Lack of Child Tax Credit Payments Forces U.S. Families to Stretch Their Financial Resources

When Colleen Caulfield chose to pursue a master’s degree, she had no idea how she and her family would make ends meet. If she was anxious about paying for housing and child care while still providing for her family’s nutritional needs, this mother of two from Wilmington, Delaware, wasn’t alone.

Once the expanded child tax credit kicks in in July of 2021, she’ll begin receiving monthly payments. Because they have two young children under the age of 6, the extra $600 per month made a significant dent in their monthly expenses.

As Caulfield recalls, “I’m not a really religious guy, but I just felt like thanking God.” This is helping us make ends meet and relieving some of our financial stress, so I’m curious how it all came together.

An important expense for families in Caulfield is child care, which receives a large portion of the child tax credit. These expenses might quickly mount if you have two young children in early childhood education.

The average cost of child care for a child under the age of five is between $8,000 and $10,000, according to a new Treasury Department research. The report stated that families would have to spend around 13 percent of their income on child care for just one child.

Depending on the age of her children, Caulfield paid between $1,200 and $1,500 per month for each one.

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Caulfield screamed, “It’s nuts.” One and a half of our mortgages, in other words.

Because of this, the monthly payment of the child tax credit had such an effect.

That’s the price of having children, she quipped. “It was presumably used for child care, but you know, the diapers and the food. “I mean, they eat so much!”

For the first time since the program’s inception, Caulfield — along with millions of other Americans — will have no access to the funds they were promised on January 15, 2022. Congressional action has not been taken to extend the program, which expires at the end of 2021.

In order for Caulfield to make it through the next three months without those monies, he will have to make some compromises.

Thoughts regarding things people can and can’t buy, like this shopping list, thought: “We can’t really do the blueberries this week. ” Because they’re so pricey, “It just seems like too much.”

Many economists point to evidence demonstrating the significant impact on the U.S. economy that the monthly payment of the enlarged child tax credit has. For every $1 that is given to families, the economy will reap $8 in net benefits to society, according to the Center on Poverty & Social Policy at Columbia University.

An additional study by the DC-based Niskanen Center estimates that a year of the monthly child tax credit allowance would produce $27 billion in consumer spending, over $2 billion in state and local taxes, and the equivalent financial support for over 500,000 full-time jobs at the median salary.

Families are able to take care of themselves and their children because of the financial support they receive from their employers. The fact is that every family is unique, and money has a lot of power because it can be used for anything.

Economic Security Project’s executive director Natalie Foster stated this. Families will be able to choose what’s most essential to them in any given week or month.

Families will be hit the hardest when their monthly child tax credit payments stop in January 2022, even though the program will have expired in December 2021. For the first time in six months, parents and guardians will have less money to invest in their children’s future. There is a lot of concern for individuals who are just above the poverty line.

Foster noted that many lower-income families are “putting food on the table” by working two or three jobs to make ends meet. Among Latinx and Hispanic families, the child tax credit reduced hunger by a third and by a quarter, respectively, pointing that that poverty is a policy decision that we are making in the United States.

The increased child tax credit did not only benefit low-income families, although it did have a noticeable effect on the children in those households. Foster estimates that if the program isn’t extended, 10 million American children will be pushed further into poverty.

More than 60 million children and 36 million families received cash as a result of the program. This program provided monthly payments of $300 for children under the age of 6 and $250 for those between the ages of 6 and 17 to roughly 90% of all children in the country.

In Phoenix, Arizona, parents like Natacha Chavez are included. As recently as last week, Chavez was let go from her non-profit employment. Since they received their last child’s tax credit payment, her family’s situation has changed significantly.

“In terms of my own life, CTC is crucial. This is an excellent bridge for any middle-class family, in my opinion,” Chavez asserted. For whatever reason, “there was something coming” in instances like this, where there is an economic gap or break, “there was something coming.”

Chavez and her family will not receive those payments this month when they are most in need. Chavez began collecting the tax credit in July 2021, which made things a little bit simpler.

Chavez recalled that he and his wife had purchased new spectacles for his son before the start of the school year. “Since he’d had his for a few years, we figured it was about time to give him something better. Also, it was just the right time for the introduction of the child tax credit.”

There was less of a strain on a family’s finances because of this, she said.

“There was a lot less anxiety in that location. Anything’s almost as if you didn’t have to think about it at all because you were confident in your abilities. It was clear to Chavez that he was capable of carrying out his responsibilities.

Things like chocolate milk from the local dairy might be added to Natacha’s family’s budget thanks to an extra $500 a month. That implies that her children will be hearing “no” a lot more now that she has no more money to spare.

There are occasions when youngsters ask, ‘Why don’t we go out for dinner?'” she added. “And you’re saying, ‘No, we can’t do that,'” I replied.

Chavez said she anticipates a lot of families would be making cuts this January.

In the short term, the CTC’s future is unclear. As part of the wider Build Back Better Act, it does not have the votes to proceed.

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The stalemate has the potential to have an influence on society as a whole. Many advocacy organizations, such as the Economic Security Project, are calling on Congress to do even more—and quickly.

As a result, “American families are working and Congress is not.” “The impasse in DC during this extraordinarily challenging period can only be explained by the fact that Congress is not listening to the people,” Foster added.

When it comes to the rising cost of living and the COVID surge, “I can’t think of a month where American parents would need a check more than January of 2022.”

Despite this, the impartial Congressional Budget Office forecasts that extending the CTC for an additional year will cost $185 billion in federal funds. It will cost $1.6 trillion to make it permanent.

A glimmer of hope shines in the distance for Caulfield, a Wilmington mom, and graduate student. In a matter of months, she will have a second source of money for her family once again. The rest of the child tax credit she expects to receive this return will hopefully tide her over until a job can be found.

“We paid down our obligations and took out a loan to cover the difference. So, we’re good to go for the month of January. “Then there’s the tax money,” explained Caulfield.

Chavez began working as a canvasser on a part-time basis.

In the interim, she has slashed many of her family’s unnecessary expenses in order to make ends meet. Both mothers’ letters to Congress are short and sweet.

There’s “nobody winning right now,” Caulfield said. “We are all drowned out here in this pandemic,” he continued. It’s a win-win situation for both of us if we can come to an agreement. When it comes to their children, “parents deserve something.”

“Come on, let’s get started on that budget. Come, come, hang out with the kids and see the things they need on a daily basis,” Chavez issued an appeal to members of Congress. “It’s just very frustrating that we have these folks that don’t seem to actually know what happens to American families.”

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Despite the long-term costs, Foster of the Economic Security Project still believes that investing in parents like Caulfield and Chavez is an investment worth making.

As far as I can tell, practically every American parent will receive a child tax credit check.” Parenting is challenging.

“It’s a lot of labor and a lot of money,” Foster added.

Tax credits for children were straightforward, effective, and quick to implement. That’s what the future of social policy should look like, she said.

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