The Impact of Ending Stimulus Checks and Tax Credits on Child Poverty: A Surge Observed

Children ages 3 to 5 participate at the Head Start classroom in the Carl and Norma Miller Children’s Center in Frederick, Maryland, March 13, 2023.

Maansi Srivastava | The Washington Post | Getty Images

Child poverty in the United States experienced a drastic increase last year as the financial aid that supported families throughout the early stages of the Covid-19 pandemic came to an end, according to the U.S. Census Bureau. The bureau’s data reveals that the child poverty rate surged to 12.4% in 2022, more than doubling from the previous year’s 5.2%. This increase can be attributed to the expiration of expanded child tax credits and the discontinuation of stimulus checks that provided assistance to individuals during the economic downturn caused by the pandemic.

The rise in child poverty occurred alongside the significant pressure families faced from inflation, with the cost of living rising by 7.8% from 2021 to 2022, marking the largest annual increase since 1981, according to the Census Bureau.

During the pandemic, the United States made historic strides in combating child poverty through the implementation of expanded tax credits. In fact, the child poverty rate decreased by 46% in 2021, reaching its lowest recorded level, as reported by Census data released last year.

However, the termination of crucial pandemic benefits alongside surging inflation erased these advances. Liana Fox, a Census official, stated during a press conference on Tuesday that child poverty has returned to pre-pandemic levels.

The overall poverty rate also witnessed a spike of nearly 5%, marking the first increase since 2010, as indicated by the data. Additionally, the median income of all workers fell by 2.2% in 2022 compared to the previous year.

Political Stalemate

In March 2021, the Democratic-led Congress injected almost $2 trillion of stimulus into the economy through the American Rescue Plan. Passed without a single Republican vote, using a process known as budget reconciliation, this massive aid package introduced significant temporary increases to child tax credits. Working families received $3,600 for children under the age of 6 and $3,000 for kids aged 6 to 17. The legislation also included a third round of stimulus checks, following earlier relief measures under the Trump administration.

However, the expanded child tax credits expired at the end of 2021. With Republicans gaining control of the House in the 2022 midterm elections, Congress has been unable to reach an agreement to reinstate the credits.

In response to the surge in child poverty, President Joe Biden attributed the loss of tax credits to the Republican party. He pledged to fight for the restoration of these benefits while campaigning for a second term in office.

The Census data highlighting the increase in child poverty does not take into account the discontinuation of several other pandemic benefits this year. Expanded food benefits expired in March, and many individuals were removed from Medicaid after the expiration of enrollment protections last spring.

Estimates from Georgetown University reveal that over 760,000 children have lost Medicaid coverage. The federal government has alerted states to the possibility of children being removed from the program despite still being eligible.

The data published by the Census Bureau on Tuesday differs from the official poverty rate, which remained essentially unchanged at 11.5% in 2022. The official poverty rate considers pre-tax income and does not include stimulus payments and tax credits. In contrast, the Census data that highlights the doubling of child poverty is an alternative measure that takes into account after-tax income and includes these benefits.


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