Things were on a financial upswing for parents in the latter half of 2021 due to monthly Child Tax Credit payments. Begun as part of President Biden’s Covid relief package, the American Rescue Plan Act, the monthly cash payments of several hundred bucks per child under 18 brought at least 4 million children out of poverty, and provided much-needed income and financial stability to families who were struggling due to the economic repercussions of the pandemic. In fact, even wealthy families spent the money on necessities, proving the cash payments were a lifeline for even those in the upper end of the economic spectrum.
Majority of Parents Say They Are Struggling Financially Now
Despite the overwhelming success, the opportunity to continue monthly payments and provide financial stability to millions of families stalled in the Senate in late December, leaving many families reeling. And the pain of those payments ceasing couldn’t be clearer.
According to a recent poll by Morning Consult, 75% of those polled who received CTC payments say they have less financial security now that the payments have ended. Thirty-seven percent of those said they expect the financial impact of the loss of the income to be “major.”
Even Though the Economy is Doing Well, Families are Struggling
U.S. Census Bureau data compiled in December of 2021 studied just how much residents of each state felt they “needed” the Child Tax Credit. In the least needy state, a whopping 59.8 percent of parents said they needed it. In the neediest states, nearly all parents felt they needed the CTC to get by. In other words, the lack of cash payments is extremely troubling financially for families.
While the economy is staggering back, many working families still feel the strain. Skyrocketing inflation, stagnant wages, increased home prices, and a devastating student loan debt crisis poses significant barriers to financial security for middle- and low-income workers.
These barriers were only exacerbated by the government’s inability to move forward on a stable guaranteed income plan.
Children Remain the Poorest Population Group in America
According to Columbia University’s Center on Poverty and Social Policy, millions of children are at risk of falling back into poverty due to the cessation of CTC payments resulting in a childhood poverty rate of 17%, one of the highest among developed countries. One in seven children lives in poverty in America.
Children are already the poorest group of Americans. And the massive benefits the Child Tax Credit gave struggling families show just how a few thousand dollars can be the difference between a full belly and an empty plate. Indeed, some parents have skipped meals to ensure their children have food, while others are disconnecting certain utilities to make ends meet.
After all, the Child Tax Credit payments were used overwhelmingly to pay for necessities like housing, utilities, and food. Many families say they aren’t sure how they will continue to cover basic expenses