Expand the child tax credit

At long last, after a recession of frightening duration and historic
intensity, we are starting to see some shafts of light break through
the economic clouds. Given that GDP has now grown for three quarters in
a row, and given Friday’s announcement that 290,000 jobs were created
in April – the fourth month in a row of job creation and the most new
jobs seen in America since 2006 – we now have some clear indications
recovery is beginning to take hold.

But, with eight million jobs lost in this recession and unemployment still unacceptably close to double digits, Congress has more work to do before this nascent economic recovery is truly felt by the working families on the ground. And one of the simplest and most cost-effective ways we can both help the families hardest hit by the recent downturn and continue these recent positive economic trends is by expanding the Child Tax Credit.

{mosads}Research has shown that income support for parents – efforts like the Child Tax Credit – effectively boosts employment, employment stability, increases earnings and income, reduces poverty and even improves kids’ school performance. Indeed, economists from across the political spectrum have called the refundable Child Tax Credit one of the most stimulative, targeted and efficient ways of getting the economy moving again.

In the Recovery Act last year, we lowered the eligibility threshold for the Child Tax Credit from $12,550 to $3,000, cutting taxes for the families of more than 17 million children. This means a single-earner working full time at the minimum wage with two or more children now gets closer to a full $2,000 Child Tax Credit. This family now gets $1,724. Previously he or she would have received only $82.50.  This was a very positive step. It cut taxes for working families and helped make a difference for millions of American children.

But a troubling dynamic soon came into play. Even as we expanded the eligibility of the Child Tax Credit, the recession lowered millions of workers’ incomes – some to nothing. And because tax credit eligibility and amount are both tied to earnings, families lose these credits as they get fewer hours, a cut in pay, or lose their jobs all together. According to the Brookings-Urban Tax Policy Center, 13 million children will lose all or part of their tax credit due to unemployment and underemployment. In other words, the families with children that most need our support become ineligible to receive it.

By lowering the eligibility threshold to zero, this cruel dynamic is undone, and kids are no longer punished for these hard economic times or the hard luck of their parents. For the first time, all working families with children would get at least a partial Child Tax Credit. For the first time, the family of a single-earner working full-time, full-year with two kids would get the full Child Tax Credit. This year, the measure would cost $2.3 billion, allowing working families to receive up to $450 back in taxes from the Child Tax Credit. That money will not only immediately stimulate our economy, but it means less low-income children will go to bed hungry. Put simply, it is a win-win.

We in the House passed legislation last December to expand the Child Tax Credit’s eligibility to all working families as part of the Jobs for Main Street Act. We have the political will to do this. I urge the Senate to follow suit and adopt this cost-effective, common-sense approach to supporting our struggling kids and reviving our economy. By acting now and expanding eligibility of the Child Tax Credit to the children of all working families, we can help our children and realize these tantalizing glimmers of recovery.

DeLauro is a member of the House Budget Committee.