The profound impact of giving American families a little more cash

The profound impact of giving American families a little more cash
Allina Diaz and her 6-year-old daughter, Journey, chat on the patio of their Jefferson, Maine, home on May 6. | Séan Alonzo Harris for Vox

Six months of payments lifted millions of children out of poverty. Then they stopped.


Part of the May 2022 issue of The Highlight, our home for ambitious stories that explain our world.

Allina Diaz started looking for work last May, after graduating from the University of Maine at Augusta. As a single mom, Diaz had attended classes while raising her three daughters — Lilly, 13, Annabelle, 11, and Journey, 6 — on a tight budget.

She knows the numbers intimately: Her financial aid (a mix of grants and federal student loans, which together covered basic living costs while she was a student) came every four months, and ranged from about $3,000 to $5,000 per payment, which she’d stretch to last until the next. She made around $500 a month from her work-study jobs as an office assistant, tutoring, and administering Covid-19 tests to students.

Her two eldest daughters received a combined $1,500 a month in Social Security benefits, which they were eligible to receive because they’d lost their father at a young age. SNAP benefits helped to cover food, and Section 8 vouchers helped to pay for her house, though she still owed an additional $600 or so a month to make up for the gap in housing costs. After covering rent and utilities, she had around $1,200 a month in cash to spend on everything else: gas for the car, clothes and school supplies for the kids, food not covered by SNAP, and unexpected expenses.

When she graduated with her degree in justice studies, the financial aid checks and work-study income stopped. Diaz, then 34, needed to find full-time work. “I thought I was going to be able to get a job quickly,” she said.

But with the pandemic still affecting many aspects of American life, the process took months. She interviewed for jobs at criminal justice reform and social advocacy nonprofits through the summer and into the fall. Toward the end of the year, the number of Covid-19 cases in Maine crept higher than they’d been at any other point in the pandemic. “My kids were out of school constantly for 10-day quarantines,” she says. She had to keep them at home for long stretches while she was busy interviewing for jobs. “It was a really rough time.”

Her financial stress would have been even worse, she thinks, if she hadn’t started receiving her expanded child tax credit payments in July, following her graduation. The credit — which was passed as part of the American Rescue Plan in March 2021 — built upon the existing child tax credit that many parents already received yearly. It increased the amount of money families were able to get, from $2,000 per child to $3,000-$3,600, depending on the age of the child.

The credit also expanded eligibility, making it available to most parents, including those who didn’t earn enough money to file tax returns. Rather than coming at tax time, as it did before the American Rescue Plan was passed, the money showed up every month between July and December in 2021: up to $300 for each child under 6, and $250 for children between 6 and 17. It was a clear example of a policy that directly benefited American families by giving them cash and trusting that they knew the best use for it.


Séan Alonzo Harris for Vox
Diaz spends time with her three daughters (from left) Lilly, 13; Journey, 6; and Annabelle, 11. After she finished college, the expanded child tax credit — part of the American Rescue Plan — helped Diaz make ends meet, until the payments abruptly stopped.

As a parent of three, Diaz received $750 a month. “Those payments made it so that my income rounded out,” she says. “I was still not bringing in as much as I had been, but it was a godsend. It came at exactly the right time.”

The economic impact of the expanded child tax credit was profound. According to one analysis by researchers at Columbia University’s Center on Poverty and Social Policy, the payments immediately lifted 3 million children out of poverty in July.

Congress only approved the expanded payments through the end of 2021. Advocates for the policy hoped that the program would be extended, possibly as part of President Joe Biden’s bigger social and environmental spending proposal, Build Back Better. But Republican senators were uniformly opposed to Build Back Better, as was Sen. Joe Manchin (D-WV), who said he specifically couldn’t support extending the expanded child tax credit due to its lack of a work requirement and its price tag — about $1.5 trillion if the program lasted a decade, according to a Congressional Budget Office estimate. Negotiations over Build Back Better fell apart in December, and the payments stopped coming.

The effects of the expanded tax credit’s expiration were just as stark as its introduction: Child poverty increased 41 percent the first month after the credit expired, according to the researchers at Columbia.

By the end of December, as Diaz realized that Congress still hadn’t renewed the payments for the following year, she began to stress about how she was going to heat the house through the Maine winter. Instead of enjoying holiday celebrations with her family, she says, she was worrying about whether she had enough fuel oil for her furnace. She’d frequently find herself going to the basement to make sure she had enough in the tank to keep the house warm. “I was afraid I’d wake up some morning,” she says, “and the kids couldn’t take a bath.”


For the six months that the payments went out, the extra money provided a layer of support to the millions of families that really needed it. It helped to alleviate some of the interminable stress of living in, or on the brink of, poverty. It was a reliable supplement to families trying to weather a pandemic and rising inflation. Since it expired, supporters of the expanded tax credit have been dismayed by the relative lack of urgency in Congress around renewing it.

“When the child tax credit was expanded, we tracked it and we saw in real time how many kids could be lifted out of poverty,” says Lisa Davis, who leads No Kid Hungry, a campaign to end child hunger started by the nonprofit Share Our Strength. “We should have a bipartisan clamoring to reinstate the expanded child tax credit. There’s nothing that symbolizes the failure to act in Congress more than this.”

One study, by the economic think tank Urban Institute, showed that half of the families receiving the credit used it for food, and nearly a third used it to pay utilities. That’s how Odessa Davis, a 34-year-old special education aide in Silver Spring, Maryland, spent hers: paying off bills and using the extra cash to buy groceries for her son, Leon. During the months she was receiving the money, she’d worry about bills, “and then next thing, boom, the child tax credit hit my account,” she says. “I didn’t end up in a negative balance. It helped me fill in when I needed it.” Her son started asking about trying new ingredients he’d learned about from watching anime. She bought him bok choy and experimented with new meals without worrying that she was wasting money.


Séan Alonzo Harris for Vox
Journey chases after a frisbee in the yard of her family’s home. Many parents, including Journey’s mom, used the cash to pay for essentials, like school clothes and groceries.

Another 30 percent of people surveyed by the Urban Institute said that they spent the money on clothing. Diaz used her money to buy school clothes for her girls, as well as to cover car payments and phone bills while she interviewed for jobs. That’s what Amber Roy, a 42-year-old from West Virginia, planned to do, too — to buy new clothes for her teenage sons — but she never actually got to. Each month, there was a more pressing need for the money, like bills they were behind on in July, or groceries that needed to be bought in August.

Roy, who lives in Charleston with her husband and sons, knows how much she owes in bills every month: $200 on water, around $400 for the family phone bills, $200 a month in gas for the car. Their income without the credit isn’t enough to cover all of their living expenses, she says, so she often finds herself cooking for her family and then skipping dinner herself.

“I say I’m not hungry because I know there’s not going to be enough for everybody to be full,” she says. “I’ll eat a piece of bread with peanut butter. You do what you have to do to make sure your kids are good.” Recently, she overheard her sons arguing over the laundry; the younger one was telling the older one not to waste water because it was too expensive. “He’s 14. He shouldn’t have to know that,” Roy says. “But he does.”

The parents who didn’t spend the money on essential needs said that it was helpful for long-term planning and unexpected expenditures — and in some cases, both. Patrick McGinty, an adjunct professor who lives in Pittsburgh with his partner Candace and their 5-year-old son Augie, decided to take $100 from their monthly credit and invest it in the 529 account they opened to save for Augie’s college tuition.

Then, in October, their furnace died, and the extra cash helped offset the $6,000 repair. “It made a tangible difference,” Patrick says. Even though the payments stopped, he and his partner have continued to send $100 a month to the account. “We probably have $2,000-3,000 in there that genuinely would not have existed” without the expanded credit, he says.

For the families that came to rely on the monthly payments, the end of the expanded credit meant that they needed to adjust how they spent their money — and just as importantly, their time. It came at a moment when inflation started to make the costs of food, fuel, housing, and consumer goods even more expensive. Jeannette, a 42-year-old mother of one from Westbrook, Maine, who asked that Vox only use her first name because she is an asylum seeker, says that she’s had to spend less on groceries and school clothes for her son, and that he’s not able to attend swimming classes as frequently as he’d like. “I’m sad about it,” she says, “because it’s something that he loves, that keeps him happy.”

The effects of losing the monthly payments rippled out beyond individual families. Sophia Whitehouse, 32, who lives in Ohio with her husband Ray and their two young children Zac and Zoe, is a school psychologist who recently opened her own practice with a colleague.

Her family used the payments for child care and summer camp so that she could work. Losing that monthly income has meant that her husband has had to add extra overtime shifts at the Walmart distribution center where he’s employed. It’s also kept Sophia away from work even as she is trying to build her practice. “I have to stay home more with the kids, which is resulting in me losing money that I could be making,” Whitehouse says. “Me not being at work means more kids in my community are not getting the help they need, because I’m not available. It’s dominoes falling over.”


Polls show that a majority of voters support the payments. Most Democrats back the policy. Even some Republicans have proposed plans for a benefit for parents — though there are real disagreements about how the payments would be paid for and who would receive them. Still, it wasn’t enough to keep the expanded tax credit from slipping into legislative limbo, and it’s uncertain if Congress will revive it. When lawmakers in Washington debate anti-poverty programs, the voices of the people who stand to benefit most from them tend to get lost, but they are the voices Congress needs to hear most as they consider the expanded tax credit’s future.

“We have a lot of families that are still struggling. Inflation has happened, the pandemic has happened, war is happening,” says Tamara Harris, a single mom from Indianapolis, Indiana, who works as a bus driver and received $250 a month from the child tax credit. “We have nothing to help us in day-to-day living expenses, and our wages are not improving,”


Séan Alonzo Harris for Vox
Annabelle and her sister Journey look for their dog through the back window of their home.

Roy is also angry, particularly because her senator, West Virginia’s Joe Manchin, didn’t support extending the payments. “He’ll never know what it’s like to have to walk into a grocery store with a calculator to make sure you don’t go over your budget. He’ll never know what it’s like to buy one Christmas gift for his kids because you can’t afford anything else,” she says. “He claims to speak for all of West Virginia. We can’t even afford to do everyday things.”

Lisa Davis, who runs the No Kid Hungry campaign, says that despite Manchin and Republicans’ concern about the cost of the program, there’s a greater cost in letting so many kids live in poverty. “There’s so much research that shows that when kids go hungry their physical health suffers, their brain development suffers, their mental health suffers, and their academic performance suffers,” she says. “When you look at all of those costs children will face for a lifetime, continuing the expansion of the child tax credit has one of the strongest returns on investment I can imagine. We have so many families and kids that really are struggling right now.”

When the credit ran out, it put a hole in Allina’s budget. In January, she skipped paying her credit card bills and her electricity bill. In February, Allina landed a job as a community organizer at Maine Equal Justice, an economic justice nonprofit that advocates for policies that benefit low-income and marginalized people. Her job came with good benefits and allowed her to stop worrying so much about money. It also put her in touch with other families in her community who are still struggling in the face of rising housing costs and inflation, and without the monthly payments that had made life a bit easier. “When these programs end,” she says, “it’s taking food out of kids’ mouths.”

Marin Cogan is a senior correspondent for Vox.