Early in the pandemic, after Graciela Flores’ husband lost his job, the couple was so broke they could scarcely afford to put gas in their car. It was easy for her to picture where things were headed: food stamps, no new school supplies for their three kids, debt on the phone and water bills. Entry into a cycle of extreme poverty they had worked hard to avoid.
“We don’t want to be part of that,” she said. “We would have lost our home.”
Flores, of Denver’s Montbello neighborhood, said the family so far has staved off that plunge only because of pandemic cash aid from the government, particularly in the form of stimulus checks and the recently expanded child tax credit — $300 per kid, per month.
“With that money, we paid some of our rent, we bought food. We can afford school supplies,” she said. “Basic human needs.”
Her story fits into a trend in Colorado and across the country: despite the recession that followed the arrival of COVID-19, poverty actually fell in 2020, according to U.S. Census Bureau data released in September.
The Census reports that the “supplemental poverty measure” — a data point that takes into account a household’s cash plus benefits, making it a more comprehensive measure than the basic poverty rate — fell from 12% to 9% nationwide in 2020. That’s the steepest drop-off since at least 2009.
In Colorado, the measure fell slightly, holding at about 11% — tied for the lowest here in more than a decade.
Luke Teater, deputy director for the governor’s budget office, told state budget officials during an economic forecast presentation last month that the takeaway is clear.
“Despite the large employment losses and loss in wage income during 2020, the strength of the policy response meant that we actually saw poverty decline,” he said.
But state Sen. Dominick Moreno, a Commerce City Democrat who chairs the state Joint Budget Committee, said that poor people and families should not count on this to continue. He said that even though one recipe for alleviating poverty — give people money — seems clear, government cash aid to meet basic needs was really more of an emergency policy.
“It’s not rocket science. If people have enough to live on then the poverty measures shrink and a host of other social issues are mitigated,” Moreno said. “But I don’t really see a sustainable path for continuing those into the future unless there’s that federal government support. Certainly, in the state we don’t have the resources to do that.”
Colorado cannot deficit-spend and it cannot raise taxes without voter approval. It has a flat income tax that applies the same rate to the poor and rich alike, and it in fact decreased last year and will again this year, down to 4.5%. This means the state cannot afford giant new social programs without cutting into or past the bone of a host of other fundamental government services.
For reference, it cost the state $168 million just to send about 400,000 people direct payments of $375, one time, one year ago. It would cost $2 billion — roughly one-sixth of all spending out of the state’s General Fund — to send those payments monthly for even one year.
That’s on top of the hurdle of political will. The concept of unending cash payments to the poor remains a third rail even in this Democrat-controlled state.
“The best way out of poverty is a job,” said Republican state Rep. Kim Ransom of Douglas County, who sits on the budget committee with Moreno. “If we’re going to try to keep people out of that cycle, just throwing government money at them is not sustainable and it’s actually not even kind. People want to take care of their families, their children and themselves. They don’t necessarily want to be dependent their entire life.”
The federal government is also controlled by Democrats, but unlike Colorado, it can deficit-spend and rewrite tax codes. But the party’s narrow trifecta — White House and both chambers of Congress — has so far approved no lasting cash aid that people like Flores have relied on. The stimulus payments are over and extended federal unemployment benefits are, too.
Proponents of the child tax credit, including U.S. Sen. Michael Bennet, D-Colorado, are clawing just to extend it for a couple of years after the current, expanded version expires at the end of the year.
That credit is costly, but an August study by Columbia University found that extending it would generate eight times the wealth — plus improve education and upward social mobility, while lowering costs to the government related to health care and incarceration. Jill Hunsaker Ryan, director of the state health department, said Friday that expanded child tax credits have “the potential to lift 40% of Colorado children out of poverty.”
Silas Atkins of Boulder said he’s seen the benefits firsthand. The father of two was laid off in March 2020 and got divorced during the pandemic. He relied on government aid to move into an affordable housing unit, which kept his kids comfortable.
“The first time I saw someone say ‘poverty is a policy choice,’ I didn’t understand what they meant,” he said. “But it’s true. It’s a decision to spend money in other areas and not on the basic human rights and needs of the population.”
And studies do show that people overwhelmingly use cash assistance on the basics, as Flores and Atkins did. Marisa Westbrook, a doctoral candidate at the University of Colorado Denver, has observed that during a two-year study in which she’s followed 35 people from the Westwood neighborhood.
“For the majority of my participants, any form of cash assistance is going towards rent and utilities. And a lot of people are talking about how, beyond cash assistance, they’re really using food banks,” Westbrook said. “This is going to be a continued issue without consistent support, consistent financial support.”
Moreno, as Colorado’s lead state budgetary policymaker, doesn’t disagree that this comes down to policy choices.
“We as a country have consciously decided not to make those really critical investments in helping people succeed,” he said. “There’s still this mentality in this country that everyone go at it alone… but we’ve seen time and again that’s not really an option for people.”
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