Talking Points

Democrats just slashed poverty. Now they need to make it permanent.

The House of Representatives passed the American Rescue Plan, a $1.9 trillion pandemic relief measure, on Wednesday. It now goes to President Biden for his signature. This will have an extraordinary poverty-fighting effect. An Urban Institute analysis found: "Poverty would fall about 42 percent for Black, non-Hispanic people, 39 percent for Hispanic people, and 34 percent for white, non-Hispanic people." This will be by far the biggest attack on American poverty since the 1960s.

However, most of the big parts of the bill last just one year, which is obviously not ideal. This includes the expansion of the Child Tax Credit, which is probably the most important poverty-fighting measure overall, because the biggest group of people in deep poverty are single-parent families. Democrats' initial idea was to make the expanded CTC (which is much larger and now no longer requires labor income to claim) permanent, but the plan couldn't get through the Senate reconciliation process that way. That's a simple matter of passing a permanent bill, perhaps with some tax hikes to compensate.

While they're at it, Democrats should fix some technical problems with the expansion. The IRS will be sending out advance CTC checks each month, but based on annual qualification metrics. Instead the Social Security Administration should be sending out the checks, with whatever means test Democrats want to apply done through taxes.

Additionally, while the CTC expansion will greatly help a lot of very desperate people who will still not quite be pushed over the official poverty line, the Urban Institute analysis finds that the part of the bill that reduces top-line poverty the most is the round of $1,400 assistance checks, which by itself will cut the poverty rate by 3.5 percentage points. There's no reason why the $1,400 checks — which are extraordinarily popular — can't also be made permanent. As Matt Bruenig suggests at the People's Policy Project, we could consider it a universal holiday bonus for all.