Study: Biden plan helped 2 million Michigan kids, raised 114,000 out of poverty

The American Rescue Plan Act was responsible for raising 114,000 children in Michigan out of poverty and providing assistance to another 2 million children, according to a new report released on Thursday.

The Rescue Plan was signed into law by President Joe Biden in March 2021 after it passed Congress with only Democratic votes in the House and Senate.

The 2022 Kids Count report released by the Michigan League for Public Policy found that several provisions of the Rescue Plan could directly be traced to positive benefits for children in the state.

The report traced a decrease in the state’s child poverty to the Rescue Plan’s expansion of the Federal Child Tax Credit.

The credit took the form of direct monthly payments of $250 or $300 that were sent to families across the United States. The Act increased the existing tax credit in the federal tax code to an annual amount of $3,000 for children over the age of 6 and $3,600 for children under 6 years old. The law also raised the age limit for children eligible for the credit from 16 to 17.

The expansion was a temporary measure, and the payments ended in December of 2021. In its report, the Michigan League called for the tax credits to be made permanent policy, along with other credits for families to be enacted by the state government.

Research published by the Center on Poverty and Social Policy at Columbia University in early 2022 found that child poverty rates rose after the tax credits were allowed to expire. The center reported that 3.4 million more children were considered to be in poverty in February 2022 than in December 2021, an increase of 38%.

Analysis conducted by the Urban Institute determined that if the tax credits were made permanent, there would be a 40% reduction in child poverty. The Census Bureau found that families that benefited from the credit used the cash payments to pay for school expenses and child care and to pay off debts.

Biden has called on Congress to make the expansion of the tax credit permanent, and language to do so was included in the Build Back Better bill introduced in Congress in September 2021. Sen. Joe Manchin (D-WV) indicated that he opposed the bill, insisting that child tax credits include a work requirement for families, and it was scuttled in the Senate. The recently announced Manchin-backed Inflation Reduction Act, which includes spending for fighting climate change, bolstering health care, and lowering prescription drug prices, does not include the expanded child tax credit at this time.

Published with permission of The American Independent Foundation.