Congress Makes Historic Pivot to Focus on Kids Over Older Adults

By Mike Dorning for Bloomberg.

While the details of President Joe Biden’s signature social-spending bill are still being haggled over, one big takeaway is clear: the $1.75 trillion package marks a dramatic shift toward boosting support for families with children after decades of government benefits being skewed toward the elderly.

The turn reflects new attention among Democrats to the lasting damage growing up in poverty does to someone’s lifelong prospects, and a growing recognition across party lines of how the financial squeeze on many working- and middle-class families often hits hardest when parents confront the costs of caring for younger children.

About one-third of the spending in the $1.75 trillion framework that Biden has agreed to with Democratic lawmakers is devoted to bolstering families through direct cash payments, subsidized child care and universal pre-kindergarten for three- and four-year-olds.

Greater help with minding young children could encourage more parents -- especially women -- to take up some of the record levels of job openings. And reducing the costs of bringing up children could address some of the longer-term economic challenges the nation faces by propping up falling birth rates.

About a third of the $1.75 trillion is devoted to families with kids

“This effort is historic in terms of families with children -- there is no question about that,” said Irwin Garfinkel, co-director of Columbia University’s Center on Poverty and Social Policy.

It’s a sharp break from other major expansions in social spending. Lyndon Johnson’s 1960s Great Society programs channeled about three-quarters of new spending to the elderly, including establishing Medicare health insurance and a doubling of the real value of Social Security benefits from 1965 to 1972, which were then indexed to inflation, according to Garfinkel.

Families with children haven’t been ignored -- President Bill Clinton created a $500 annual child tax credit that was later increased under George W. Bush and Donald Trump. And Barack Obama’s Affordable Care Act helped with health care expenses across age groups. 

Still, only 9% of federal spending in 2019 was devoted to children, while about 36% went to the elderly, according to the Committee for a Responsible Federal Budget.

Biden’s expanded child tax credit alone would reduce child poverty by more than 40%, lifting 4.3 million children out of dire circumstances, according to an Urban Institute analysis. It also would ease the strain on families making as much as $182,000.

For Democrats, there’s a political element as well: an appeal to the White working-class families Democrats have been losing to Trump populism and many of the suburban voters who recently shifted to Democrats but aren’t firmly tied to the party.

Impact of poverty is disproportionately felt by minority children

Reducing child poverty also advances the racial-equity agenda Democrats have focused on in the wake of the George Floyd killing. A disproportionate 24% of Black children and 22% of Hispanic children versus 7% of Whites are raised in poverty, even factoring in government benefits, according to an analysis of 2018 census data by the Center on Budget and Policy Priorities.

The Biden framework agreement funds an expanded tax credit for families of as much as $300 per month for each child under six and $250 for each older child, continuing for another year a benefit from Biden’s March coronavirus relief package that ends next month. Many Democrats are hoping the tax break becomes so popular that Congress doesn’t let it lapse.  

Subsidies for the next six years also would limit child-care costs to no more than 7% of income for middle- and low-earning families -- defined as those earning up to 250% of state median income for a family of the same size, a threshold that in New York State would be about $251,000 for a family of four.

House Speaker Nancy Pelosi also pressed to include a provision for four weeks of paid family leave, which was omitted from the framework Biden negotiated. Its prospects are uncertain, since Senator Joe Manchin, a West Virginia Democrat, opposes including paid leave in the package. 

The House moved toward a vote Friday on its version of the overall package, with Senate Majority Leader Chuck Schumer saying senators would strive to act by Thanksgiving, which is Nov. 25.

Bipartisan Interest

Increasing attention to families isn’t just a Democratic phenomenon. Republican lawmakers also have made proposals to expand the child tax credit. 

Senator Mitt Romney of Utah, a former GOP presidential nominee, proposed an even larger child tax credit, though its cost would be offset by reducing other benefits for families and eliminating the federal deduction for state and local taxes. 

Plenty of Republican lawmakers still vehemently oppose Biden’s aid for families as promoting dependency. Senator Marco Rubio of Florida -- who’s proposed a child tax credit expansion that’s only partly refundable, meaning it’s only paid in full to those with sufficient taxes owed -- attacked Biden’s version, saying it “abandons requirements for work” and would “recreate the failed welfare state.”

But Samuel Hammond, director of poverty and welfare policy at the center-right Niskanen Institute -- who advised Romney on his plan -- said the socially conservative White working class voters that Trump has attracted to the Republican Party are more comfortable with cash assistance to families than were Republicans of the Ronald Reagan and Newt Gingrich eras.

“Today, the issues are rural economic decline, escalating costs of core services like child care and housing and the inability of a younger generation to start a family without making enormous sacrifices,” Hammond said.

U.S. fertility rate fell 4% last year to reach the lowest rate on record

Many social conservatives are alarmed by the drop in U.S. births, Hammond added. The fertility rate has plummeted since the so-called Great Recession more than a decade ago, from 2.12 births expected over the lifetime of a woman in 2007 to 1.64 in 2020, a record low for the nation.

The financial impact of having children is greater than a generation ago, and it’s not just the added costs, Hammond said. Parents often have to forgo earnings or miss promotion opportunities as one or both reduce work hours to take on responsibilities at home.

That often strains families that are well above the poverty line.

Views Evolved

Social observers in recent years have highlighted the cost of even temporary periods of poverty -- which harm children’s health, educational attainment and earnings well into adulthood. That’s provided strong evidence that assistance, on average, enhances those youngsters’ later earnings rather than steering them into dependency.

The research consensus was crystallized in an influential 2019 report by the National Academy of Sciences.

After years of growing discontent over stagnant middle-class wages and increasing income inequality, the economic upheaval of the pandemic also vividly showed the financial vulnerability of many families. Within weeks of the crisis, cars lined up for miles outside food banks. 

The Black Lives Matter protests and racial reckoning of 2020 focused attention on inequalities throughout society -- including the large numbers of Black and Hispanic children consigned to a life of poverty.

“Those stark disparities really are a reason at least Democrats have woken up,” said Sharon Parrott, president of the Center on Budget and Policy Priorities.

— With assistance by Alexandre Tanzi