End of pandemic-era safety net programs increased poverty
The expected spike in poverty — particularly child poverty — between 2021 and 2022 shows the impact of letting major pandemic-era safety net program expansions expire, a policy experiment with no precedent in the U.S.
Why it matters: The pandemic programs were enacted as temporary measures. But their expiration still stings for the Americans who experienced an economic boost only to lose it — and there's more to come.
Driving the news: Real median household incomes fell by 2.3% in 2022 and the poverty rate increased by 4.6 percentage points to 12.4%, according to data released yesterday by the U.S. Census Bureau.
- Child poverty more than doubled fr0m 5.2% in 2021 to 12.4% in 2022.
- A separate poverty measure that doesn't include government programs found no significant change in poverty from 2021 to 2022 — highlighting the impact of pandemic-era aid.
- The increase in poverty reflects the expiration of the expanded child tax credit and the end of stimulus payments — which occurred as inflation caused the cost of living to rise.
Although more people had health insurance in 2022 than in 2021, this was almost certainly a fleeting phenomenon that has been undone by the unwinding of pandemic-era Medicaid policies.
Between the lines: The conventional wisdom used to be that Washington didn't let benefit programs expire, not least because taking benefits away from people is politically unpopular.
- But that's exactly what happened last year, despite some calls to extend the enhanced child tax credit.
- The economy has subsequently risen to being a dominant issue heading into the 2024 election — and one that President Biden is on the losing side on, according to public opinion polling.
- But Republicans' economic priorities have largely been centered on reducing government spending. "There's a real opening on the right for some bold family policy," said Joe Grogan, director of the Domestic Policy Council under the Trump administration.
What they're saying: "The rise reported today in child poverty is no accident—it is the result of a deliberate policy choice congressional Republicans made to block help for families with children while advancing massive tax cuts for the wealthiest and largest corporations," Biden said in a statement.
What we're watching: Government relief programs have continued to expire this year, and more still are coming.
- Student loan payments are coming due again next month for the first time in three years, although the Biden administration has announced a new plan that will slash many borrowers' monthly payments.
- At least 6.4 million people have been disenrolled from Medicaid already, per KFF, the majority of which had their coverage terminated for procedural reasons.
- And families with children may feel even deeper economic pain this fall after pandemic-era funding for child care providers expires, which is expected to cause thousands of child care centers to close and millions of children to potentially lose care.