Editor’s Note: Mark Wolfe is an energy economist and serves as the executive director of the National Energy Assistance Directors Association (NEADA), representing the state directors of the Low Income Home Energy Assistance Program and the Energy Programs Consortium. He specializes in energy, climate, housing and related consumer finance issues. The opinions expressed in this commentary are his own.
The Inflation Reduction Act, the Democrats’ tax, climate and health care bill that the Senate just passed, sets the nation on a path to meet its climate goals, and provides a set of practical initiatives that will help lower-income Americans who have fewer resources than other households to invest in reducing their energy use and adapt to rising temperatures. It will provide tax credits and rebates designed to help them afford electric vehicles and home retrofits and reduce their use of fossil fuels.
But helping low-income families transition to clean energy is not a substitute for helping them afford basic needs, like food, rent and utilities, or for reducing child poverty rates in the US, which are among the highest in the developed world. Congress must do more to help families afford basic needs and reduce the nation’s high rate of child poverty.
The Build Back Better bill, the House-passed, larger version of the Inflation Reduction Act, would have extended the enhanced Child Tax Credit for families with children, as it was only in effect for one year. The plan increased the size of the credit from $2,000 to $3,000 for children over the age of 6, and to $3,600 for children under the age of 6. And it was fully refundable, so lower-income parents who did not have sufficient taxable income could take full advantage of it.
These enhanced credits provided an additional income boost to families, especially those who needed it most, and extending them would have kept millions of children out of poverty. In fact, the Center on Poverty and Social Policy at the Columbia University School of Social Work estimated that the rate of child poverty increased from 12.1% at the end of December 2021 to 17% in January 2022, which is when the credit ended.
The Build Back Better bill would have also increased lower-income families’ ability to participate in the labor force, especially lower-income women with children or dependent elderly relatives, by providing subsidized child care, universal prekindergarten for 3-year-olds and 4-year-olds and home-based care for older adults and people with disabilities. The bill would also have required employers to provide up to four weeks of paid family and medical leave.
Further, the bill would have addressed the racial disparities in health coverage in the country. It would have provided a pathway to Medicaid coverage for the two million low-income Americans in states that haven’t expanded it. In 2019, people of color made up 60% of those in this coverage gap, including 28% who are Latino and 28% who are Black.
The loss of these benefits is significant. For example, according to the Center on Budget and Policy Priorities, the enhanced Child Tax Credit provisions had been projected to reduce child poverty by more than 40%. precisely because families receiving the enhanced child tax credit used these funds to pay for basic necessities including food, child care and school expenses.
If the Senate had agreed to the social welfare provisions in the Build Back Better bill, it would have represented the most significant increase in social spending for families in several generations. And the need for these benefits is only getting worse, as rising inflation in basic goods is forcing families to choose between necessities like food and medicine.
Congress needs to tackle these issues head-on and revisit funding for the suite of social welfare provisions included in the Build Back Better bill. While it does not appear likely it will do so this year, there are opportunities to include at least some additional funding to rental assistance and child care during the regular appropriations process, which would help low-income families. In addition, Congress could add at least some of the provisions back at the end of the year when it considers extending certain business tax breaks that are set to expire.
Energy-efficient housing is a must, but it is not going to put food on the table or pay the rising cost of gasoline for the country’s struggling families. We shouldn’t have to wait for another generation for these provisions to become law. The midterm elections are coming up in the fall, and voters will have the opportunity to send a message to Congress about the importance of providing strong support for hard-working American families.