A sure sign that the Child Tax Credit (CTC) should not become a permanent program of unconditional cash payments is that its advocates refuse to say their proposal out loud. President Biden pitches the policy as a “significant tax cut to America’s working families.” The White House webpage dedicated to raising awareness uses the phrase “working families” five times in the first three paragraphs and then features four illustrative infographics, all of working families already above the poverty line.
Now, a group of 448 economists has issued an open letter, urging congressional leaders to make permanent the CTC’s one-year expansion. But the letter makes no mention that these payments would be entirely disconnected from work. Either the economists are unaware of this reality, or, more likely, they’ve chosen to make tendentious claims in its face.
“Expanding the CTC would dramatically reduce childhood poverty,” the letter declares, and “research shows that reducing child poverty improves” all manner of outcomes. But notice the sleight of hand in that two-part formulation. It’s not the CTC’s free-cash approach to poverty reduction that their research supports. In fact, five of the first six studies they cite concern Earned Income Tax Credits (EITC), paid only to working households with the explicit objective of rewarding work. The sixth concerns food stamps, a conventional safety-net program very different from unconditional cash handouts.
When stated plainly, the chain of logic is rather less sophisticated than the economists might hope their citations imply: Children raised in poverty fare worse than children raised in better-off households. Giving households money so that their incomes exceed the poverty threshold will mean that fewer children are in poverty. Therefore, outcomes will improve. QED.