Overnight Finance

On The Money: IRS to start monthly payments of child tax credit July 15 | One-fourth of Americans took financial hits in 2020: Fed

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Happy Monday and welcome back to On The Money, where we didn’t realize we still needed to worry about Chernobyl. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

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THE BIG DEAL—IRS to start monthly payments of child tax credit July 15: The Biden administration on Monday announced it will start to make monthly payments of the expanded child tax credit on July 15.

  • Roughly 39 million households that account for about 65 million children, or 88 percent of children in the United States, will automatically receive the payments
  • The March COVID-19 relief law signed by President Biden also increased the maximum credit amount from $2,000 to $3,600 for children under age 6 and $3,000 for older children and made the credit fully refundable, which will allow the lowest-income families to be eligible for the credit.
  • Eligible families will receive monthly payments of up to $300 for children under 6, and up to $250 for children ages 6 and older.

The Hill’s Naomi Jagoda has all the details here.

The timing: The administration’s announcement, which coincides with Monday’s deadline for individuals to file their 2020 tax returns, provides more details about how the Treasury Department and the IRS plan to implement a key part of the coronavirus relief law.

The details about the monthly payments also come as Democrats seek to extend the one-year expansion of the child tax credit.

  • Biden has proposed in his American Families Plan to extend most of the expansion through 2025, while making the credit permanently fully refundable. 
  • Congressional Democrats across the ideological spectrum are pushing to make the full expansion of the credit permanent.

“We must make this lifeline permanent, which is why Congressional Democrats will continue to champion an expanded Child Tax Credit — because we can only Build Back Better by putting families first,” Speaker Nancy Pelosi (D-Calif.) said in a statement, deploying a phrase President Biden often uses to describe his economic-recovery agenda. Naomi has more here.

 

LEADING THE DAY

Nearly one-fourth of Americans ended 2020 worse off financially: Fed

Nearly one-quarter of Americans ended 2020 worse off financially than they were 12 months ago, according to results from a Federal Reserve survey released Monday.

A survey conducted by the Fed in November found that 24 percent of Americans said their financial standing took a hit amid the pandemic, 10 percentage points higher than at the end of 2019. 

An uneven toll: While nearly one-in-four Americans reported being worse off financially, that ratio is far higher for Black and Hispanic Americans. 

  • The percentage of white respondents who said they were doing “at least okay financially” ticked up from 79 percent in 2019 to 80 percent in 2020, but declined from 65 percent to 64 percent for Black Americans and from 66 percent to 64 percent for Hispanic Americans.
  • The proportions of Black and Hispanic Americans that ended 2020 worse off financially also rose by 12 and 14 percentage points, respectively, while only rising 9 percent for white respondents.

The survey also found significantly more hardship among respondents with lower levels of educational attainment, which makes them more likely to hold a job that requires physical presence at a business that couldn’t be adapted to teleworking.

I break it down here.

 

Student debt cancellation advocates encouraged by Biden

Student loan cancellation advocates are encouraged by recent moves by the Biden administration that signal he may act on eliminating some college debt for individual borrowers, but others remain skeptical that action will be taken on the matter during his first term.

  • Supporters of forgiving some student loan debt welcomed a recent announcement by Education Secretary Miguel Cardona that a fierce critic of the student loan industry, Richard Cordray, would head the department’s office that oversees the loan portfolio.
  • The movement pushing for student loan cancellation also has a fierce advocate in Senate Majority Leader Charles Schumer (D-N.Y.).

But the prospects of progress on the matter during Biden’s first term are still slim.

The Hill’s Alex Gangitano explains why here.

 

Inflation fears grow for White House

Rising prices are putting increasing pressure on President Biden and the Federal Reserve to prevent inflation from derailing the recovery from the coronavirus recession.

  • A surge of consumer demand unleashed by government stimulus, improving vaccinations and fewer pandemic restrictions is putting a strain on global supply chains. 
  • Manufacturers and other hard-hit industries are struggling to get back up and running after a year of lockdown measures, causing supply shortages and raising costs.
  • All of those factors combined to push the consumer price index (CPI) up 0.8 percent in April and 4.2 percent over the past 12 months, the fastest annual rate since 2008, the Labor Department reported this past week.

While the ramped-up consumer spending is a sign of increased optimism, the Biden administration faces political risks as Americans find themselves dealing with inflation levels that the country hasn’t seen in more than a decade.

I break it down here.

 

ON TAP TOMORROW:

  • The House Financial Services Committee holds a hearing on China’s Belt and Road initiative at 10 a.m.
  • A House Small Business subcommittee holds a hearing on community development financial institutions at 10 a.m.
  • The Senate Banking Committee holds a hearing on reauthorizing the National Flood Insurance Program at 10 a.m.
  • The Senate Health, Education, Labor, and Pensions (HELP) Committee holds a hearing on paid family leave at 10 a.m.
  • A Senate Commerce subcommittee holds a hearing on reviving international travel to the U.S. at 3 p.m.

 

GOOD TO KNOW

  • The European Commission announced Monday it will temporarily suspend a planned increase in tariffs on American goods as the U.S. and EU work to resolve a trade dispute started under former President Trump.
  • The Supreme Court may soon be asked to weigh in on the nationwide eviction freeze enacted by public health officials to keep cash-strapped renters in their homes amid the coronavirus pandemic.
  • Lawmakers are debating President Biden’s pitches to strengthen tax enforcement against high-income individuals and businesses as Congress considers different ways to pay for infrastructure legislation.
  • Senate Majority Leader Charles Schumer (D-N.Y.) and Speaker Nancy Pelosi (D-Calif.) face an uphill battle on one of their top tax priorities, repealing the cap President Trump put on deducting state and local taxes.
  • New federal guidance on mask-wearing is putting businesses and local officials in a tough spot.

 

ODDS AND ENDS

  • Bitcoin rallied after hitting a three-month low Monday, following comments from Tesla CEO Elon Musk about the company’s cryptocurrency assets.
  • Millionaires who support raising taxes on the rich are protesting in front of Amazon founder Jeff Bezos’s homes, calling for the billionaire to pay more in taxes. 
Tags Charles Schumer Donald Trump Elon Musk Jeff Bezos Joe Biden Miguel Cardona Nancy Pelosi Richard Cordray
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