Economics 101: The Poverty Rate
If you give $500 a month to a rich man, he will put it in his pocket. Eventually, he may invest it in the stock market. If a broker is involved in this transaction, that broker may get a fee. It is only that small portion of the money that may make its way into the overall economy.
If you give $500 a month to a poor family with children,, they will immediately put it into the overall economy. They will buy clothes for the kids, food, books, etc. They may get tutoring for the kids or pay for child care so that both spouses can work. Other Americans and the economy as a whole will benefit.
This option of whether we (the government) should give to the rich or give to the poor has been a bone of contention between conservatives and progressives for decades. The conservatives champion Trickle Down economics by giving the rich tax breaks. You can be the judge yourself of whether that has worked. The progressives kept insisting that giving money directly to the poor will actually be better for the economy as a whole. The progressives' theory has never been tested ... until recently.
The American Rescue Plan enacted by the Biden Administration during the Pandemic, changed the way that the Child Tax Credit is provided to families with children. Under this plan, actual payments (not just a credit at income tax filing) were made to families with children. The payments were up to $300 per month per child and families who made too little income to even pay income tax were able to get the credit for the first time. That is, the families who needed the credit the most were now able to get it. The Child Poverty Rate was cut in half, down to 5.2%. Then, in 2022, the program ended due to the refusal of congressional Republicans aided by Joe Manchin (a Democrat in name only) to renew it. The poverty rate more than doubled to 12.4%.. That's more than 5 million children who briefly enjoyed a middle class life but are now thrust back into poverty. Their families will no longer positively contribute to the economy.
I don't want to tug on your heart strings too much, because I want you to think about yourself. Giving money to the rich through tax cuts or other programs does not improve the economy. We now know that giving money to the poor does. It gets people off of food stamps, welfare and Medicaid while increasing the number of Americans who can pay their fair share.
If you give $500 a month to a rich man, he will put it in his pocket. Eventually, he may invest it in the stock market. If a broker is involved in this transaction, that broker may get a fee. It is only that small portion of the money that may make its way into the overall economy.
If you give $500 a month to a poor family with children,, they will immediately put it into the overall economy. They will buy clothes for the kids, food, books, etc. They may get tutoring for the kids or pay for child care so that both spouses can work. Other Americans and the economy as a whole will benefit.
This option of whether we (the government) should give to the rich or give to the poor has been a bone of contention between conservatives and progressives for decades. The conservatives champion Trickle Down economics by giving the rich tax breaks. You can be the judge yourself of whether that has worked. The progressives kept insisting that giving money directly to the poor will actually be better for the economy as a whole. The progressives' theory has never been tested ... until recently.
The American Rescue Plan enacted by the Biden Administration during the Pandemic, changed the way that the Child Tax Credit is provided to families with children. Under this plan, actual payments (not just a credit at income tax filing) were made to families with children. The payments were up to $300 per month per child and families who made too little income to even pay income tax were able to get the credit for the first time. That is, the families who needed the credit the most were now able to get it. The Child Poverty Rate was cut in half, down to 5.2%. Then, in 2022, the program ended due to the refusal of congressional Republicans aided by Joe Manchin (a Democrat in name only) to renew it. The poverty rate more than doubled to 12.4%.. That's more than 5 million children who briefly enjoyed a middle class life but are now thrust back into poverty. Their families will no longer positively contribute to the economy.
I don't want to tug on your heart strings too much, because I want you to think about yourself. Giving money to the rich through tax cuts or other programs does not improve the economy. We now know that giving money to the poor does. It gets people off of food stamps, welfare and Medicaid while increasing the number of Americans who can pay their fair share.