Families Are Receiving A Child Tax Credit. Janet Yellen Says It Should Be Permanent

Jul 15, 2021
Originally published on July 16, 2021 9:05 am

Treasury Secretary Janet Yellen is calling for the child tax credit expansion to be made permanent as the first installment of the monthly allowance was delivered to parents' bank accounts this week.

Under the Biden administration's American Rescue Plan passed by Congress in March, parents are set to receive $250 to $300 per child every month for the rest of this year. The first of those monthly payments, totaling $15 billion, were delivered on Thursday.

"I think this is something that's very important to continue," Yellen told Morning Edition host Noel King in an interview with NPR on Thursday.

The rescue plan increased an existing tax credit from $2,000 per child to $3,000 — or $3,600 for children under 6 — and expanded eligibility to parents with little or no income. It also directed that half the credit be delivered in monthly installments from July through December.

But the increased payouts last for only one year. President Biden has proposed extending the larger credit through 2025, and eventually Yellen, along with congressional Democrats, hopes to make it permanent.

"It's a very important program that will do a huge amount to relieve child poverty, which has been a tremendously important problem in the United States," Yellen told NPR.

Yellen reiterates need for higher taxes for the wealthy

Parents who claimed a dependent child on their tax return in 2019 or 2020, or who received earlier relief payments for children during the pandemic, should receive the monthly deposits automatically.

Yellen said the administration is also working with nonprofit organizations to alert other parents who might otherwise miss out.

"We do want to make sure that every child that's eligible to receive this tax credit — a very important source of support — will know about it and be able to get it," Yellen said.

The expanded tax credit carries a hefty price tax of about $100 billion per year. Biden has proposed paying for that with higher taxes on wealthy individuals.

"His promise is ironclad that no one earning under $400,000 will see their taxes increase, but very high income tax payers will see an increase," Yellen said in the interview.

Yellen says she's confident inflation will ease

Turning to inflation, the Treasury secretary said she's keeping a close eye on it, but she does not believe the recent surge in prices will continue indefinitely.

"We shouldn't expect it to disappear next month, but certainly over the medium term, I don't think it will continue," Yellen, who previously chaired the Federal Reserve, told NPR.

The Labor Department said this week that consumer prices in June were 5.4% higher than they were a year ago — the highest rate of inflation in nearly 13 years.

Yellen said that's largely a byproduct of increased spending by newly vaccinated consumers and the challenges that many businesses have faced in trying to keep up.

"There are bottlenecks and difficulty in expanding the supply of some goods and services rapidly enough to meet surging demand," Yellen said.

She predicted that "as the economy gets back to normal," inflationary pressures will ease, echoing the view of the Federal Reserve.

Yellen said unlike the 1970s, when consumers and businesses came to anticipate higher inflation, stable prices are now baked into most people's expectations. She pointed to the yield on Treasury bonds, which remains low.

"That's telling you that market participants believe this is a transitory phenomenon and they're not expecting inflation to continue like this over the medium term," Yellen said.

Yellen hopes to see Harriet Tubman $20 bill

Yellen, who made history as the country's first female Treasury secretary and first female Federal Reserve chair, also said she hopes to accelerate production of a new $20 bill featuring Harriet Tubman.

The Obama administration unveiled a prototype for the bill in 2016, but during the Trump administration, the timeline for producing the new greenback was delayed to the latter part of this decade.

Yellen said she hopes to see the new bill "as soon as possible."

"I'll do everything I can to expedite it," she added.

Scott Saloway and Nina Kravinsky contributed to this story

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AILSA CHANG, HOST:

Millions of Americans received some extra money from the government today. The Biden administration rolled out the first round of child tax credit payments. Many parents are entitled to receive one if they have kids under 18. Morning Edition host Noel King spoke with Treasury Secretary Janet Yellen about the administration's push to make sure all eligible families are signed up.

NOEL KING, BYLINE: The IRS is going to send most people this money automatically because the IRS knows where they are. But there are people who don't have to file tax returns, and that includes low-income people who the administration really wants to get this credit. How is the IRS going to reach them?

JANET YELLEN: So any family that doesn't have to file a tax return but signed up for the earlier economic impact payments will automatically now receive the Advance Child Tax Credit today. Beyond that - and I should also mention that there are many children in low-income families that have only received a partial credit so far that - this year, this is about 26 million children - will now actually receive the full credit. Beyond that, there are some families with children that have not signed up for the economic impact payments and don't file taxes, and we need to work very hard and are working very hard to tell those families about their eligibility and to try to reach out to them through partnerships with nonprofit organizations and an extensive advertising campaign. So we do want to make sure that every child that's eligible to receive this tax credit, a very important source of support, will know about it and be able to get it.

KING: Entitlements are difficult to roll back, goes one way of thinking about this. Right now the child tax credit is a temporary program. Do you think it should become permanent?

YELLEN: Yes, I do. I think it's a very important program that will do a huge amount to relieve child poverty, which has been a tremendously important problem in the United States. It's estimated that the American Rescue Plan - and, most importantly, because of this child tax credit - is going to be cutting poverty this year by 50%. So I think this is something that's very important to continue, and I'm very hopeful that Congress will decide to include a continuation of this refundable credit that's now remarkably being paid monthly - hope it will be included in the reconciliation package.

CHANG: That was Treasury Secretary Janet Yellen speaking with Noel King. You can hear the full interview tomorrow on Morning Edition.

(SOUNDBITE OF NIGHTMARES ON WAX'S "MORSE") Transcript provided by NPR, Copyright NPR.