Video: Hong Kong Doctor use BNO moved to UK not happy with life and culture there 香港醫生使用 BNO 移居英國 對那裡的生活和文化不滿意 早知有今日何必當初呢!
https://rumble.com/v1djltd-hong-kong-doctor-use-bno-moved-to-uk-not-happy-with-life-and-culture-there.html
https://www.facebook.com/100036400039778/posts/756854418871219/
Video: Why US Protects & Control Taiwan, use it as a base to attack China 美國為什麼要保護和控制台灣，以它為基地來攻擊中國
https://rumble.com/v1dhqsv-why-us-protects-and-control-taiwan-use-it-as-a-base-to-attack-china.html
https://www.facebook.com/100036400039778/posts/756550082234986/?d=n
American Nathan Rich made his wealth in Silicon Valley, move to China lives in Beijing & Shanghai more than 10 years. He knows China better than most overseas Chinese. He regularly debunk fake news by NYT, BBC, CNN, Washington Post intentionally demonize Chinese and China 美國人火鍋大王在矽谷發家致富，移居中國，在北京和上海生活了 10 多年。 他比大多數海外華人更了解中國. 他經常揭穿紐約時報, 英國廣播公司, 美國有線新聞, 華盛頓郵報等等故意妖魔化中國人和中國的假新聞
Why America Will Lose Semiconductors Hegemony. Tangible bi-partisan solutions for solving a national security crisis. 為什麼美國會失去半導體霸權. 如何解決美國國家安全危機的切實可行的兩黨解決方案 by Dylan Patel 6-13-22
The US has always been the world leader in semiconductors: design, manufacturing, and the tools to produce them. Semiconductors are the base of all technological innovation in computing and information technology. Without them, companies such as Amazon, Google, Microsoft, Meta, Apple, and Tesla would not exist. The US has slowly been losing its dominance over the semiconductor industry over the last couple of decades. In recent years, the rate of loss has been accelerating. If it is lost, then the foundational building block of modern technology is lost, and the US will cede its overarching technology advantage. In this article we will discuss the major causes of this problem and offer solutions which should be bipartisan in nature.
Before we get into the problem, let’s talk about the current state of the US’s semiconductor dominance. Most of the largest semiconductor equipment, design, and software companies are based in the US or have critical engineering in the US. In the equipment space, Lam Research, Applied Materials, and KLA are based out of the US. ASML, the widely known leader in lithography, does much of their critical engineering for the EUV Source and EUV Collector out of San Diego. These technology assets and teams come from the acquisition of San Diego based Cymer. ASML pays royalties to the EUV-LLC whose membership includes multiple US national labs. Without these tools, it is impossible to manufacture chips.
The critical software needed to be used to design chips is called EDA and it all comes from the US. Cadence, Synopsys, and Mentor Graphics (now owned by Siemens) are located in the US. Without this software, it is impossible to design modern chips.
American companies like Texas Instruments and Intel hold leading market shares in their respective fields while manufacturing their own chips. The 4 largest companies that design chips for external sale and use contract manufacturers are also American. They are Qualcomm, Broadcom, Nvidia, and AMD.
But that dominance is shifting away to countries that pose as geopolitical risks. US share of chip manufacturing is at an all-time low. The US will lose the semiconductor industry unless immediate action is taken. This is a national security crisis.
The US has been the hallmark of innovation through entrepreneurship, education, and making large investments. All three of these tenets are eroding, partially due to the private market’s attitude and partially because the government’s policies incentivize certain behaviors. The shift is occurring in favor of countries that have favorable government policies, regulatory support, focus on STEM higher education, and a general cultural recognition of the importance of semiconductor manufacturing.
Entrepreneurialism in Semiconductors
Entrepreneurialism is what innovated and semiconductors in the first place. Ever since the invention of the transistor at Bell Labs, startups in Silicon Valley created and defined the modern semiconductor industry. Unfortunately, entrepreneurism in the semiconductor industry is falling away.
SemiEngineering.com, one of the leading publications in the semiconductor industry, tracks monthly semiconductor and semiconductor adjacent industry startup fundraising by company headquarters location. Their data is compiled in the table below for May, but other months look very similar. This trend is terrifying for prospects of American hardware dominance. Not only is most of the assembly done in China, but the most well-funded startups in the semiconductor field and the most IPOs in the semiconductor field are occurring there well.
While startups and IPOs don’t necessarily indicate innovation, they are one of the corner stones of it. Not all startups will succeed, and it’s very likely the stricter funding models of US based startups will mean they are more likely to succeed, but the disparity is a big issue. America isn’t the land of entrepreneurship anymore, despite continuing to dominate other areas of the world such as Europe. It’s China.
Why are there so few semiconductor startups in the US?
The US private market of venture capital and angel investing is completely off its rockers investing in software platform based “tech” companies. While this type of investing is fine, these same venture capital and angel investors have completely ignored the semiconductor and hardware space. We here at SemiAnalysis have seen it firsthand as we have helped a few firms in the semiconductor industry raise money. It’s extremely difficult to convince venture capitalists to invest in startups, even if they have promising technology and exceptional track records.
The private market has a strong prejudice against hardware startups. Semiconductors in general have higher startup costs, and the market potential is limited in comparison to a platform-based tech company. US based venture and angel investors that require them tend to think in terms of tens or hundreds of billions of dollars addressable markets. They want software platforms that can have a few dozen employees with the potential to scale to billions in revenue. There can only be so many Instagram’s, Uber’s, Shopify’s and Airbnb’s though. Hardware entrepreneurship is needed even if it doesn’t meet the wild dreams that US based venture and angel investors have. A friend of SemiAnalysis, Jay Goldberg has written about this phenomenon on his newsletter in posts titled Hard or Soft, and Hard or Soft with Math.
Semiconductor investments are a tragedy of the commons style of situation. No private entity will invest in basic infrastructure since no single entity will reap all possible rewards. Semiconductor manufacturing and design capacity are modern day infrastructure for technology and software, with the similar requirement that these kind of infrastructure projects require government incentives and regulatory support to thrive. The US government must assist the semiconductor startup industry by offering incubators and accelerators through the National Science Foundation.
Investment Crisis in Semiconductors
Startups are not the only place where investment is lacking. This problem exists at the largest firms as well. As such, US share of semiconductor R&D has dropped drastically and domestic chip production has fallen from 40% to below 15%. Investment is not encouraged by our financial markets or our government policies. We will showcase the plights of US policies, which incentivizes buybacks and dividends over investment, with a few examples.
First let’s discuss the crux of the issue. The chart below shows total semiconductor wafer fabrication equipment spending by region. It shows that China by far is building the most fabs, which is driven by their favorable tax and regulatory policies as well as massive subsidies. The US is a tiny share of worldwide spending. If the current rate of spending holds, then in a decade, the US will be fabricating less than 10% of the world’s semiconductors and China will be fabricating nearly 30% of them.
The US national, state, and local governments have created tax and regulatory policy that makes investing in new manufacturing capacity for semiconductors incredibly difficult. It takes mountains of money and many years to even get through the process of permitting and approval to being a project in the US. Furthermore, while these policies intend to protect the environment, they actually don’t. They simply slow down the process and increase costs.
This contrasts with other nations who offer tax credits and outsized deductions for investments in semiconductor tools. They offer streamlined processes for permitting and approval of the fabrication facility. They protect the environment with proactive punitive actions for polluting companies. They allow entire developments of new apartments, homes, and businesses to quickly crop up around semiconductor facilities, so workers do not have to spend huge portions of their paycheck on living expenses, which in turn lowers costs for companies and increases the standard of living for the entire community.
The US must make it more advantageous to a company’s stakeholders to invest heavily in new capacity instead of paying dividends and performing stock buybacks. One solution is by offering a permanent option for a 100% deduction of chip manufacturing equipment, tools, and other associated capital expenditures in the 1st year of purchase. Other industrial equipment such as trucks serve as precedent for such a policy.
To be clear, such a policy would only make one part of a multifaceted incentive package targeted at equalizing policy with other nations. China has gone as far as offering tax holiday for up to 10 years to domestic semiconductor companies. While such a drastic measure is unrealistic in the US, it should serve to underscore the criticality of policy changes needed when our biggest geopolitical rival is willing to take such a measure.
This gap in policy is what has caused Micron, the largest US based memory manufacturer, to offshore manufacturing out of the US. Micron now produces the majority of their memory chips in Singapore and Taiwan, despite their R&D hub and original manufacturing facilities being located in the United States. The two largest memory manufacturers in the world, SK Hynix and Samsung, are headquartered in South Korea. Although they are generally considered equal or behind Micron in technology, SK Hynix and Samsung hold larger market share. This is partially the byproduct of various South Korean semiconductor policies which incentivize larger investments in fabrication capacity. South Korea is only accelerating on their incentives in the semiconductor industry with their K-Belt initiative. This policy is a geographic ring-fenced low-tax and pro-R&D area with tool and R&D tax reimbursements.
Furthermore, a tax credit must be applied to R&D expenditures. Currently, US tax policy does not have one that matches many Asian nations. Instead, it incentivizes minimizing R&D as much as possible to fund stock buybacks, dividends, and financially engineered acquisitions.
Broadcom is an example of the broken US tax policy incentivizing the wrong behavior for the semiconductor industry. Although Broadcom has been a stellar stock to invest in and they still lead in some areas of technology, their innovation strategy has been very negative for the industry as a whole. Broadcom generally keeps a very tight lid on all expenses, including R&D growth. Meanwhile, they have increased prices for chips and software where they enjoy a near monopoly status. Lastly, they use these profits they generate to acquire more innovative leading companies with products and technologies that they can apply this formula to. The policy is colloquially known by those in the semiconductor industry and investors as the “Hock Tan Flywheel,” named after their CEO who engineered this strategy. We won’t even get into that time where they moved their headquarters to Singapore for a number of years for tax optimization, but it was also a result of poor US policy.
Another example of poor investment related policy is that of Intel in the prior decade. They were on top of the world in terms of semiconductors. Instead of innovating in new areas of semiconductors design and manufacturing, they focused on lowering capital expenditures and total spending as percentage of revenue. They used their profits to buy back shares and pay larger dividends. Shareholder elected board members who cheered on and specifically encouraged this behavior. There is certainly a lot more to the story of Intel’s downfall including technological missteps and a toxic corporate culture, but the flaws in US tax policy and financial markets were certainly a big contributor. Nowadays, Intel has realized their mistakes and cut stock buybacks to 0. They are investing every dollar they can, but they simply cannot hold a candle to the sheer scale of fab spending these other countries hero’s such as TSMC and Samsung.
An example of good targeted policy is with Wolfspeed and the state of New York. New York assisted Wolfspeed via tax reimbursements and other subsidies in order to build the world’s largest Silicon Carbide semiconductor fabrication facility. New York as a result is a world leader in a type of chip that is used heavily in electric vehicles, there were thousands of high paying jobs created, and the State University of New York has a full fledged program for research and education that prepares people for continued innovation in this field.
Education in Semiconductors
Even if the startups and production facilities were in the US, there is now a severe shortage of skilled workers in the field. By 2025, this shortage is projected to be as high as 300,000 workers. Educated and skilled personnel is a cornerstone of innovation, and without them, the job cannot be done.
Most Americans who pursue a higher education do so in a non-STEM field. While not a negative in and of itself, this is a huge concern when viewed in light of the expected growing shortage of skilled workers in the semiconductor industry. Over 5 million people were granted degrees/certificates at postsecondary institutions in the US, yet not even 1/5th were in STEM according to the chart below from Statista.
2/3 of STEM PHD students in the US are foreigners. They were able to get student visas for their education, yet many of them have a very difficult time immigrating after their education despite hoping to do so. China has nearly 5 million people graduating with STEM degrees annually, population size differences make the gap between China and the US impossible to fill with domestic population alone.
The US must make it easier for educated people around the world to immigrate. It was much easier at other points in US history, which was part of the recipe for the US outpacing the rest of the world in innovation. The concept of brain drain is very real, and the best and most qualified in the world must be allowed to move to the US.
China doesn’t just allow semiconductor workers to immigrate, they explicitly find people they want and go after it. There are multiple state owned enterprises which offer a highly specific and prestigious quality of life to engineers moving from Taiwan. They provide spacious accommodation near semiconductor hubs and personal tax advantages alongside the targeted immigration. Many of these amazing engineers from Taiwan would come to the US if they had the opportunity, even without the state sponsored lifestyle.
Furthermore, of the pool of US STEM graduates, the number specifically going to fields related to semiconductors, manufacturing or design, is a tiny fraction of the total. These semiconductor related STEM programs are vastly underfunded. The federal and state governments have not promoted them in any way. Meanwhile, competing nations have subsidized these programs to a massive degree. This in turn increases the total number of available minds dedicated to their respective semiconductor industry which then allows more innovations.
The US post-secondary education system subsidizes all degrees and certificates by generally the same amount even though there are some professions with large shortages of skilled workers. Our education system needs to account for the effective skill allocation based on industry gap in labor demand when subsidizing education costs or promoting certain fields.
The public and media perception of the field does not help with this matter either. Being a chip architect, process integration engineer, or board designer are not the career most children and young adults aspire to have. It’s just not sexy. Meanwhile China idolizes the semiconductor industry, going so far as to create a glorifying TV show.
Part of the lack of interest in semiconductors is due to the culture of repairing and tinkering with computing devices. Many in the semiconductor industry fell in love with the industry when they first opened up a computer. For example, my story of obsession with the semiconductor industry started when I got an Xbox 360 for Christmas. A few months later, it broke due to a defect known as the “Red Ring of Death”. After doing research online, I came across a home repair known as the “Penny Trick” which involves opening the device. This sparked my love for the industry. Unfortunately, the culture of repairing computers, game consoles, and smartphones, is dying in the western world due to a variety of legislative and company specific roadblocks.
In Taiwan and China, this culture flourishes. It is very easy to get parts for devices, whether it be displays, batteries, memory, or even entire mainboards. People can go the Guanghua market in Taipei City, Taiwan, Huaqiangbei in Shenzen, China, or numerous other markets across these countries and purchase any component or tools associated with repairing common consumer electronic devices.
Implementing right to repair policies would bring the US on par with these nations and should have bipartisan support. It is good for the consumer’s because they have more freedom of control over the devices they purchased and allows their devices to last longer. It is good for the environment because less electronic waste is produced. It is good for the semiconductor industry because it makes more people become interested in opening computers and becoming interested in how they work. Taiwan and China can do this because their governments allow the right to repair movement to flourish, and the US needs to match them if we want members of our youth to fall in love with this industry as well.
Actions Congress Must Take To Save The Semiconductor Industry
Congress must immediately pass multiple bi-partisan legislative efforts if it wants to bring the US semiconductor industry back to the forefront of the world.
Congress must immediately pass the CHIPS Act which was first introduced over 2 years ago. They should also add guardrail provisions that restrict any recipient of CHIPS act funds from reaching companies that are expanding in China. The $52B here is still a drop in the bucket compared to the over $250B of subsidies that SemiAnalysis has tallied up from the Chinese government in the form of tax policy, direct + indirect grants, local joint ventures, and subsidized loans, but it is a start.
Congress must immediately fix the US tax code to bring it on par with other nations whose companies currently have an unfair advantage. This can be achieved by implementing an optional 100% bonus depreciation for chip manufacturing equipment, tools to make wafer fabrication equipment, and other associated capital expenditures related to the design or production of semiconductors in the year of purchase. Congress must also implement a permanent tax credit for these groups of investments to match that of other east Asian countries.
Congress must immediately fix the US permitting and regulatory lock which severely lengthens the amount of time and increases costs for creating semiconductor manufacturing facilities.
Congress must immediately fix the R&D spending gap by adding a tax credit for R&D related to semiconductors.
Congress must immediately fix the startup crisis by directing the National Science Foundation to create a startup incubator and accelerator targeted to the semiconductor industry.
Congress must immediately fix the education disparity by funding semiconductor and semiconductor adjacent post-secondary education programs.
Congress must immediately fund and create a US based semiconductor research facility similar to Europe’s IMEC.
Congress must immediately fix the skilled semiconductor worker shortage by allowing skilled semiconductor workers to immigrate to the US.
Congress must immediately pass right to repair laws to increase interest in the hardware industry thereby increasing consumer freedom and protecting the environment.
Congress must immediately pass legislation to protect against state sponsored corporate espionage, forced IP transfers, and hacks in the semiconductor industry.
If these actions are taken, we are confident that the ingenuity and innovation of America can be unleashed, and the US can stay at the apex of the semiconductor industry. If these actions are not taken, we are confident that the US will further erode its leadership in an industry with ever increasing importance to national security.
Video: China’s Wentian lab module en route to space station 中國的問天實驗室艙在前往空間站的途中
https://rumble.com/v1dgbsh-chinas-wentian-lab-module-en-route-to-space-station.html
https://www.facebook.com/100036400039778/posts/756354595587868/?d=n
China has successfully launched Wentian, the first of two laboratory modules of its space station, from south China’s Hainan Province. China’s largest heavy-lift carrier rocket Long March 5B, blasted off from the Wenchang Spacecraft Launch Site on Sunday at 14: 22 (BJT). The long-anticipated mission was executed perfectly within a short launch window, marking a milestone in the history of China’s aerospace industry.
2nd China-Greece Dialogue on Exchange and Mutual Learning of Civilizations & Opening Ceremony of “Chinese Bridge” 第二屆中希文明交流互鑑對話暨“漢語橋”開幕式
It was my honor to participate as a keynote speaker on July the 21st, at the 2nd China-Greece Dialogue on Exchange and Mutual Learning of Civilizations & Opening Ceremony of “Chinese Bridge” Virtual Summer Camps for Greek Students together with his Excellency the Ambassador of China to Greece Mr. Xiao Junzheng, his Excellency the Ambassador of Greece to China Mr Georgios Iliopoulos, the Vice President of Chinese People’s Association for Friendship with Foreign Countries Mr. Yan Dong and the Deputy Director-General Center for Language Education and Cooperation Mrs. Jing Wei. Thousands of Greeks are learning the Chinese language today and I feel justified as many years ago we were the first to import Chinese language learning methods to Greece and reprinted an important Chinese-Greek dictionary.
Dear friends, following are the main points of my speech at the 2nd China-Greece Dialogue on Exchange and Mutual Learning of Civilizations, regarding the 50th anniversary of the establishment of diplomatic relations between China and Greece:
«I would like to close my greeting with a reference to the 50th anniversary of the establishment of diplomatic relations between China and Greece. In this strongly belligerent climate prevailing in the world these days, the 50th anniversary of diplomatic relations between Greece and China should remind us of certain things.
Video: One of the best reception ever given to any President, this reception of Putin by Arabs is a slap on Biden’s face 阿拉伯人對普京的招待是有史以來對任何總統最好的招待之一，這是對拜登的一記耳光
https://rumble.com/v1dfp9n-one-of-the-best-reception-ever-given-to-any-president-this-reception-of-put.html
https://www.facebook.com/100036400039778/posts/756250132264981/?d=n
Global Times online poll asks whether shocking human rights abuses in US should be probed by UN Human Rights Council Jul 23 2022
https://enapp.globaltimes.cn/article/1271205
Video: US HIMARS vs. Russia’s Tornado-S, Western media fake news propaganda to overrate HIMARS to fool Americans in supporting the US proxy war against Russia 美國 HIMARS 與俄羅斯的 Tornado-S 導彈比較, 西方媒體假新聞宣傳高估HIMARS以愚弄美國人支持對俄羅斯的代理人戰爭
https://rumble.com/v1debnj-us-himars-vs.-russias-tornado-s-western-media-fake-news-propaganda-to-overr.html
https://www.facebook.com/100036400039778/posts/756020322287962/?d=n
The Western media continues singing the praises of US HIMARS multiple launch rocket systems as well as the arrival of M270s from US allies across Europe. However claims that these rocket launchers are “more accurate” and give Ukraine a “game changing” ability are not only false, it omits the fact that Russia has much more capable systems firing rockets just as accurate and at much further ranges.
CNN Exclusive: FBI investigation determined Chinese-made Huawei equipment could disrupt US nuclear arsenal communications 美國有線電視新聞網獨家報導：FBI調查確定中國製造的華為設備可能會破壞美國核武庫通信 7-23-22
More speculation than evidence. None of these assertions would make it to court as evidence. But in the MSM they are passed as facts.
The title is chosen to raise the worst fears with no evidence as Julie pointed out. Even assuming that the Huawei equipment is able to so disrupt as asserted, CNN provided zero evidence that the equipment is doing so.
As the Viaero CEO explained, he has not noticed any suspicious activity with the Huawei equipment. The key point here is that Huawei does not operate the equipment, and so what ever is done with the Huawei equipment is under the total control of Viaero. CNN and the unnamed intelligence sources equate the asserted capabilities with what the equipment is actually doing, even though it is a total fantasy.
Then there is the issue of the asserted capability. As Huawei clearly explained in the article, it’s equipment operates in a frequency spectrum that is not within the one reserved for DoD, and so it is impossible for its equipment to eavesdrop. In fact the reason why the US is behind in 5G is that the best frequencies for 5G is reserved for the DoD. But most readers don’t understand this and Huawei statement being buried in page 20, will escape any readers attention.
NYT: We Pay to Keep the Old Out of Poverty. Why Won’t We Do the Same for the Young? 紐約時報: 我們付錢讓老人遠離貧困. 為什麼我們不為年輕人做同樣的事情? by By Bryce Covert May 7 2022
Ms. Covert is a journalist who focuses on the economy, with an emphasis on policies that affect workers and families.
The United States has an incredibly high child poverty rate.
Nearly one in seven children lives in a poor family. By comparison, fewer than 10 percent of adults are poor, and under 9 percent of those age 65 and over are. Child poverty also doesn’t fall evenly across demographics: 71 percent of poor children are Black, Hispanic or Native American.
But child poverty is not a problem without a solution. Americans may roll their eyes at being constantly compared unfavorably with Western European countries, but in this case we aren’t just bested by the usual suspects. The United States is a pretty extreme outlier. Out of 40 countries, America ranks 38th, behind not just Finland, Denmark, Germany and France but also Slovenia, Estonia, Russia and Mexico.
There’s a very simple reason for this: We don’t give parents enough money to raise their children. Or at least we didn’t until last year’s expanded child tax credit payments that proved we could if we wanted to.
Some have blamed single women choosing to have children out of wedlock and “the decay of the American family” for poverty, in the words of the former representative Michele Bachmann. But the shapes and sizes of our families can’t explain our high child poverty rate. “Across countries, child poverty rates are pretty similar in terms of the poverty that’s there before the government does anything,” Jane Waldfogel, a professor of social work at Columbia, told me. Even with the comparatively paltry wages low-income Americans earn, the country still has similar poverty levels to others just based on income alone, before the government offers families benefits.
That’s true for all kinds of families. In the 2000s, about 65 percent of American single mothers lived in poverty before the government stepped in, similar to rates in Canada and Germany and lower than in Britain. But once government benefits were taken into account, single mothers’ poverty rates dropped significantly in most countries but stayed highest in the United States, at over 50 percent.
“It’s not our family structure or our demographic mix or our high immigrant share or any of those things,” Dr. Waldfogel said. “If you look at what share of children would be in poverty if all they had was what their family brings in, we would be very comparable in our child poverty rate to Canada or France or England or any of our other peer countries.”
Others have argued that American poverty persists because government assistance makes Americans unwilling to work. As the former representative Paul Ryan put it, “There are nearly 100 programs at the federal level that are meant to help, but they have actually created a poverty trap.” But our high child poverty rate isn’t because poor people feel less incentivized to work or they’re just plain lazier in the United States. We manage to have both high employment levels and high poverty rates at the same time.
The real difference is that the United States does far less to reduce its child poverty rate than some of its foreign peers. “It’s no more complex than we spend less, and so poverty rates are higher among kids,” Hilary Hoynes, an economist at the University of California, Berkeley, told me.
There are a number of social programs that other countries offer that the United States doesn’t. We don’t have universal health care (although we do have the Children’s Health Insurance Program for low-income kids, as well as more expanded coverage through the Affordable Care Act). We also spend far less on child care and early childhood education.
But the most important distinction is that most other countries give parents more money when their children are young, many of them through direct child allowances. “The evidence is overwhelming that child allowances are the single most important policy for preventing child poverty,” said Irwin Garfinkel, an economist at Columbia. Giving parents cash goes an incredibly long way toward erasing poverty.
By contrast, we’ve spent significant resources over the past half-century on alleviating elderly poverty. Social Security is the greatest anti-poverty program we have in the United States. It kept 26.5 million people out of poverty in 2020, most of them seniors. Unemployment insurance, the safety net program that clocks in next, lifted 5.5 million people above the poverty line. We rarely talk about it this way, but Social Security is a form of direct cash payment to all Americans once they hit a certain age.
“It’s not rocket science,” Dr. Hoynes said. When it comes to how much we spend on the elderly, “we look pretty similar to other countries.” The United States simply spends less on a permanent safety net for children.
Failing to invest in children comes with concrete consequences, for both them and everyone else. When families have less income, they can’t afford as much food. It’s perhaps not surprising, then, that the United States has had a high rate of food insecurity among families with children. That’s particularly dangerous for children’s development. Hunger not only can lead to health problems later in life but has also been linked with behavioral issues and mental health problems. Better food access, on the other hand, is associated with higher educational attainment and better earnings in adulthood.
Recent robust research out of Columbia University has linked better resources in childhood to a long list of benefits, including fewer infant deaths, better health, less interaction with the criminal justice system, higher graduation rates, more work and higher income. Lacking enough resources in childhood, on the other hand, leads to “quite a profound level of insults in adulthood,” Dr. Hoynes said.
The Covid-19 pandemic has provided a natural experiment that allowed us to see what happens when the U.S. government spends significantly more resources on alleviating hardship, especially through direct payments, than it usually does. What we’ve found is that it works.
Families began receiving an expanded child tax credit last July, created by the American Rescue Plan, passed exclusively by Democrats and signed into law by President Biden. The existing credit was expanded for the first time to reach all poor families and offered them more money: up to $300 a month for every child under age 6 and $250 for older ones. More than 90 percent of American families were eligible. Payments went out monthly.
The immediate impact was stark. The results were “incredible,” Dr. Garfinkel said with a laugh. Child poverty dropped from 15.8 percent in June, before checks went out, to 11.9 percent in July. That means three million fewer children were living in poverty. The effects were even more significant for Black and Latino children, who saw their poverty rates drop by 3.8 and 6.1 percentage points, thanks to the credits, compared with 3 percentage points for white children. The drop in poverty can be directly explained by the payments: Fewer parents struggled to afford their expenses after they started receiving checks, even while more childless adults struggled to afford the basics.
With more money in their pockets, parents were better able to afford the food they needed to feed their families. Nearly half of people who got the payments spent the money on food, and 3.3 million more families had enough to eat. The decrease in food insecurity was “jaw dropping,” Dr. Garfinkel said.
We’ve since reverted to our norm. The child tax credit payments were scheduled to last only through the end of 2021, and a deal to extend them crashed and burned on the opposition of Senate Republicans and Senator Joe Manchin, Democrat of West Virginia, in part, reportedly, because he worried that parents would spend the money on drugs. (Publicly he said he opposed a package that included an extension because of its cost.) In January, the first month since last summer without the payments, child poverty increased to 17 percent (from 12.1 percent), the highest rate since the end of 2020, pushing 3.7 million more children into hardship.
Sending parents more money during a devastating pandemic was a sound way to keep them from free-falling into destitution. But it’s just as sound a policy when there’s no other emergency than our continuing high child poverty rate. With the one weird trick of sending cash payments to parents, we could join our peers in caring for the youngest among us. All that stands in the way is politics.
Johnson Choi Biz