For millions of children, January has been the cruelest month, thrusting them back into poverty and leaving their families uncertain about how they will keep a roof over their heads and put food on the table.
The temporary expansion of the child tax credit expired Dec. 15 and is expected to increase childhood poverty from 12 percent to 17 percent in January, the highest since December 2020, according to research by the Center on Poverty and Social Policy at Columbia University. Black and Latino children will be hit harder, with poverty rising to 1 in 4 kids.
The child tax credit expansion was introduced under the American Rescue Plan Act by House Democrats, allowing payments previously distributed as part annual tax refunds to be distributed as automatic monthly payments of $250 or $300 per child. The total payout was increased to $3,000 per child 6 and older, and up to $3,600 per child younger than 6. Eligibility definitions were broadened, including allowing families with children to be eligible for the full credit even if they had low or limited earnings.
Families say that extended a lifeline to them at a time when job security and child care were scarce.
Eliza Carey, 39, is a mother of five in Bloomington, Indiana, with an underlying health condition. She had jobs at UPS, an insurance company and a clinic during the pandemic but is now studying to be a special education teacher. The child tax credit helped her buy food, make rent, pay her car loan and “treat the kiddos every once in a blue moon.”
Without the tax credit, she says, she would have had to move in with family and skip meals so her children could eat.
Without it, it has been like taking a whole working person from the house.
“No one is sitting around waiting to collect. People who are used to going out and working hard and they lost their job because of Covid, they really need that help,” Carey told NBC News.
Amber Fredenburg, 32, a house cleaner in Bradenton, Florida, said the child tax credit “helped us get by and not have to stay stressed about how we would have lights or water, if we would have somewhere to sleep.” The single mother of three who left her job as a waitress after she got Covid said the child tax credit had paid for three-quarters of her rent and covered the utilities.
“Without it, it has been … like taking a whole working person from the house,” she said.
“The power of what the child tax credit did was getting funds directly to those kids who need them — there is simply no policy that is as effective as that,” said Andrew Stettner, a senior fellow at The Century Foundation, a progressive think tank. “The reductions were historic and it is criminal that it’s so controversial to take a simple step to rectify the inequality our modern economy causes.”
A 2019 study by the National Academy of Sciences, commissioned by Congress, found that the United States could cut poverty in half and increase the hiring of low-income workers by more than 400,000 by expanding the child and dependent care tax credit, expanding the earned income tax credit, which is a tax credit for workers with low to moderate income, expanding the housing voucher program and SNAP benefits (formerly known as food stamps). That would take $90.7 billion annually. Studies estimate the annual cost of child poverty in the U.S. is as much as $1.1 trillion.
Extending the child tax credit was a component of the now-stalled Build Back Better plan, which is languishing in the Senate. President Joe Biden said he has been talking to Congress about passing parts of the bill on their own, and advocates fighting child poverty are still pushing on Capitol Hill for the tax credit to be one of those pieces.
“Children’s issues are seen as a private family issue, rather than affecting us all,” said Cara Baldari, vice president of family economics, housing and homelessness at First Focus on Children, a nonprofit advocacy group. “When families have resources to support their children, they can thrive, have better education and health, and earn more as adults … they are our future workforce.”
Studies estimate the annual cost of child poverty in the U.S. is as much as $1.1 trillion.
First Focus is just one of the groups urging Biden to create a child poverty target by executive order, which would set an overall policy goal for cutting child poverty. It's a strategy that has already proven successful in aligning policy in other countries, like the United Kingdom and Ireland, which used it to curb child poverty.
Creating a children’s interagency coordinating council at the U.S. Department of Health and Human Services would also help streamline bureaucracy and share data between federal agencies to tackle issues more effectively, Baldari said. The Office of Management and Budget could keep a “children's budget” as a score card on how budget actions impact kids, Baldari added. Additionally, benefits programs could be overhauled so families can apply for benefits with a single click instead of running around to different programs.
NBC News reached out to the administration for comment on these proposals.
“While we aren’t going to negotiate in public, we can all agree that the Child Tax Credit is a historic tax cut for middle class, families and the key driver behind the American Rescue Plan putting us on the path to cut child poverty in half,” a White House official told NBC News in an email. "Recent studies add to the evidence that the child tax credit helps working families and the development and opportunities of all our children.” A new study found that cash aid to low-income workers increases brain activity in babies.
"It’s important to remember that Americans that qualified for the extended CTC will still receive half of the entire benefit when they file their taxes this year, and yesterday we launched a new version childtaxcredit.gov to help Americans get the full CTC as tax filing season begins," the White House official said. "Families who have gotten monthly payments will get up to $1,800 for each child under 6 and up to $1,500 for each child ages 6-17.”
Biden has also previously called for extending the expansions of the child tax credit, making permanent the full refundability of the child tax credit, and making permanent the expansion of the earned income tax credit.
Relief can’t come soon enough for working families struggling to make ends meet.
“I feel like I’m living in the twilight zone or something,” said Stephania Cajuste, 41, a clinical psychotherapist and a mother of three living on a single income in Brooklyn, New York. She has considered leaving the city to lower her cost of living, but needs to stay close to her family.
While she used to pay a family member to watch her children during the day, the child tax credit allowed her to send them to day care and preschool. It's been important for their socialization, and taking the childcare burden off exhausted family members.
“When the child tax credit came around, I was like, 'OK, I can afford to send everybody to school,'” she said. Now she's worried she has to keep them home again.
“Something is very broken,” Cajuste said.