child benefits policy into a single Universal Child Dividend that functions as Social Security for children. This would have provided $500 a month for every child until the age of five and then $350 a month until the age of age 18 without conditions or qualification requirements.
Encouragingly, similar proposals have since gained traction in Congress. Sen. Mitt Romney proposed a monthly child allowance program in February, while the American Rescue Plan is headed to the House for final approval on Tuesday before President Joe Biden is expected to sign it into law.
The relief bill would provide significant help for millions of families, but it could be improved to have a greater impact. The government should offering extra help to families with young children and increase the benefits to $500 per month (up from $300 a month for children under 6 under the new relief bill). This money should also be deposited immediately into new individual bank accounts automatically set up for all Americans by the Federal Reserve — as Sen. Sherrod Brown has proposed — so parents would not have to wait for checks to arrive in the mail or direct deposits to clear. The bank accounts would also allow parents to spend the money without any fees or minimum balance requirements. Most importantly, the child tax credit should be made permanent.
For families like Juanita’s, the benefit just might change the trajectory of her children’s lives. “My older son needs a tutor for physics and math,” she told us. The benefit would eventually cover the costs of college applications and SAT prep too.
“Security is everything,” she said. “Financial security helps me be confident; it helps my family grow.” This is the moment for our political leaders to step up to provide the economic security that children and families need to thrive.
