W23-03: Social Security Administration's Growing Interest in the Child Tax Credit and Other Child-Driven Income Support Programs

Abstract

We use the March 2022 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) to assess distributional differences related to income and poverty, racial differences, and geographical differences among Social Security (SS) program beneficiaries with children who report Child Tax Credit (CTC), Supplemental Nutrition Assistance Program (SNAP), Economic Impact Payment, or Earned Income Tax Credit (EITC) receipt for 2021. Our research suggests that as many as half of the SS program participants living with children under age 18, newly eligible to receive the expanded CTC in 2021, did not benefit from that expansion. The project estimates the number participating in these programs and, poverty rates excluding and including program benefits, and it simulates poverty rates under CTC policy alternatives, with an eye to “grandfamilies” where OASI recipients are raising their grandchildren, and SSDI and SSI beneficiaries with eligible children who are not benefiting from the CTC and other child-related benefit programs beyond SS programs alone.We find that the large majority of SS beneficiary units with children receive benefits from the CTC in 2021, however, participation was notably low among SS beneficiary units where children are living solely with their grandparent or another relative. CTC and EIP benefits are the relatively most effective programs at reducing poverty due to near universal eligibility and large benefit amounts. We demonstrate the added poverty impacts of the ARPA CTC compared to the current CTC and proposed CTC that expands current benefits to all lower income units regardless of work. The American Rescue Plan Act (ARPA) CTC was more effective than the current Tax Cuts and Jobs Act (TCJA) CTC at addressing poverty among SS beneficiary units with children and led to larger reductions in the poverty rate. The existing $2,000 CTC maximum benefit, extended to families with incomes below $35,000 also generates substantial anti-poverty effects while highlighting the importance of removing any earnings restrictions on parents in SS beneficiary units. Our findings offer insights into which groups to target with outreach to increase public assistance program participation, how SS beneficiary families with children are participating in multiple programs, and the optimal design of the Child Tax Credit to enhance economic well-being for this population.