How government-provided cash gives people the tools to solve their own problems.
By Aisha Nyandoro and Natalie Foster
As President Joe Biden prepares to sign the American Rescue Plan, a surprising bipartisan hero has emerged: the Child Tax Credit. The new law will nearly double this already-existing credit for one year and send $250 to $300 per child every month to almost every family in America. Biden and Democrats in Congress have expressed support for making these changes permanent. And the enthusiasm for the policy extends across the aisle, with Senator Mitt Romney (R-UT) introducing his own version.
For those of us working in economic policy, this is nothing short of revolutionary—a guaranteed income for families with children is estimated to cut child poverty in half, bringing close to 5 million American children out of poverty.
It is a major step forward to leave the punitive welfare system of the past four decades in the past, and instead embrace the simplicity and efficacy of unconditional cash.
Much of the foundation for the insufficient and conditional nature of our current benefits system can be attributed to GOP idol Ronald Reagan. His administration paved the way for a generation of conservatives to eviscerate the social safety net by fear-mongering about fraud and waste by the poor, all while slashing taxes on the wealthy. Decades of policy were shaped by this false narrative, which is still evident in conservative hand-wringing over whether pandemic aid was too generous to minimum-wage workers struggling to survive through COVID-19.
Aspects of the Reagan era can be seen in where the original Child Tax Credit fell short: it shows our limits on who we think is deserving.
It did not go far enough in addressing the needs of the full family—for example, a disabled adult under a parent’s care, or an aunt without children whose lost her job due to COVID. What makes the new Child Tax Credit remarkable is the fact that it is unconditional—no complicated hoops to jump through or minimum income requirements of parents. Families will simply receive checks.
With the dual crises of racial injustice and a virus response only now being taken seriously by a new White House, Americans must finally rid our politics of the poisonous ideology surrounding poverty in the U.S.
For far too long, we’ve been sold a reductive story that people are poor because they don’t work hard and deserve to be.
That people who are wealthy are rich because they work hard and deserve to be.
This morality tale is a lie. Who is working harder—the CEO who leaves the office at 5 p.m. or the cleaner who spends the night scrubbing down the office? The truth is, our economic system has been engineered to funnel wealth to the very top, while the working class pay the price. The pandemic has illustrated the stark results: the collective wealth of America’s billionaires has grown by 36%—$1 trillion—while eight out of 10 U.S. households earning under $50,000 are still having difficulty meeting basic needs each week. We need to build an economy that recognizes a person’s inherent worth and ensures that we are all given the opportunity to not just survive—but thrive.
The path to shared prosperity and common-sense policy should begin where the need does—within the community. We see how this pays off in a program like Magnolia Mother’s Trust in Jackson, Miss. It was developed through a process that was created based on the needs of the families living in subsidized housing it serves. Potential recipients had similar stories of waiting for hours at government offices to “prove” they were still poor, being penalized in lost benefits if they were able to scrape together a semblance of savings to try and get an apartment in a safer part of town. When asked what would help them achieve economic stability, the answers ranged from owning a reliable car to get to work to coming up with tuition money for their last semester of community college.
The challenges were individual, but the solution was universal: cash.
The “radically resident-driven” nonprofit, Springboard to Opportunities, developed a program to provide a group of mothers $1,000 a month for a year. The results were more promising than any job training or budgeting seminar. The initial 20 recipients paid off $10,000 in predatory debt. The amount of meals made at home versus picking up fast food or takeout more than doubled. At the end of the first year, all the participants said they were able to pay their basic needs. Now expanded to 110 mothers, the second year is about to wrap up. While the data will take some time to collect, the money was crucial—the first payments went out on March 15, 2020, just as the U.S. was entering lockdown.
One mother, Mimi, saw her hours as an Olive Garden server evaporate overnight. Unemployment insurance was slow and unreliable. She didn’t have health insurance, and worried about going back to work once the restaurant resumed service. The $1,000 from the program was the only steady source of income she had to care for herself and her children.
There are millions of Mimis across this country, and they deserve help—not judgment.
Policies like the Child Tax Credit and recurring direct checks can provide them the agency and choice they need to do what’s best for themselves and their families. This pandemic has shown what we know to be true: cash gives people the tools to solve their own problems. Direct cash payments have driven poverty reduction and boosted local economies, but perhaps most important—cash has been a lifeline for people to meet basic needs and fill in the gaps in their own personal safety nets.
It’s time to relegate Reagan-era welfare policy to the history books and follow the new trail blazed toward equity, trust and dignity we are seeing U.S. leaders finally embrace.
Aisha Nyandoro is the CEO of Springboard to Opportunities and the founder of the Magnolia Mother’s Trust guaranteed income program. Natalie Foster is co-chair of the Economic Security Project.
To see original article please visit: https://www.marketwatch.com/story/covid-relief-package-lifts-millions-of-children-out-of-poverty-and-shuts-the-door-on-reagans-punitive-welfare-legacy-11615407139