Treasury Secretary Janet Yellen, pictured on Capitol Hill last month, called for a permanent extension of the child tax credit in an interview with NPR Thursday. Greg Nash / Pool Photo / Getty Images Hide caption
Greg Nash / Pool Photo / Getty Images
Greg Nash / Pool Photo / Getty Images
Treasury Secretary Janet Yellen is calling for the child tax deduction to be permanent as the first installment of the monthly allowance was transferred to the parents’ bank account this week.
Under the Biden administration’s American rescue plan, passed by Congress in March, parents are expected to receive $ 250 to $ 300 per child each month for the rest of this year. The first of those $ 15 billion monthly payments was delivered Thursday.
“I think it’s very important to continue this,” Yellen said Thursday in an interview with NPR, Morning Edition host, Noel King.
The rescue plan increased an existing tax credit from $ 2,000 per child to $ 3,000 – or $ 3,600 for children under the age of 6 – and expanded entitlement to parents with little or no income. It was also determined that half of the loan would be delivered in monthly installments from July to December.
But the increased payouts only last a year. President Biden has proposed extending the larger loan to 2025, and eventually Yellen, along with the Democrats in Congress, is hoping to make it permanent.
“It is a very important program that will go a long way in helping alleviate child poverty, which is a hugely important problem in the United States,” Yellen told NPR.
Yellen reiterates the need for higher taxes for the rich
Parents who claimed a dependent child in their tax return in 2019 or 2020 or who received child benefits earlier during the pandemic should automatically receive the monthly contributions.
Yellen said the administration is also working with nonprofits to warn other parents who might otherwise be missing out.
“We want to make sure that every child who is eligible for this tax credit – a very important source of support – knows about it and can get it,” said Yellen.
The extended tax credit comes with a hefty price tax of approximately $ 100 billion per year. Biden has suggested paying higher taxes for wealthy people for this.
“His promise is firm that no one earning less than $ 400,000 will raise their taxes, but very high income taxpayers will see an increase,” Yellen said in the interview.
Yellen is confident that inflation will ease
On the subject of inflation, the Treasury Secretary said she was keeping a close eye on it but didn’t think the recent price hike would continue indefinitely.
“We shouldn’t expect it to go away next month, but in the medium term I don’t think it will go on like this,” Yellen, the former chairman of the Federal Reserve, told NPR.
The Labor Department said this week that consumer prices in June were 5.4% higher than a year ago – the highest rate of inflation in nearly 13 years.
Yellen said this was largely a by-product of the increased spending by newly vaccinated consumers and the challenges many companies have faced in order to keep up.
“There are bottlenecks and difficulties in expanding the supply of some goods and services quickly enough to meet increasing demand,” said Yellen.
She predicted that “when the economy returns to normal,” inflationary pressures will ease, reflecting the Federal Reserve’s view.
Yellen said unlike the 1970s when consumers and businesses expected higher inflation, stable prices are now firmly anchored in most people’s expectations. She pointed out that government bond yields are still low.
“That tells you that market participants see this as a temporary phenomenon and do not expect such inflation in the medium term,” said Yellen.
Yellen hopes to see Harriet Tubman $ 20 bills
Yellen, who made history as the country’s first female Treasury Secretary and first female chairman of the Federal Reserve, also said she hopes to speed up production of a new $ 20 bill with Harriet Tubman.
The Obama administration unveiled a prototype for the bill in 2016, but during the Trump administration the schedule for producing the new dollar was postponed to the second half of this decade.
Yellen said she hopes to see the new law “as soon as possible”.
“I’ll do everything I can to speed it up,” she added.
Scott Saloway and Nina Kravinsky contributed to this story