A new Biden administration plan seeks to greatly expand direct payments to American families. The payments, contained 
in a much larger $1.9 trillion COVID-19 relief bill, are expected to nearly halve the number of American children living in poverty.

By Matthew Hansen, Managing Editor

Money talks. But money also may be able to do something else, something that has early childhood experts cautiously optimistic that we might soon improve the lives—and the futures—of millions of young American children.

“Everyone might not know that money helps grow brains,” says Sam Meisels, founding executive director of the Buffett Early Childhood Institute at the University of Nebraska. “But that’s true. It does.”

Sam Meisels

A new Biden administration plan seeks to greatly expand direct payments to American families of low income, as well as middle-class families. These straightforward payments, contained in a much larger $1.9 trillion COVID-19 relief bill that may pass in March, are expected to nearly halve the number of American children living in poverty.

These child tax credits will likely have a massive impact on families’ financial stability in the short term, as Americans grapple with the continued devastation of COVID-19. But that cash could also spur eventual, longer-term gains in childhood literacy, Kindergarten readiness, standardized test scores, and even high school graduation rates, some experts believe.

Why? Because a growing body of research shows that one of the best ways to build the brains of young children is to boost them out of poverty.

A landmark 2019 report by the National Academies of Science, Engineering, and Medicine shows that living in poverty—even for short periods—can create all sorts of problems for young children, problems that often persist into adulthood.

Some of these problems are obvious: A lack of money can mean a lack of nutritious food, which can harm a young child’s brain and body development.

Roughly 1 in 7 American families say they “sometimes or often” don’t have enough to eat, according to a January U.S. Census survey.

Some problems aren’t as obvious. Children living in poverty tend to encounter higher levels of toxic stress than young children growing up in more affluent families. Toxic stress is harmful enough that it can permanently alter and damage young children’s brains and bodies, leading to higher rates of learning disabilities and lifelong health problems like heart disease.

Increased family income is no panacea, experts interviewed for this story caution. There is still much work to be done delivering quality early care and education to more American children, they say.

But the money does appear to help, several studies show, leading many experts to believe that child subsidy payments to families now could lead to better health, better educational outcomes, and better work lives for their young children in the future.

Tammy Mann

“This is a direct benefit that puts families in the driver’s seat, without the complexity of the variety of benefit-structured programs that can be really daunting for families to navigate,” says Tammy Mann, a Buffett Institute Board of Advisers member and CEO of the Campagna Center, which provides education and support services to more than 2,000 children and families in Alexandria, Virginia. “There’s an ease to this, and that’s attractive both in its immediacy and also potentially down the road,” says Mann, who also serves on Virginia’s state board of education.

The Biden administration’s plan, if passed into law as expected, would increase the existing child tax credit to $3,000 a year per child, and $3,600 if that child is under age 6.

Single-parent households making less than $75,000 and two-parent households making less than $150,000 in annual income would receive the full grant, while parents making more would receive a smaller amount of money. (The tax credit plan phases out gradually above those income thresholds.)

This means that a Nebraska working-class couple with two young children would receive $7,200 through the tax credit, to be paid out in monthly $600 payments via direct deposit, check, or prepaid debit card.

The proposal appears to have some bipartisan support. Sen. Mitt Romney, Republican of Utah, recently unveiled his own child tax credit plan, which would send money to even more American families if enacted into law.

The child tax credit plan may be the first of several big things that the federal government does during the Biden presidency, experts say—action that would continue to prove that advancing early childhood education retains bipartisan energy even in these polarized times.

Biden’s COVID relief bill would pump at least $40 billion into the child care industry, which is reeling a year into the pandemic.

Some $25 billion in emergency funding would go to child care providers, many of whom are in danger of closing after months of pandemic-related financial and safety struggles. And another $15 billion would go to help families pay for the cost of child care—a move that experts say will help parents, especially mothers, re-enter the workforce after many left jobs to care for children during the pandemic.

This bill, if passed, would add to the billions already pumped into the wounded child care system in the stimulus packages delivered during the Trump administration.

“If your house is burning, you have to put out the fire before you rebuild the house,” says Sharon Lynn Kagan, a Columbia University professor, early childhood expert and author who serves on the Buffett Institute Board of Advisors. “We have a pandemic that is essentially causing the child care community and industry to burn. We have to focus on getting the fire out. But we then have to focus on the rebuilding and the infrastructure of the system.”

Sharon Lynn Kagan

Kagan hopes the federal government builds that infrastructure by soon focusing on improving early childhood teacher salaries and benefits—many early childhood providers themselves make wages that sit near or below the poverty line—while also increasing the amount of training and professional development that early childhood professionals receive.

That mirrors two recommendations from the Nebraska Early Childhood Workforce Commission, which advised boosting both early childhood pay and training in its groundbreaking report released just before the pandemic hit the United States.

Mann says the Biden administration needs to grapple with the ever-increasing cost of child care for parents, some of whom exit the workforce—at a cost to the American economy—when the cost of child care surges past the cost of college tuition. 

That caution echoes the danger exposed in a recent study by the University of Nebraska−Lincoln’s Bureau of Business Research and First Five Nebraska, which found that the state of Nebraska loses an eye-popping $745 million annually because parents miss work, turn down promotions, leave the workforce, or simply move because of a lack of quality, affordable child care.

The Buffett Institute’s Meisels wants to see a newfound recognition from the federal government that early childhood is crucial to our future.

Expand Head Start. Institute a sliding fee scale so more parents in the lower- and middle-income brackets can access affordable, quality child care for their children. Create true financial incentives so that more people become early childhood teachers and providers.

“We have a lot of good ideas,” Meisels says. “But we haven’t had a commitment to bring them into being.”

That’s why Meisels and other experts are thrilled with the potential of increasing the child tax credit in the United States. Simply supplementing the income of more American families has long been studied and discussed, he says. But the Biden administration may soon take that idea and make it reality.

“This is exceedingly important. It’s potentially revolutionary,” Meisels says. “We would have to invent the word dramatic to describe this if that word didn’t already exist.

“What I’m trying to tell you is that this is really, really big.”

Matthew Hansen, the managing editor of the Buffett Early Childhood Institute at the University of Nebraska, is an award-winning journalist tasked with telling the stories of the Institute's work and early childhood care and education in Nebraska and beyond.

His columns can be read at https://buffettinstitute.nebraska.edu/news-and-events/early-years-matter. Have a comment, a question, or a story idea?