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

The $1.9 trillion relief bill includes a new monthly allowance for American parents that could help provide a critical lifeline.

Transcript

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 Cordiero and her family. Her husband, who does home renovations, has been unable to work during the pandemic. And while Cordiero 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 CORDIERO: 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. Cordiero, who lives in Middletown, R.I., says that'll make it easier to catch up on bills and fill the refrigerator.

CORDIERO: 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 Cordiero acknowledges she'd like to work a little less and spend more time with her daughter.

CORDIERO: 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: Cordiero might get that chance this summer. The new child allowance is set to start in July. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.