Colorado U.S. Senator Michael Bennet responded to a ‘Wall Street Journal’ editorial criticizing the Child Tax Credit (CTC) expansion.
Last week’s editorial criticizing the expanded child tax credit fundamentally misconceives the state of our economy, and the resulting struggles of many American families. As an author of the new child tax credit, I think readers deserve a fuller picture.
At issue is the decision by President Biden and Democrats in Congress to increase the child tax credit to a maximum of $3,600 per child and, for the first time, fully extend it to the poorest children.
As a result of those changes, the credit now supports roughly 90 percent of American children and will cut child poverty nearly in half this year.
The Journal mournfully calls this “an enormous change in social policy,” but ignores why such sweeping change might be necessary. If the Journal had its wishes, children would only receive the credit if their parents owe federal taxes, cutting off 27 million kids — including half of all Black and Latino children — because they are too poor.
The Journal seems fine with this trade-off because it fears the tax credit might disincentivize parents from working. Most research, however — much of it by libertarian-leaning organizations — consistently finds that countries with a child benefit generally enjoy higher workforce participation rates than the U.S. because parents have flexibility to stay on the job through emergencies like a surprise car repair or loss of childcare.
Faced with an elegant policy solution that cuts poverty without creating a new federal program, the Journal laments that expanding the child credit would cost $1 trillion over the next decade. It fails to consider that child poverty costs the country $1 trillion a year, and that recent analysis from Columbia University has plausibly projected the child credit will produce an 8x return to society because it helps kids do better in school, stay healthy, earn more when they’re older, and require less government support. Take it from a former Denver school superintendent, reducing childhood poverty will cost far less than attempting to mitigate its effects.
The Journal moralizes that “the dignity and order of stable work is the most reliable path out of poverty.” This is no doubt a worthy aspiration for any society — but in the U.S. it is now more fairy tale than lived experience. To make progress, we must understand the economy as it exists, not as the Journal imagines it.
Over the past 50 years, nine out of ten Americans have struggled as their incomes remained flat, while their costs of housing, health care, child care, and higher education have skyrocketed. Millions of families are now trapped in a growing chasm between stagnant service economy incomes and rising costs.
The result is an America with the worst income inequality since the Gilded Age, one of lowest rates of economic mobility in the industrialized world — and one of its worst rates of childhood poverty (38th out of 41 countries). I can report with deep sadness that our country’s education system only reinforces this inequality, as have the tax cuts for the wealthiest Americans the Journal has consistently supported.
These trends should trouble every American, and they should unite us to build an economy that when it grows, grows for everyone — and restores “the dignity and order of stable work.”
Our success, or failure, will resound far beyond our borders. China’s astronomical rise, which has lifted nearly 750 million people out of poverty, begs the question whether democracies can also deliver broad-based growth in the 21st century. I believe we can, but it will require us to think anew about how to drive opportunity for all in a modern, globalized economy; a repeat of the last 50 years — where all the gains accrue to the very top — will destroy our democracy.
Our founders studied history, and they knew that economic insecurity breeds tyranny. They understood that democracies often collapse under the ambition of craven politicians offering false promises of prosperity to consolidate their power.
That’s why our example to the world has been most convincing when we stood, not only for freedom, but also for opportunity. The world drew inspiration from us because we had the freedom to shape our future through democracy, but also the conditions to hand our children a better future through hard work. We can and must restore America’s example, and it starts by ensuring opportunity for all of our children.