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What the Child Poverty Rate Is Missing




House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer He assured us in July 2021 that expanding the child tax credit “would halve the child poverty rate in the country.” Shortly thereafter, President Biden announced that the expanded credit would “cut child poverty in half this year.” Official census numbers are out, and in 2021 the poverty rate among children under 18 was 15.3%. It fell just 0.7 percentage points from 16% in 2020 and was still 0.9 points higher than the pre-pandemic low of 14.4% in 2019, even though the government spent an additional $2.6 trillion on transfer payments in 2020-2021. .


As noted in these pages, the Democrats’ Pink Promise will not be recorded in the Census Bureau’s official poverty numbers, because the income numbers used to calculate official poverty rates do not count tax credits refundable as income to beneficiaries. No matter how much money the government spends on any of these tax breaks, it will never raise the official income measure due to the way the census determines income. The omission of refundable tax credits from the official poverty rate calculation is not unique. The Census Bureau fails to account for two-thirds of all government transfer payments to families in the income figures it uses to calculate not only poverty levels but also income inequality and income growth. In addition to not counting refundable tax credits, which are paid by checks from the U.S. Department of the Treasury, official Census Bureau procedure does not count food stamps, Medicare, the Children’s Health Insurance Program, rental subsidies, energy subsidies, and health insurance benefits under the Affordable Care Act . In total, benefits provided in more than 100 other federal, state, and local transfer payments are not counted by the Census Bureau as income to beneficiaries.


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