Congress’s new tax deal could lift 400,000 kids out of poverty

Good afternoon!

Here's what's on tap today:

UP FIRST: The return of a major anti-poverty policy?

CATCH UP: Starvation in Gaza

—Li Zhou, senior reporter

UP FIRST

The possible return of a major anti-poverty policy

Two people holding their children in front of the Capitol, with a sign reading Congress must continue the Child Tax Credit.

Alex Wong/Getty Images

In the face of serious dysfunction, Congress might do something good: pass a tax deal that would renew a major anti-poverty policy.

That deal, a bipartisan compromise that would resurrect a temporary expansion of the child tax credit in exchange for business tax breaks, could lift as many as 400,000 kids out of poverty by giving parents an annual financial boost.

As Vox's Dylan Matthews explains, it falls short of the same child tax credit expansion that Congress previously approved toward the beginning of the Covid-19 pandemic and is significantly narrower in scope. If passed, however, its impact could still be notable, benefiting low-income families who have previously used this credit to cover basic costs like food, child care, and housing.

What's in the deal for families: As Dylan breaks down, the deal is a little complicated, but it contains an expanded child tax credit that primarily helps families with incomes between $20,000 and $40,000 a year. It also has provisions that help low-income families with multiple children.
What's in the deal for businesses: The agreement revives expired tax breaks that allow more favorable treatment of research and development costs, larger write-offs for small businesses, and more generous expensing of equipment that companies use.
The proposal is limited: Compared to the 2021 expanded child tax credit, which guaranteed as much as $3,600 per child annually, this option is much less generous — but it would still have notable benefits.
Its chances are uncertain: It's a good sign that the bill is a compromise between Sen. Ron Wyden (D-OR) and Rep. Jason Smith (R-MO), two key tax legislators in Congress. And the release of an agreement is an achievement in and of itself. But the question now is whether it can actually pass a Congress struggling to even achieve the basics of funding the government.

CATCH UP

Gaza is increasingly suffering from famine

Palestinians on two sides of a barrier gesture and drop supplies.

Anadolu/Getty Images

Famine is increasingly becoming a reality for hundreds of thousands of Palestinians, Martin Griffiths, the head of the United Nations' emergency relief, told CNN on Monday.

A new aid agreement between Israel and Hamas — which enables delivery of medicine to Israeli hostages held by Hamas and humanitarian aid to Gazans — attempts to mitigate some of the food and water scarcity that people have experienced, though it's expected to fall far short.

How effectively it confronts this problem will depend on whether the aid can actually reach Gazans, particularly in the north, given both damaged roads and ongoing displacement that civilians are experiencing.

It's unlikely that the proposed aid is sufficient to address the scope of the issue in Gaza, where roughly 1.9 million people have been displaced, nearly 75 percent of hospitals are no longer functional, and an estimated 400,000 people are experiencing or at risk of famine.

Starvation is the latest front of the humanitarian crisis: "Famine will make an already terrible situation catastrophic because sick people are more likely to succumb to starvation and starving people are more vulnerable to disease," WHO Director-General Tedros Adhanom Ghebreyesus said in a statement earlier this week.

VERBATIM

🗣️ "My wife likes him. I like him. Just to be honest, I'm not sure he has a chance, which I think most of the country feels the same way I do."

—New Hampshire bar owner and voter Peter Telge on Rep. Dean Phillips's candidacy for the Democratic presidential nomination. [Vox]

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