Wherever we turn in this era of tremendous technological advancement, we also bump up against the undeniable fact that there exists a wide gap between the poor and the rich. This gap is not new. It has been with us since humanity first walked upright.
In 1935, in the midst of the Great Depression, President Franklin Roosevelt created Social Security as a tool to attack poverty in America. In 2023, the Census Bureau reported Social Security continued to be a most important antipoverty program, moving 28.9 million people out of poverty in 2022, alone.
In the 1960s, before getting himself deep into the quagmire of Vietnam, Lyndon Johnson attacked poverty in America, which at the time stood at 22.1% of the population. He announced his Great Society initiative during his first State of the Union address in 1964, outlining a series of domestic programs he believed were required to eradicate poverty and inequality in the United States. By the end of Johnson’s term, Congress had implemented 226 of his 252 legislative requests. No President has ever done more to lift people out of poverty.
At the end of 2023, the Census Bureau reported poverty had dropped to 12.4%. The greatest decline in poverty has been in the South, which has seen a drop since 1960 of 54%.
But 41 million people still live in poverty, five million more than in 1960.
Nonetheless, it is undeniable that governmental programs have raised millions of Americans our of the crevasse of poverty.
Globally, there have been similar results, as former Secretary of the Treasury and Harvard President Larry Summers told Econofact.org’s Michael Klein¹ in a podcast chat last week. According to Summers, “I think that any discussion of the human condition has to begin with the fact that, depending on just how you do the numbers, some number like 140,000 people a day have been lifted from extreme poverty, every day, on average, for the last 30-some years. And that is an achievement that is entirely without precedent in human history.”
While everyone who had a hand in poverty reduction, both globally and domestically, deserves our thanks, there is still much work to do to achieve President Johnson’s aspirational “eradication” goal.
According to Professor Melissa Kearney, of the University of Maryland, writing for Econofact.org, “The extent of child poverty varies greatly across race and ethnic groups, as well as by family structure. Black and Hispanic children have the highest rates of poverty in the U.S.: 26% and 21%, compared to 8.3% among white children and 7.3% among Asian children.”
Kearney goes on to say:
In 2019, 41% of children in mother-only families lived in poverty, as compared to 8% in married-parent families. These poverty differences by family structure hold within race/ethnic groups as well. According to data on child poverty rates within race and ethnic groups, children in mother-only families are three to six times more likely to live in poverty. This largely reflects the fact that two adults bring in more income than one adult. But it also reflects the fact that parents who have lower levels of education and lower levels of income are less likely to marry. Thus, single-parent family structure is both a cause and an effect of poverty.
During the COVID pandemic, Congress raised the Child Tax Credit to as much as $3,600 per child, up from its previous (and current) $2,000 per child. But that raise was for one year, 2021, and two years ago it expired. According to a paper from the Economic Policy Institute analyzing the effects of the expansion:
The refundable Child Tax Credit alone accounts for a reduction in child poverty of 2.9 million children. Within that, the expanded Child Tax Credit—a key element of the 2021 American Rescue Plan (ARP)—lifted 2.1 million children out of poverty. The ARP Child Tax Credit is the leading reason child poverty fell so precipitously from 9.7% in 2020 to 5.2% in 2021, the lowest rate on record.
Given the significant success of expanding the Child Tax Credit during the pandemic, child welfare advocates have been lobbying ever since to make the expansion permanent. It has not helped the effort that so many of our politicians, especially those in so-called red states (states that have benefited the most from the Great Society programs) have resisted doing so.
However, it now appears all the lobbying may have succeeded.
At the end of January, the House of Representatives, in an unusually bipartisan manner, approved expanding of the Child tax Credit. The vote was 370-70.
The bill, called the Tax Relief for American Families and Workers Act of 2024, is now in the Senate, although a date for a vote has yet to be scheduled.
If the bill passes in the Senate and the President signs it (which he will), more than a quarter of all children under 17 living in rural areas would benefit in the first year, compared with 21% of children in metro areas. Nationwide, roughly 16 million children in families with low incomes — more than 80 percent of the 19 million children who currently get a partial credit or none at all because their families’ incomes are too low — would benefit from the bipartisan expansion.
“In its first year, the Child Tax Credit proposal would lift as many as 400,000 children above the poverty line and give more financial support to an additional 3 million children in families with incomes below the poverty line,” noted Sharon Parrott, president of the Center on Budget and Policy Priorities, in a statement after the House passed the measure.
This bill is a compromise. The Child Tax Credit expansion is not all that’s in it. To get Republican support, Democrats went along with further reducing taxes for upper income people and agreed the $78 billion dollar bill would not be funded with debt, as was President Trump’s Tax Cuts and Jobs Act of 2017. According to the Committee for a Responsible Federal Budget, that giveaway added $8.4 trillion to the national debt.
But regardless of what else is in the bill, helping the poor should not be controversial, especially in our Christian oriented Congress.
There are nine places in the New Testament where Jesus urges his followers to help the poor. Typical is Mark 10:21-22:
Jesus, looking at him, loved him and said, ‘You lack one thing; go, sell what you own, and give the money to the poor, and you will have treasure in heaven; then come, follow me.’ When he heard this, he was shocked and went away grieving, for he had many possessions.
In the Old Testament, whoever wrote Deuteronomy said it best in Deuteronomy 15:11:
For there will never cease to be poor in the land; that is why I am commanding you to open wide your hand to your brother and to the poor and needy in your land.
After the Lankford/Sinema/Murphy border bill went down in flames, I have to say I was surprised to see expansion of the Child Tax Credit make it through our fractious House of Representatives. Its passage shows that compromise can still happen.
Now, if our elected Representatives would somehow find the spine to stare down Donald Trump and get their act together for Ukraine, we might see some actual governance going on.
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¹ Michael Klein is the founder of Econofact.org, housed at the Fletcher School of Tufts University. If you haven’t yet, I urge you to subscribe. If you’re at all interested in economic thought leadership, you’ll be glad you did.
