Losing the child tax credit is hurting families in Arkansas, proponents say

WASHINGTON — Jasmine James hasn’t used her state child tax credit for the extravagant. Instead, the 22-year-old Jacksonville mom relied on the monthly checks to help with life’s basics: her car insurance payment, utility bills and groceries for her young children.

Now that the monthly payments are up, she’s pushing for $600 less each month. To deal with this, James said she took out two personal loans through payday lenders to subsidize her bills. “If they bring it back, it’s going to help a lot more people because the bills are going up. The light bills are rising. Rents will definitely go up. Gasoline will go up,” said James, mother of a 2-year-old daughter and 3-year-old son.

James’ household is among tens of thousands of Arkansas families who received their final monthly payments in December.

About 350,000 child tax credits for about 602,000 children were issued to Arkansas families this month, according to the Treasury Department. Overall, families in Arkansas received more than $160 million in payments under the program this month.

Monthly child tax credit payments, which paid parents up to $300 per child a month, expired after Senate Republicans opposed President Joe Biden’s sweeping social and environmental legislation package, also dubbed “Build Back Better.” package is known.

After it passed the House of Representatives, Senate Democrats, who faced public opposition from Democratic US Senator Joe Manchin in late December, were unable to rally enough support to get the package through the chamber.

In Arkansas, supporters of monthly payments describe their phasing out as a blow to families across the state. They say the money has tackled child poverty and given families financial leeway as they navigate the coronavirus pandemic.

Arkansas has the sixth-highest poverty rate of the 50 states and has large disparities in median incomes between black and white households.

The state’s median household income is $49,475, a figure well below the national average of $64,994 according to five-year estimates by the US Census Bureau.

There are large racial disparities in household income levels in Arkansas.

In Arkansas, the median income for non-Hispanic white households is about 62% higher than for black households, according to the agency’s five-year estimates. The median household income for non-Hispanic white families is $53,335, and the same figure is $32,844 for black households, according to the agency’s data.

Kymara Seals, policy director for the Arkansas Public Policy Panel, described the payments as “a lifesaver” for families. The Policy Panel is a non-profit organization dedicated to advocating issues of social and economic justice.

“It is so unfortunate that these payments have stopped,” she said. “And hired at a time when this country could afford to continue making those payments. So the timing was terrible.”

Families across the country continue to face high consumer prices, including increased costs for groceries, electricity and gas.

Republicans blame inflation on Democrat-backed legislative policies. The all-Republican congressional delegation from Arkansas last year voted against America’s $1.9 trillion bailout plan, which included direct monthly payments to families.

“If you have more money to chase less goods, you inherently have more inflation,” said US Senator Tom Cotton. “We warned the Democrats about this at the time, and it wasn’t just the Republicans who warned the Democrats.”

Cotton, an Arkansas Republican who opposes reintroducing monthly payments, said the payments contributed to inflation by injecting more money into the economy at a time when supply was constrained. Nationwide, families received about $92 billion through the monthly payments, according to the Treasury Department.

But Bruno Showers, a senior policy analyst at Arkansas Advocates for Children and Families, said spending on child tax credits alone isn’t big enough to drive inflation.

The organization, which works on issues affecting children and families, supported the monthly payments.

“It’s a significant amount of money for these individual families that are receiving it,” he said. “It helps them pay for basic necessities. But as a percentage of our economy, it’s really small.”

The Center on Poverty and Social Policy at Columbia University credits the expanded child tax credit with lifting 3.8 million children out of poverty in November. The center reported that the monthly child poverty rate rose from 12.1% in December to 17% in January, the month when families stopped receiving direct payments.

The Center bases its figures on the Supplemental Poverty Measurement Framework, which takes into account government contributions in kind. The Census Bureau began publishing the measure in 2011. It accounts for other “government programs to support low-income families and individuals that are not included in the official poverty measure,” according to the Census Bureau’s website.

US Rep. Rick Crawford said the child tax credits are indiscriminate and not every family needs the money.

“Really, I think we’ve exceeded the need for that, so I don’t really think we need to bring that back,” the Jonesboro Republican said.

Crawford said his district was experiencing labor shortage issues and employers had been calling, wondering how to get people to get back to work.

“We honestly have a problem at home and across the country where people couldn’t work and couldn’t work,” he said.

That’s not the reality for James, the mother of two in Jacksonville.

James works four 10-hour shifts per week as an assembly line worker and loader at an Amazon warehouse. Her work doesn’t offer extra shifts at this time of year, she said. And yet, working longer hours would mean she would miss quality time with her young children, she said.

In general, there are people who work jobs but don’t make enough money, she said.

“If you have a minimum-wage job, you can barely pay the rent,” she said.

There are parents who are also struggling with the effects of Long Covid and are unable or restricted to work, said Donna Massey, the state chair of Arkansas Community Organizations, a group that advocates for low-income families.

Anecdotally, families are feeling renewed concern over the loss of child tax credits, said Terry Bearden, executive director of the Arkansas Community Action Agencies Association. The organization represents non-profit organizations that fight poverty and serve middle- and low-income people in Arkansas.

“There are few people who actually waste money on unnecessary things,” she said.

If parents are worried about paying rent or supporting their families, they’re not in a good position to take bigger steps forward, like going back to college or starting a small business, she said. The monthly payments, she said, gave families a sense of stability.

Other members of the Arkansas congressional delegation voiced criticism of the tax credit payments people had received over the past year.

US Representative Bruce Westerman, a Republican, said he does not support monthly child tax credit payments.

“As part of the ‘Build Back Broke’ agenda, Democrats are attempting to transform the program into a no-work welfare system,” Republican Rep. Steve Womack said in a statement, referring to the Democrat-backed social and environmental legislation package .

US Representative French Hill said in a statement inflation is lagging behind household budgets and wage growth. He blamed the Democrats’ “tax and spending policies” for high consumer prices.

“The best way to alleviate poverty is not through more government spending, but through meaningful reforms to fight inflation,” he said, also pointing to reducing the “tax burden” on small businesses.

When asked if he would support scaling back last year’s monthly payments, US Senator John Boozman said he was “supported to look at the program as a whole and try to work out some kind of compromise.”

The monthly child tax credit payments were made in an emergency situation to get the nation through Covid, he said. But the Covid landscape has shifted and the US now faces “unbridled inflation,” Republican lawmakers said.

“The question is, what are you doing now?” he said. “Now we are in a different situation.”

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