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Report: Republican Welfare Reform Cut Child Poverty, Democrats’ Expanded Child Tax Credit Threatens That Progress

March 25, 2022

A new report from the Heritage Foundation shows that the benefits of the 1996 bipartisan welfare reform have persisted decades after its passage, with children today half as likely to live in families below the poverty threshold. However, Democrats’ expanded Child Tax Credit threatens that progress.

Key Takeaways: 

Republican-led bipartisan welfare reform demonstrated real results: The overall child poverty rate had remained largely frozen for decades before welfare reform—and began to drop dramatically shortly after reform.

  • Children today are half as likely to live below the official poverty threshold as were children in 1996. 
  • Deep child poverty (with resources less than half the official poverty threshold) has been nearly eliminated. 
  • Among single-parent families, deep poverty fell from around 5 percent before reform to less than 1 percent today.
  • The poverty rate among single-parent families was relatively flat before welfare reform. Immediately after reform, poverty among these families began to decline sharply, falling from 33 percent in 1996 to 11 percent today.

The Biden Administration undermines these gains with new handouts that eliminate work requirements and undermine marriage.

  • Studies that show child poverty was “cut in half” by Democrats’ partisan expansion of the child tax credit use flawed methodology to define poverty:
    • Researchers from Columbia University simulated that child poverty increased by 4.9 percentage points (3.7 million more children) in January 2022 compared to the prior month because they merely guess families’ income based on their employment status and unverified assumptions about who is receiving government assistance–rather than using actual incomes reported by families.
    • Researchers from the University of Chicago and Notre Dame contradict this study with better analysis, showing that the expiration of the Child Tax Credit coincided with a slight decrease in child poverty, which fell slightly from 15.3 percent in December 2021 to 15.2 percent in January 2022.
    • The researchers use actual data on reported income over the most recent 12 month period, an approach described and validated in a Brookings Institution paper published early in the pandemic.
  • University of Chicago study found the CTC expansion would lead 1.5 million workers to exit the labor force, and that the decline in employment and earnings loss would offset the reduction in child poverty.

CLICK HERE to read the full report.


WATCH: Republican Meeting with former chairmen of Ways and Means, Speaker Paul Ryan and Chairman David Camp: “Building on Welfare Reform’s Success” (Wrap-up here)

READ: Debunking Democrat Myths About the Child Tax Credit