White House prepares for sharp rise in poverty rate

The White House is preparing for a sharp rise in the U.S. poverty rate following the end of pandemic-era child tax credit (CTC) expansion.

President Biden and Democrats fought unsuccessfully last year to extend an expanded version of the CTC that started during the depths of the pandemic and temporarily lifted millions of children out of poverty.

The Census Bureau is set to release Tuesday its annual report on poverty, income, and health insurance. The new poverty data will be a hit for Biden, whose reelection campaign could hinge on how Americans feel about the economy.

The Council of Economic Advisers (CEA) said in a blog post Friday that it expects a “sharp rise” in the Supplemental Poverty Measure, which measures income and benefits plus government programs such as tax refunds and food stamps.

To “understand why this is likely to happen in 2022, it is crucial to remember what happened in 2021,” the CEA argued.

A Democratic-controlled Congress passed the beefed-up CTC in 2021, boosting the credit eligible parents could receive to $3,000 per child over the age of 6 and $3,600 per child under the age of 6. 

The enhanced CTC alone lifted almost 3 million children out of poverty in 2021 and cut the child poverty rate by more than 40 percent in 2021, the CEA wrote.

The expansion expired in December 2021, and Democrats have not been able to strike a deal with Republicans to bring it back since.

Sen. Michael Bennet (D-Colo.), who has championed expanding the program, said that the census data will show that Congress should have not allowed the expanded credit to expire.

“When we expanded the Child Tax Credit, we demonstrated that we don’t have to accept one of the highest childhood poverty rates in the industrialized world as a permanent feature of our democracy. Tomorrow’s data will show we never should have let it expire, and I’m committed to doing everything I can to restore it,” he told The Hill in a statement.

The CEA argued Friday that the increase in poverty is likely to persist absent congressional action to restore the enhanced child tax credit.

Zach Moller, director of the economic program at the center-left think tank Third Way, said Democrats will uphold this report as a good reason to continue the child tax credit expansion because it’s proof that government intervention is necessary.

“The government can absolutely fight childhood poverty, it just costs money to do it,” he said. “Those policies that the Biden administration and the Congress were able to implement in the American Rescue Plan act were temporary, so the improvement in child poverty is temporary.”

Cutting child poverty for the long term has been a goal for Biden since he took office.

The expanded CTC was a centerpiece of Biden’s American Rescue Plan, the 2021 economic relief bill passed after Democrats took control of the White House and Congress. 

Biden and fellow Democrats are eager to tout the benefits of the president’s economic plan, dubbed “Bidenomics,” with the 2024 election roughly a year away. 

Republicans have blamed Biden for the surge in inflation that began shortly after he took office, though price growth sped up across the world in the wake of the pandemic.

Biden, meanwhile, has recently stepped up attacks on former President Trump about the economy while hoping to highlight the rapid recovery and the historically strong job market of his own presidency.

Biden and Democratic lawmakers have also touted trillions of dollars allocated for improving infrastructure, bringing down drug prices, expanding manufacturing and cracking down on tax evasion by the wealthy and corporations.

But messaging about the economy hasn’t been easy for the Biden administration; Bidenomics is a major talking point for the administration on the campaign trail but has yet to really take off with Americans.

A recent RealClearPolitics polling average shows just 38 percent of those surveyed approve of Biden’s handling of the economy, compared with 58.4 percent who disapprove.

Biden has been hit with dismal polling numbers overall lately. A CNN poll released last week found that 46 percent of registered voters said any Republican presidential nominee would be better than Biden in next year’s election and found his overall approval rating at a 39 percent.

Moller argued that Biden’s focus on creating jobs, especially for low-income Americans, could bring him closer to his goal of cutting child poverty because of provisions in his top legislative achievements — the Inflation Reduction Act, the infrastructure bill, and the CHIPs and Science Act.

“All that manufacturing is going to be incredibly helpful for folks with out there that don’t have a college degree. And so that is another way of trying to tackle childhood poverty, by making sure that parents have a good-paying job,” Moller said.

In its blog post, the CEA noted that the Congressional Budget Office projected in 2021 that it would take until the end of 2025 for the jobless rate to fall under 4 percent. The unemployment rate was 3.8 percent as of August, not far from its 3.5 percent rate before the pandemic.

Inflation is steadily improving, a success that the president touts often. But the CEA expects Tuesday’s census data to show inflation-adjusted income falling in 2022.

The agency blamed “elevated pandemic inflation” and “factors such as the Russian invasion of Ukraine and avian bird flu” for the 2022 data, and the Biden administration will likely argue that the data is in the rear-view because of the improvements in inflation in 2023.