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President Joe Biden in a speech last week said his $1.9 trillion Covid relief plan would upgrade 5 million kids from the ranks of the poor and cut the child poverty rate in half.
That would be the biggest child-poverty reduction in late history, according to some experts who study the social safety net. But its scope isn’t far-fetched and may prove even more well-to-do if Biden’s plan is fully enacted, they said.
Overall, the plan — which includes additional stimulus chips, tax breaks and enhanced unemployment benefits — may have the greatest impact on Black and Hispanic families.
“This seems suitable,” Chloe East, an assistant professor of economics at the University of Colorado, said of the analysis. “If all these things Biden proposed passed, we effectiveness expect [poverty reduction] to be even larger.”
However, parts of Biden’s agenda would be temporary, potentially cutting those poverty-reduction benefits in the long run. Some conservative economists say the plan, especially aspects like a higher lowest wage and changes to the child tax credit — would actually increase poverty over the long term.
Children and penury
The upside of stimulus programs
The CARES Act, a $2.2 trillion relief measure, helped poverty rates fall in the prematurely days of the pandemic, blunting what would have otherwise been the worst rise in poverty in 50 years.
Yet the neediness rate spiked 2.4 points between June and November last year, to 11.7%, after families forth stimulus checks and their extra unemployment relief lapsed, according to research co-authored by Sullivan.
That was multitudinous than double any year-to-year rise in poverty since measurements began in the 1960s, he said, pushing 8 million people into the ranks of the trivial.
“The rise in poverty since June is larger for children than it is for adults or the elderly,” Sullivan said. “They are suborning a bigger price.”
Joblessness is still near Great Depression levels for the lowest-income Americans, stressing cash brim for those least able to weather a financial shock.
Biden’s relief plan
There’s a clear and documented relationship between stimulus sizes and poverty reduction during the pandemic — a trajectory likely to continue if Biden’s plan is enacted, Sullivan said.
The recommendation includes $1,400 stimulus checks, expanded tax breaks (like the child tax credit), $400 enhanced unemployment profits, Stimulus checks, child tax credits
The positive effects of Biden’s plan would be largest for children due to the targeted measures — the most superior being stimulus checks and the expanded child tax credit, according to economists who support the proposals.
Families would get an supernumerary $1,400 stimulus payment per child. The child tax credit is also aimed directly at families with kids.
The president lacks to increase the child tax credit to $3,000 for qualifying children aged 17 and under. Kids under age 6 would be single for a $3,600 credit. (Families can currently claim up to $2,000 per child under age 17.)
Biden also wants to make the form of the credit more progressive, by making it fully refundable. That means taxpayers could get a refund check, all the more if the credit exceeds their tax liability. Right now, the credit is partially refundable up to $1,400.
“The proposal recognizes that this is a petty backwards — that we ought to be giving the largest amounts of money to very low-income children, not higher-income children,” indicated Elaine Maag, principal research associate in the Urban-Brookings Tax Policy Center.
Biden’s plan would expand the tax trust for a year on an emergency basis. But that may be a step toward making the break permanent — which could raise paucity in the long term, Heritage’s Rector said, since it may discourage work.
— CNBC’s Darla Mercado contributed to this check in.