money Biden’s economic 'rescue plan' could cut child poverty in half, analysis finds
President-elect Joe Biden’s $1.9 trillion ‘rescue plan’ could lift millions out of poverty — especially children, Blacks, and Hispanics — according to a new analysis, and could result in a poverty rate that’s lower than before the pandemic began.
Over 11.6 million people would be lifted out of poverty in 2021 if Biden’s plan is implemented, according to an analysis by Columbia University’s Center on Poverty and Social Policy. Five million of those would be under 18, cutting the child poverty rate in half. The 2021 poverty level would sink to around 9%, much lower than its pre-pandemic level of 11.7% in 2019.
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“It would represent a historic effort to cut poverty, and particularly child poverty,” Megan Curran, a postdoctoral research scientist, and co-author of the report told Yahoo Money. “We can't get out of this crisis unless we make sure that families who have been struggling the most are able to meet their needs. This package would go a long way in making sure that's possible.”
The decrease in poverty would be the most significant among Blacks and Hispanics.
In December, the Black poverty rate was 20.3% and the Hispanic rate was 18.9%, while the poverty rate for white Americans was 8.8%. Under Biden’s plan, the Black poverty rate would drop to 13.3%, while the Hispanic rate would fall to 11.5%. The poverty rate among white Americans would sink to 7.1% under Biden's proposal.
“Black Americans and Latino Americans have been among the hardest hit in terms of poverty amidst the crisis,” Curran said. “The extension of expanded unemployment benefits and increasing the weekly supplement to $400 would do quite a lot.”
Under Biden’s proposal, the extra weekly amount in unemployment benefits would be increased to $400 a week, up from the current $300 a week. Biden’s plan would also extend those benefits and other unemployment programs through September — currently, the additional benefit lapses on March 14.
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Two other key proposals that would help families with children along with Black and Hispanics are the $1,400 stimulus checks and the tax credit expansions included in the proposal. Qualifying Americans would get an additional $1,400 check per adult as well as an additional $1,400 for each dependent (adult dependents would be eligible too), meaning that families with children would get bigger checks this time versus previous rounds.
Biden’s proposal would improve the child care tax credit, making it refundable and worth up to $4,000 for one child and $8,000 for multiple children. It would also increase the child tax credit to $3,000 per child, up from $2,000, and make it fully refundable. The eligibility requirements for the Earned Income Tax Credit would also be expanded under Biden’s proposal.
Poverty in the U.S. unexpectedly declined at the beginning of the coronavirus pandemic, thanks largely to generous government support from the CARES Act. But that trend reversed as the relief provisions expired. The $900 billion stimulus package enacted last month kept poverty at 12.6% in December. It would have risen to $13.6% if no relief was passed.
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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