I’ve been writing about economics and politics for many years, and have learned to keep my temper. Politicians and policymakers often make decisions that are simply cruel; they also often make decisions that are stupid, damaging the national interest for no good reason. And all too often they make decisions that are both cruel and stupid. Flying into a rage every time that happens would be exhausting.
But the latest census report on income and poverty made me angry. It showed that child poverty more than doubled between 2021 and 2022. That’s 5.1 million children pushed into misery, for it really is miserable to be poor in America.
And the thing is, this didn’t have to happen. Soaring child poverty wasn’t caused by inflation or other macroeconomic problems. It was instead a political choice. The story is in fact quite simple: Republicans and a handful of conservative Democrats blocked the extension of federal programs that had drastically reduced child poverty over the previous two years, and as a result just about all of the gains were lost.
The cruelty of this choice should be obvious. Maybe you believe (wrongly) that poor American adults are responsible for their own poverty; even if you believe that, poor children aren’t to blame. Maybe you worry that helping low-income families will reduce their incentive to work and improve their lives. Such concerns are greatly exaggerated, but even if you worry about incentive effects, are they big enough to justify keeping children poor?
Why do I say that this policy choice was stupid as well as cruel? Two reasons. First, avoiding much of this human catastrophe would have cost remarkably little money. Second, child poverty is, in the long run, very expensive for the nation as a whole: Americans who live in poverty as children grow up to become less healthy and productive adults than they should be. Even in purely fiscal terms, refusing to help poor children may, over time, actually increase budget deficits.
About the immediate budgetary costs: The thing about helping low-income Americans is that precisely because their initial incomes are so low, fairly modest amounts of aid can make a huge difference to their well-being.
More than half of the rise in child poverty could have been avoided by extending the 2021 enhancement of the child tax credit. Such an extension would probably have had a direct budget cost of about $105 billion a year.
That may sound like a lot to people who aren’t familiar with the sizes of both the U.S. economy and other major social programs. But it’s actually a modest sum. It’s less than half a percent of the country’s gross domestic product. It’s a small fraction of what we spend on Social Security ($1.3 trillion) and Medicare ($800 billion). It’s only a bit more than half the annual revenue loss from the 2017 Trump tax cut.
Furthermore, we could have significantly blunted the rise in child poverty by retaining just one piece of the child tax credit enhancement, the part that made the credit fully refundable — that is, allowed the lowest-income households to get the entire $2,000 credit. The estimated cost of doing this would be around only $12 billion a year — pocket change in the context of the federal budget.
But we didn’t do any of these things, again, because of conservative opposition. And the nation as a whole will pay a steep price.
The proposition that helping poor children makes them healthier, more productive adults isn’t hypothetical. On the contrary, it’s backed by solid evidence — better than the evidence that spending on physical infrastructure is good for the economy (although I believe that too) and infinitely better than the evidence that tax cuts promote growth, which is nonexistent.
How so? Historically, anti-poverty programs like food stamps and Medicaid weren’t introduced uniformly across America. Instead, they were rolled out gradually across regions, so we can compare the life trajectories of Americans who had access to these programs as children with those of Americans who didn’t. The results are clear: Aid to low-income children is a “highly cost-effective investment.” Those who received such aid ended up healthier, better educated and more economically self-sufficient than those who didn’t.
Since adults who aren’t productive or healthy are, among other things, a fiscal burden, this may well mean that even in purely budgetary terms cutting off aid to poor children is self-destructive.
Yet here we are.
Unfortunately, children can’t vote and poor adults tend not to vote either. So politicians can get away with policies that harm poor children.
But not all politicians are completely cynical; some of them care even about Americans who don’t vote or send them money. Nor are all voters purely self-interested. After all, we did make huge strides against child poverty, even if they were short-lived. And now at least we know that fighting child poverty is possible.
Realistically, the political will to undo our terrible mistake doesn’t exist at the moment. But there’s always hope that we’ll eventually do the right thing.