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‘Huge’ COVID stimulus could lift 117,000 Michigan children out of poverty

Child poverty
The American Rescue Plan includes a 15 percent increase in food stamp benefits. In Michigan, more than 430,000 adults reported they can’t afford food to adequately feed their children. (Shutterstock photo)

July 6: What Michigan needs to know about the July 15 Child Tax Credit payments
April 30: Child tax credits are expected to start arriving in July. Here’s what to know.

The $1.9 trillion federal stimulus could have an outsized impact on Michigan families, including hundreds of thousands struggling from the impact of the coronavirus pandemic.

In Michigan, about 19 percent of children are impoverished, and the stimulus is expected to lift about a quarter of them (117,000) out of poverty and assist another 249,000, according to the DC-based Center on Budget and Policy Priorities.

“It’s a huge package that will really help people get back on their feet,” said Gilda Jacobs, CEO of the Michigan League for Public Policy, which advocates for racial equity and economic security.

“This totally parallels our agenda that we’ve had for years,” she said. “I was doing a happy dance.”

The stimulus, known as the American Rescue Plan, includes $1,400 per-person stimulus checks. While those are gaining significant attention, those who advocate for families say a longer-term impact could be the plan’s increases in child tax credits.

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Currently planned for one year, boosters hope the benefit would become permanent. The tax credit increases to $3,600 from $2,000 for each child under 6 and to $3,000 from $2,000 for children 6 to 17.  

Parents would be eligible even if they make $112,500 as a head of household or as much as $150,000 as a married couple. 

Significant for those living in poverty who don’t pay taxes ($26,500 for a family of four), the stimulus would provide direct monthly payments — equal to half the credit ($300 per child) each month, with the other half coming at tax time.

Jacobs acknowledged it’s a radical idea but one that has gained currency. Republican U.S. Sen. Mitt Romeny has proposed a similar idea — with even bigger payments — that he said would be a “new national commitment ot American families.”

Most children would benefit

The Center on Budget and Policy Priorities estimates that 1.97 million children under 18 in Michigan — and 65.7 million nationwide — would benefit from the expansion, 92 percent of all children in the state. 

But there are other benefits, including:

  • More than $880 million for food assistance, including a 15 percent increase in food stamp benefits. In Michigan, more than 430,000 adults reported they can’t afford food to adequately feed their children, according to the U.S. Census Bureau.
  • Some $25 billion rental assistance and housing vouchers for those behind in rent because of COVID or at risk of homelesness. In Michigan, some 139,000 families reported they were at risk of eviction.
  • $25 billion in aid to help child-care providers reopen safely and $15 billion in additional child-care assistance to help families return to work.
  • Increases to the earned income tax credit for low-wage workers who aren’t parents, would rise from about $530 to $1,500, while the income cutoff would rise from $16,000 to $21,000.

The House is expected to finalize the stimulus as soon as Tuesday. 

While some details are being finalized, advocates say it’s a godsend to those who struggle with day-to-day expenses but don’t qualify for public assistance.

“That would be so amazing,” said Leah Ellis, 38, of Lansing. 

She owns a business that sells educational aids to students, and said she has had to home-school her three children because of the pandemic. That has limited her ability to work — and to pay her bills.

After using her own stimulus check — estimated as high as $5,600 — on erasing some of her utility debt, she said she’d be able to use some of the monthly child-tax credit money to pay for a tutor for her 5th grader who has attention-deficit disorder.

“That’s what I’ve wanted to do. It’s just not been affordable,” she said.

The stimulus represents a profound policy shift because it also benefits working families, said Nancy Lindman, director of public policy and partnerships for the United Ways of Michigan.

By raising the income cutoff to $150,000 for parents, the aid helps those who often make too much money for assistance but still struggle to pay bills. It also could prevent lower-income families from having to choose between working and losing benefits, she said.

“I think it encourages work because (they’re) not going to drop off a cliff and lose benefits,” Lindman said.

Child care assistance 

With nearly $40 billion targeted to aid child-care providers and those who rely on them, the measures could also be a boon for employers struggling to find workers.

Annmarie Valdez, president of First Steps Kent, which advocates for improved child-care options, said it would help many who want to work but have had a hard time finding child-care or affording it. 

“The cost is prohibitive. It can be more than a mortgage payment,” Valdez said. 

By increasing the amount families can pay, more may choose to work, Lindman said. “It definitely encourages work because (they’re) going to be able to afford child care,” she said.

For years, advocates for the poor and working families have looked to Lansing for more money. 

But with budgets that were hit hard by the Great Recession, the conversation was typically around minimizing cuts, not spending more money.

But the federal government, unlike the state, does not have to balance the budget annually, allowing it to step in. 

“We’re very aware that the state has fiscal limitations that the federal government does not,” said Alex Rossman, director of external affairs and government relations for MLPP.

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