How We Could Cut Child Poverty By More Than Half and Pay for It Too

Back in 2007, the Half in Ten campaign set a goal of cutting poverty in America in half in 10 years. Not doing so well at that, are we?

Well, says the Children’s Defense Fund, what if we ended child poverty in this very wealthy country? That, of course, would mean ending poverty for parents and guardians too.

CDF recently released a report to take us a long way toward the child poverty goal. It offers nine recommendations that would reduce child poverty by roughly 60% — and deliver more economic resources for families of all but 3% of children who are poor now.

We’d have 6.6 million fewer children living in poverty, including half a million who are deeply poor, i.e., in households with incomes below 50% of the applicable poverty threshold.

What’s Notable

Several things distinguish this report. The first is that it builds on existing policies and programs that have proved effective. The aim is less to innovate than to increase reach — and in some cases, effectiveness as well.

The second, which is more distinctive, is that the report includes poverty-reduction impacts for each of the recommendations.* These reflect analyses by experts at the Urban Institute, who used Census Bureau data and its Supplemental Poverty Measure — a more complex and accurate measure than the one used for official purposes.

The third distinctive thing is that the report identifies specific policy and other budget changes that would yield enough savings or additional revenues to offset what the recommendations would cost.

What CDF Recommends

The recommendations fall into two big buckets. In the first are recommendations that would enable more low-income parents to work — or work more than they do — and to make their work pay more, both directly and through the tax code.

On the work side itself, we have subsidized jobs, like those temporarily funded through the Recovery Act. Also enough childcare subsidies so that all eligible families below 150% of the federal poverty line could afford high-quality child care during their working hours.

On the pay-more side, we, of course, have an increase in the federal minimum wage, but also an expansion of the Earned Income Tax Credit and changes in the Child Care and Dependent Tax Credit. The latter would become refundable so that families with incomes too low to owe federal taxes could benefit. At the same time, the reimbursement rate for lower-income families would increase.

In the second bucket, we have recommendations that would ensure children’s basic needs are met. These are mostly changes in major safety net programs. And all but one — treatment of child support payments — would lift more children out of poverty than any of the work-related recommendations.

The most effective of all addresses housing costs. CDF proposes a large expansion of the shrunken federal Housing Choice voucher program.

Vouchers would become available for all households with children that have incomes below 150% of the poverty line and that pay — or would have to pay — at least half their income for rent at the U.S. Department of Housing and Urban Development’s fair market rate. This recommendation alone would cut the child poverty rate by 20.8%.

Next down on the impact scale is a recommendation based on one the Food Research and Action Center has made for some years.

It would change the basis for determining SNAP (food stamp) benefits from the Thrifty Food Plan, which is generally used for no other purpose, to the Low-Cost Food Plan, which, FRAC says, is “generally in line with what low- and moderate-income families report they have to spend on food.”

We’d not only have fewer poorly-fed — or even underfed — children. We’d have 11.6% fewer in poverty. No benefits boost, however, for people who’ve got no children living with them.

How We Could Pay for the Proposals

First off, it’s worth noting that we’re already paying for child poverty — roughly $500 billion a year, according to an estimate a team of economists produced some years ago.

The proposals themselves would cost an estimated $77.2 billion a year. This is not only far less. It’s a tiny fraction — about 2% — of what the federal government spends.

CDF nevertheless lists five trade-offs, i.e., policy and spending changes that would free up funds to cover the costs of its proposals.

Like the recommendations, the trade-offs fall into two buckets. In one bucket, we have tax loopholes Congress could close, plus an income tax rate for capital gains and dividends equal to the rate imposed on wages.

In the other bucket, we have cuts in egregiously large and arguably wasteful Pentagon spending. Congress could, for example, give up on the F-35 fighter plane, which still can’t fly. This would free up $162.5 million per plane.

Total savings from this alone would fund all CDF’s proposals for 19 years, it says. Could be even longer, since the President’s proposed budget would fund more of these clunkers than the estimate CDF relied on.

On the other hand, the President’s budget does include some proposals similar to CDF’s, e.g., a subsidized jobs program, a larger maximum Child and Dependent Care Tax Credit for families with young children, more funding for housing vouchers, though far from enough to expand eligibility. General resemblances to some of the trade-offs in his tax code proposals too.

House Speaker John Boehner, among others, pronounced the budget DOA even before it got to Congress. Other sources think there might be some common ground. Far from enough — or in enough of the right places — to significantly reduce the child poverty rate. But it’s useful to know how we could do it — and pay for it too.

* Economist/blogger Jared Bernstein, who uses the report to poke Republican Presidential hopefuls, provides a table that identifies each recommendations, its impact of child poverty and the net new cost.

 

2 Responses to How We Could Cut Child Poverty By More Than Half and Pay for It Too

  1. […] initiatives, e.g., the housing pilot evaluation I blogged on recently. We’ve got at least one full-blown agenda for dramatically reducing child […]

  2. […] a plan I earlier blogged on, its parts all have to do with the Child Tax Credit. The first part, tucked into the brief as a […]

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