On Tuesday, Hillary Clinton unveiled what is arguably among the most important policies she’s announced during her entire presidential campaign. It is an ambitious but politically attainable plan that will lift huge numbers of families with children out of poverty. It is targeted exclusively at the poor, and the extreme poor in particular, with no money spent on the middle class or rich.

Specifically, Clinton is calling for a change in the refundability threshold of the child tax credit. That sounds like a technical change, but it has tremendous ramifications. Currently, the poorest American families can’t claim the credit, which is a mainstay of the tax returns of most middle-class families. That’s because households that make less than $3,000 a year — the truly, desperately poor — are excluded entirely, and households making under $9,666.67 can’t get the full credit.

Clinton would change the law so that families start getting the credit with the first dollar they earn. That would effectively increase the tax refunds of the poorest families with children. In addition, Clinton would double the credit for children 4 and under, something that helps both poor and middle-class families with young kids, and she’d make the credit phase in much faster for families with kids in that age range.

An analysis by Chuck Marr and Chloe Cho of the Center on Budget and Policy Priorities estimates that Clinton's plan will lift 1.5 million people above the poverty line, and bring another 9.4 million closer to the poverty line. It would increase the incomes of 5.2 million people living in deep poverty.

The plan is not a complete answer to the increase in extreme poverty that’s occurred over the past two decades, but it’s a very good start. And it takes the US closer to the system most other rich countries use of simply giving every family a child allowance of a few thousand dollars per kid every year, no strings attached.

How the child tax credit works — and how Clinton would improve it

To understand why what Clinton’s proposing is a big deal, you need to know a bit about how the child tax credit works. Originally, the credit didn’t fight poverty at all. It was first enacted in 1997, as a $500 nonrefundable credit. That meant that only families with a positive income tax burden (which almost always excludes poor families, who don't earn enough to pay income taxes) benefited.

The Bush tax cuts of 2001 doubled the credit to $1,000, where it remains today, and made it refundable for the first time — but only partly. The refundable part phased in for families that earned at least $10,000 a year. For each dollar they earned above that, they could get 15 cents of the credit, up to a max of $1,000. That let poor families benefit from the credit for the first time, but very poor families were still shut out.

The Obama stimulus package of 2009 lowered the $10,000 threshold to $3,000, and didn’t index it to inflation. That greatly expanded the number of poor families eligible for the credit. This was initially a temporary measure, but in 2015 the administration succeeded in making the measure permanent as part of a tax deal with congressional Republicans.

That’s great news. But one thing we’ve learned in recent years is that the 1996 welfare reform substantially increased the number of people living in desperate poverty. The University of Michigan’s Luke Shaefer and Johns Hopkins’ Kathryn Edin have found that the share of families living on less than $2 per day in cash income per person more than doubled from 1996 to 2011. That suggests that more and more families are living on less than $3,000 a year in taxable earnings, and are thus excluded from the child tax credit.

The simplest way to fix this would be to simply make the tax credit fully refundable: Everyone below the phaseout level ($75,000 for singles, $110,000 for married couples) just gets a check for $1,000 in the mail every year for each kid they have (or $83.33 every month, etc.). Rep. Rosa DeLauro (D-CT) has proposed something along these lines: a fully refundable $1,500 credit for kids under 3, with no phase-in.

The problem with this idea is mostly political. So long as there’s an earnings phase-in, backers of the child tax credit can say it only goes to people who work. You need earnings to get it. It isn’t welfare. That’s a potent argument, and one that’s helped sustain and expand both the child tax credit and the earned income tax credit over the years.

So Clinton and other policymakers looking to expand the child credit, like Sen. Michael Bennet (D-CO), have tended to instead move the phase-in threshold to $0, and increase the phase-in for families with young kids. Both Clinton and Bennet would increase the phase-in from 15 percent to 45 percent for families with young children, meaning the poorest families are considerably likelier to get the full credit. And because Clinton is also proposing doubling the credit for young kids, the full credit will be twice as valuable to boot.

It's not clear how expensive the whole plan is. Last year, the Tax Policy Center's Elaine Maag estimated that reducing the refundability threshold to $0 would cost about $16.5 billion more over 10 years than merely keeping it at $3,000. That's a relative pittance for a policy that, in Maag's words, "would target additional CTC benefits on very low income families: just over three-quarters of families with children in the lowest income quintile and about a quarter of those in the second quintile would receive larger credits."

Back in 2011, the Tax Policy Center estimated the average tax break that poor people affected by the change would get to be $372 a year — not a lot to middle-class families, but a very significant sum for families in desperate poverty.

What it means that Hillary Clinton is announcing this

This is a somewhat odd policy for Clinton to be touting in the last month of the presidential election. It does help families with young children, which includes a lot of voters she’s courting, but changing the refundability threshold and the phase-in rate are only changes that help people who are much poorer than the average American family. To see a benefit from these changes, your household income has to be less than $10,000 a year.

That’s not a closing argument to win a general election. But it is an effort to address one of the ideological left’s main criticisms of Hillary Clinton’s policy legacy, and an important signpost to congressional Democrats about the possible direction of a governing agenda.

While Bernie Sanders did not make it a signature issue himself, Hillary Clinton’s support of the 1996 welfare reforms became a major point of controversy among left-of-center writers and intellectuals backing Sanders during the primary debate. It was the clearest case they could make that Clinton was willing to gut the safety net, to participate in a disastrous reform effort that resulted, according to multiple studies, in a rise in extreme poverty. She backed a policy that is literally making children go hungry.

Clinton, who worked for the Children’s Defense Fund early in her career and was the driving force behind the Children’s Health Insurance Program, naturally does not think of herself as someone willing to let children starve in the streets. Nor do her staffers, many of whom are veterans of Clinton and Obama administration fights to expand refundable tax credits. Crafting a policy specifically designed to give more money to people in extreme poverty is a compelling way to signal that this really is a matter she takes seriously, and that she understands something needs to be done to account for the failures of welfare reform.

Just as importantly, the proposal functions as a statement of priorities to Democrats in Congress. Given Donald Trump’s ongoing implosion, and polls suggesting Clinton could win by double-digits, it looks at least conceivable that Clinton could take office with a Democratic House and a Democratic Senate.

That is not really a situation anyone had planned for. The party has spent the past five years proposing policies — the Buffett rule, universal pre-K, etc. — that essentially functioned as cheap talk. They’re good campaign issues, but they were crafted with the assumption they’d never pass because of the GOP-controlled House. It’s not clear how moderate Democrats in Republican-leaning districts would vote in a scenario where the Democratic agenda of the past few years could actually become law. And it’s not clear which of these bills Democrats would want to go first.

Clinton has been pretty consistent in signaling she wants to do immigration reform and infrastructure spending first. But both of those are issues that could probably be done with a Republican Congress, too. So she might want to front-load things that can pass with a Democratic Congress, operating under the assumption that she’d lose the House again in 2018, as occurs in most midterms.

This proposal signals to House Democrats that expanding the child tax credit, and more generally doing tax breaks for poor and middle-class families, is something Clinton wants to prioritize in that scenario. It’s hard to imagine this stuff passing with Paul Ryan still in office as House speaker. But if Nancy Pelosi gets the job, it becomes possible.

We know how to end poverty. So why don't we?