“The idea was that pandemic insurance would find and fill the holes. The problem is that you’ve painted an entire wall to fill a few cracks,” said Jonathan Parker, head of finance at the MIT Sloan School of Management. If pandemic aid was targeted only at those who really need it, any inflationary impact would be “much, much smaller”.
Refundable tax credits, including the Extended Child Tax Credit and Earned Income Tax Credit, lifted 9.6 million out of poverty.
Some conservatives argue that falling poverty rates offer few lessons for the future.
“Okay, great, like poverty has come down a lot, but no, really — not permanently,” said Michael R. Strain, director of economic policy studies at the American Enterprise Institute. “If you think about poverty in a broader sense related to issues around self-sufficiency and earnings and upward mobility, then I think a huge reduction in poverty based on a one-time temporary transfer of income is not really poverty reduction at all. .”
But for many recipients, the aid served as a springboard to a better life.
Among those who escaped poverty with government help is Kristina Ennis, 29, a restaurant operator in Pittsburgh who gave birth to her first child last year. Maternity leave reduced her income and the pandemic led to her fiance’s layoff.
Their income, after taxes and work expenses, would leave them $25,000 below the poverty line. But the safety net gave them more than $18,000 worth of aid, which included stimulus payments, tax credits and food stamps. About a third of the aid, including the extended child tax credit, was pandemic-related aid, while the rest came from the permanent safety net.
The state of jobs in the United States
Economists have been surprised by the recent strength in the labor market as the Federal Reserve seeks to slow and tame inflation.
Ms Ennis said the financial pressure left the couple arguing and depressed until tax credits brought in almost $8,000 and relieved them of their debts. She said the aid helped her be a more attentive mother and gave her boyfriend time to find a better job, which more than doubled his salary. They used some of the money to finance their wedding, which is scheduled for Saturday.