WIUM Tristates Public Radio

How Biden's Plan Could Help Reshape The Finances Of American Families

Mar 13, 2021
Originally published on March 14, 2021 9:45 am

For Nancy Cordeiro, a plan by the Biden administration to provide her family with a monthly allowance is more than just about money that she sorely needs. It's also about restoring something she has lost at times during the pandemic: her pride.

"When you have to go to the food bank, there's a lot of pride at stake and people are suffering from that," Cordeiro said. "They're getting depressed over that, because all that weight is on them, just like it is on me."

The Middletown, R.I., mom of a 4-year-old has kept her job with a heating and cooling company, but her husband, who does home renovations, has been unable to work during the pandemic.

For a while, their daughter's preschool was closed, so the child had to tag along with Cordeiro to the office. Fixing three meals a day plus snacks was a drag on the family's grocery budget.

Some of that weight is about to be lifted. Included in President Biden's $1.9 trillion relief package is a provision that provides many American parents an allowance of $250 a month for each child and $300 for kids under 6.

Although set to last only through this year, many experts see this as a potentially game-changing initiative to fight poverty in America and lift up lower-income families.

The federal government already offered a limited tax break for parents, but the new law expands that in a number of important ways.

First, it vastly expands the amount of money provided to families — 50% to 80% more for each child.

Second, it's designed to be given out monthly, like an allowance, rather than just once a year. And third, parents with little or no income still qualify for the full amount.

That's a departure from the existing tax break, which is less generous to low-income workers and gives the poorest families nothing at all.

"This is landmark legislation that would really slash child poverty and target benefits to the lowest-income families that need them the most," says Kris Cox, deputy director of federal tax policy at the left-leaning Center on Budget and Policy Priorities.

For Cordeiro, the allowances will make it easier to catch up on some bills and fill the refrigerator.

"It's a huge financial help because that takes away some of the burden of, 'What do I pay?' " Cordeiro said. " 'Do I pay the rent? Do I pay the utilities? Do I pay day care? Or do I get my daughter some new clothes and new shoes for school?' "

Jessica Ricciardelli knows that feeling. She's a single mom in Fairfield, Maine, who makes just over $15 an hour.

"My budget before the pandemic came around was on a shoestring," she said.

Ricciardelli has faced some unexpected bills this past year, including a Wi-Fi upgrade so she can work from home and a car to replace her old one, which failed to pass inspection.

Ricciardelli said news of the new allowance gives her and her 5-year-old daughter, Izzy, some breathing room.

"It was the first time I've ever felt like I was going to be positively impacted by a decision that our government had made. In a huge way," she said.

"$300 is a third of a paycheck for me," Ricciardelli added. "That means that I'm not one small disaster away from not being able to pay my rent."

Congressional Democrats are already hoping to make the child subsidy payment permanent. Cox says there's ample evidence kids who get that kind of early support are healthier, do better in school and earn more money as adults.

"Many wealthy countries around the world have a child allowance where the government provides regular income support to parents throughout the year," she said. "So in many ways, this is the U.S. catching up to the rest of the world and recognizing the importance of investing in children."

That investment does not come cheap. Extending the child subsidy would cost about $100 billion a year.

Still, financial help for parents and kids has traditionally enjoyed support from Republicans, who tend to see such measures as "family-friendly."

Several GOP senators have backed an even larger child subsidy.

But Sen. Marco Rubio, R-Fla., draws the line at paying benefits to families with no income, seeing it as a disincentive to find work.

"That is not tax relief for working parents," Rubio said in a statement. "It is welfare assistance."

Cordeiro acknowledged she would welcome the chance to work a little less and spend more time with her daughter.

"Even if it's just to take her to the zoo for a day — just to give her something of a treat," Cordeiro said. "We don't really get to do that, because I have to work."

She might get that chance this summer. The new child allowance payments are set to start in July.

: 3/13/21

A previous version of this story misspelled Nancy Cordeiro's last name as Cordiero.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

SCOTT SIMON, HOST:

People who have children are about to get a bigger allowance from the federal government as part of the new COVID relief law. Parents making up to $150,000 a year will soon receive a monthly subsidy for each child. It's temporary, but Democrats hope it will cause lasting change in the way the government tries to help poor children and their families. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: The last year has been a financial crunch for Nancy Cordeiro and her family. Her husband, who does home renovations, has been unable to work during the pandemic. And while Cordeiro has kept her job with a heating and cooling company, she's also had to look after her 4-year-old daughter, Olivia, whose preschool was closed for a few months. Fixing three meals a day plus snacks for Olivia was a drag on the family's grocery budget.

NANCY CORDEIRO: It's definitely been life-changing, I think, for everyone. When you have to go to the food bank, there's a lot of pride at stake, and people are suffering from that. They're getting depressed over that because all of that weighs on them just like it is on me.

HORSLEY: Some of that weight is about to be lifted thanks to the COVID relief package that President Biden signed on Thursday. The new law gives parents an allowance of $250 a month for each child, $300 for kids under 6, like Olivia. Cordeiro, who lives in Middletown, R.I., says that'll make it easier to catch up on bills and fill the refrigerator.

CORDEIRO: It's a huge financial help because that takes away some of the burden of, what do I pay? Do I pay the rent? Do I pay the utilities? Do I pay daycare? Or do I get my daughter some new clothes and new shoes for school?

HORSLEY: Jessica Ricciardelli knows that feeling. She's a single mom in Fairfield, Maine, who makes just over $15 an hour.

JESSICA RICCIARDELLI: My budget before the pandemic came around was on a shoestring.

HORSLEY: Ricciardelli faced some unexpected bills this past year, including a Wi-Fi upgrade so she can work from home and a car to replace her old one, which failed to pass inspection. Ricciardelli says just hearing about the new $300 a month allowance gives her and her 5-year-old daughter Izzy some breathing room.

RICCIARDELLI: It was the first time I've ever felt like I was going to be positively impacted by a decision that our government had made in a huge way. Like, $300 is a third of a paycheck for me. That means that I'm not one small disaster away from not being able to pay my rent.

HORSLEY: The federal government already offers parents some financial help through the child tax credit, but the new law expands that in a number of ways. First, it's more money - 50 to 80% more for each child. Second, it's designed to be paid out monthly like an allowance rather than just once a year. And parents with little or no income still qualify for the full subsidy. Kris Cox of the left-leaning Center on Budget and Policy Priorities says that's a break from the old policy, which was less generous to low-income workers and gave the poorest families nothing at all.

KRIS COX: That's completely upside-down. So this is landmark legislation that would really slash child poverty and target benefits to the lowest-income families that need them the most.

HORSLEY: The new larger child subsidy only lasts for one year, but congressional Democrats hope to make it permanent. That would be a dramatic turnaround since cash payments to low-income families have been out of favor since welfare reform in the 1990s. Still, Cox says there's ample evidence that kids who get that kind of early support are healthier, do better in school and earn more money as adults.

COX: Many wealthy countries around the world have a child allowance where the government provides regular income support to parents throughout the year. So in many ways, this is the U.S. catching up to the rest of the world.

HORSLEY: That doesn't come cheap. Extending the child subsidy would cost about $100 billion a year.

Republicans have traditionally supported tax breaks for parents and kids, which they see as family friendly. But GOP lawmakers like Marco Rubio draw the line at paying benefits to families with no income. That's not tax relief for working parents, Rubio says, but, rather, welfare assistance. He and other conservatives argue that a too generous child subsidy might discourage parents from working. Nancy Cordeiro acknowledges she'd like to work a little less and spend more time with her daughter.

CORDEIRO: Even if it's just to take her to the zoo for the day, just to give her something of a treat. We don't really get to do that because I have to work.

HORSLEY: Cordeiro might get that chance this summer. The new child allowance is set to start in July. Scott Horsley, NPR News, Washington.

[POST-BROADCAST CORRECTION: A previous version of this transcript misspelled Nancy Cordeiro's last name as Cordiero.] Transcript provided by NPR, Copyright NPR.