How the US slashed child poverty: Lessons for Israel

First, the bare facts, how one piece of legislation slashed US child poverty.  Then, the story of the handful of people who made it happen.

Many Western nations have paid child allowances to families for decades.   I grew up in Regina, Saskatchewan, Canada, and recall my parents receiving monthly child allowance checks 70 years ago.   This was true of many European nations as well, including the UK and Sweden.   But not the US.  America spends only 0.6% of GDP on child and family benefits compared with the OECD average of 2.1%.

Only in 1997 did the United States do what other civilized nations have done for years – tackle decades-long massive underinvestment in kids, with a child tax credit that reduced family tax liability annually.  The amounts involved were expanded seven times over time.

But the new expanded child tax credit, mandated by the American Rescue Plan Act of March 2021, is paid out in advance, monthly; payments began on July 15.  Parents don’t have to owe taxes to receive it.  Payments are made by the Internal Revenue Service and amount to $250 per child under age 18 or $300 per child under age 6. And they have already slashed child poverty.

Three major changes were implemented in March. Payments are now monthly, not annual. They were increased by 50%.   And families no longer had to qualify by earning enough to pay taxes – extending benefits to one-third of previously ineligible poor children.

How did this happen, in a dysfunctional US political system rife with partisanship, where the Trump tax cut of 2017 (still in force) shoveled an estimated $2.3 trillion over 10 years from middle-income to top-income tycoons?

The answer is: An effective coalition emerged, combing a dogged Congresswoman, clever senators and a research institution.  Call it evidence-based politics.

The Congresswoman is named Rosa (Rosie) DeLauro. Rosie’s mother was a garment worker, who worked hard in a sweatshop.  Her father sold insurance.  They were very poor. One day she came home from school, age 10, and found “all our furniture out on the street.”

But DeLauro studied hard, went to the London School of Economics, and entered politics.  She won a House of Representatives seat in Connecticut’s Third District, mainly New Haven, a district that houses Yale University and many poor children.

She began promoting the expanded Child Tax Credit  (CTC) in 2003.  But George Bush, a Republican, was president, and the Republicans controlled the House and the Senate. They opposed “welfare.” And Rosie was a Democrat.

Nonetheless, Rosie got the CTC on the political agenda and for years, in the political wilderness, kept pushing the idea.  She did not meet real opposition – who can oppose lifting kids out of hunger and poverty?  Worse than opposition, she met indifference and apathy.  And child poverty grew.

After Joe Biden became the Democratic candidate for President in the 2020 election, she enlisted Chris Dodd, former long-time powerful Connecticut Senator.  She built a team of legislators – Senators Cory Booker (NJ), Michael Bennet (Colorado) and Sherrod Brown (Ohio); and members of the House,  Suzan DelBene (Washington state) and Ritchie Torres (South Bronx).

The CTC expansion was not in the original American Rescue Plan bill.  But DeLauro called Jared Bernstein, Biden’s chief economic advisor, Ron Klain, his eventual chief of staff; and others.

“The moment is now!” she said.  And very soon after that call – her CTC plan was “in” – in the bill!  It passed the House and Senate last March.

There is another key player involved – the Center on Poverty and Social Policy (CPSP) at Columbia University, an Ivy League college in Manhattan. Their research focuses on anti-poverty policies at the national and local levels, with a particular interest in child allowances, federal and local minimum wage policy, and housing policy.

Rep. DeLauro credits the CPSP team of researchers, including Sophie Collyer, a Research Director at CPSP, with supplying the airtight, irrefutable scientific evidence that the CTC would indeed help poor families and lift millions of kids out of poverty.  Despite QAnon, Trump and Fox News, policy in the US is still partly driven by evidence, research, data – and truth. And DeLauro had the evidence. Thanks to the CPSP.

I interviewed Collyer on Zoom to learn more about the role her team’s research played.

Collyer: “I grew up in New York City. And I think something that’s so apparent walking around New York as a young child and as an adult, is – it’s immensely unequal. There are so many different systems that have created that.

“I think what I saw from a young age was, how much different policy choices constructed inequality in the city.  And that was something that stuck with me. When I graduated from college I wanted to work to take on these policy issues, but I didn’t know exactly how. I thought, “Okay, how can I use my skills with people to do that work?”  So that landed me jobs in  case work, social work, on-the-ground social work.  I worked in an ‘alternative to incarceration’ program as a caseworker.

Collyer: “I was a middle school teacher for a while.  The challenges that I saw facing families were closely related to finances. Just keeping up. And so I really loved working on the ground.  But I think I started to wonder, what are the possibilities in terms of work on these related policies and fixing them? So some of the work that we’re doing at the Center -- it is about how are we working ourselves out of a job.  That’s the goal, you know!”

Collyer: “So, the US had one of the highest rates of child poverty among OECD nations.  It’s always tricky to do cross-national comparisons because we often use different poverty measurements. Israel probably uses a relative poverty measure based on median income.

“The poverty measure we use at our Center is called the supplemental poverty measure.  By this measure, about 1 in 7 children in the US were living in poverty, 13%.  So this is very high. And to put that in some context, for a family of four, the poverty line is between $25,000 and $30,000.  These income levels are very low.

“I want to make to sure to note that it was the research of our whole center.  So it was kind of a big team, and we at the Center on Poverty and Social Policy have been studying this possible reform since we were founded in mid- 2014.  So there’s been a long history of this kind of work at our center.  It actually started a very long time ago with one of our co-directors, Professor Irwin Garfinkel, who studied this as a young PhD student, and continued to study child allowances, and has been doing so for decades.

“The reason we were able to work on this is, we didn’t think it was crazy. In 2015 when my colleagues released their first report on child allowances, many people rolled their eyes. There were really interesting findings about the impact [the child tax credit] was going to have. But the refrain, was, oh, that could never happen in the US, right? We could never have anything like that in the United States. This is not politically feasible.

“And now, fast forward five years, and it’s happening. So, I think step one is not shying away from big, bold policy options, particularly when you know how effective they can be.

“So that was what got the ball rolling in term of the Center’s work. And we kept at it, continuing to study what could be. Continuing to study the impact it could have, continuing to understand who was being left out of the credit under previous law.  And when people were doing legislative work around it, we would make sure to share our findings. We weren’t driven in any way by the political calendar. But when we heard about people beginning to introduce this type of legislation, we made sure that their offices had our data.”

Collyer: “Yes, that had a large part to do with the expanded CTC.  That’s kind of our mission, right? We do work that meets academic standards in terms of policy analysis, but we make sure it doesn’t only live solely within an academic community. The reason a lot of people are studying policies that they think are more effective, is to make sure that those effective policies become a reality. And so, we didn’t shy away from making sure that those who were interested in our studies could access them. In every political domain, across the spectrum – making sure that the information was out there.

Collyer: “When the CTC is combined with the other components of the American Rescue Plan legislation passed in March, the child poverty rate is projected to be cut by half. So that in 2021 we project that without this intervention, the poverty rate would have been about 15%. And all of the interventions in the ARP, combined, cut it in half -- moving half of poor children above the poverty line in the US.

Collyer: “She’s long been a champion of this reform. And so when we began doing this research, we made sure she and her office had access to it, as well as everybody else, in Congress.

“The CTC expansion is based on a piece of legislation called the American Family Act.  It was actually introduced in the House of Representatives by Representatives DeLauro and DelBene. And then in the Senate by Senators Sherrod Brown, Michael Bennet, and Cory Booker.  It had backing among Democrats in both Houses. And we made sure that the work we were doing got to those people. And we also worked with a several other researchers who study anti-poverty policy in a paper called, “A Case For a Child Allowance in the United States”.

“It was a principled outline and approach to how to structure such a policy. And this included information on the credit amounts and delivering it monthly, which is what’s happening now. And so we made sure that they had access to that information.

“Secondly, I think something we live by in our Center is just about being open.  When someone asks, what about impacts for this group, what about this other group?  We respond. That’s part of our mission. When people ask, we investigate. We are open when requests come in. So we were able to build and strengthen relationships that way.

“We’re not a think tank. We’re an academic research institution.  Our focus is on academic research -- we don’t have political opinions. We have evidence showing impacts of policies and reforms and we also work to get these findings out into the world.  That’s our bread and butter. We don’t do advocacy; we discuss our work. And it speaks for itself.”

Slashing child poverty is not rocket science.  America did it. So can Israel.  You do it by giving money to poor families.

Conservatives call it welfare.  The dictionary says welfare means the happiness and health of people.  Only in the US is welfare known as financial aid to the needy.  What in the world is wrong with helping those who are poor, to become healthier, smarter and happier?  By giving them money? Conservatives say, they will waste it.  The Economist notes:  “Surveys from the Census Bureau show that most [US] families say they are spending the new funds on clothing, food, housing and utilities.”

Right-wing Israeli politicians have insisted on legislating Israel to be a Jewish state, in the Nation-State Law.  OK, fine -- then why can we not learn from the US and walk our talk – live Jewish values rather than just talk them?   Poor adults are a blot on our nation. Poor kids are much, much worse.

A study led by Prof.  Garfinkel has shown that “the value to society that flows from the impact [of the expanded child credit], by increasing children’s health, education and future earnings and decreasing health, child protection and criminal justice costs, is nearly eight times the annual costs.”

Garfinkel, one of my heroes, has studied poverty since 1968. He knows whereof he speaks. Show me another social investment that pays a 700% annual rate of return.

But this may not have a happy end.  The CTC expires in December – unless it is extended by the House and Senate. With razor-thin Democrat majorities in both Houses, it will be a cliff-hanger.