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Critics say monthly child tax credit payments, now available for more than 35 million American families, could discourage people from working, but Treasury Secretary Janet Yellen disagrees. The credit can help parents play for childcare to enable them to work, she says. Yellen spoke with Judy Woodruff about the expanded credit, Biden’s infrastructure spending and health of the U.S. economy.
And now to an interview with Treasury Secretary Janet Yellen on the economy and pocketbook issues.
It comes as millions of families are starting to receive their first monthly payments from an expanded child tax credit. The credits were part of the American Rescue Plan bill approved by President Biden and Congress in March. The money goes directly into an individual's bank account. People qualify if they claim a child under 17 on their taxes. They receive $300 a month per child for those under the age of 6, maxing out at $3, 600 annually.
The payments are $250 a month for children between 6 and 17 years old, maxing out at $3,000 a year.
I spoke with Secretary Yellen earlier today.
Secretary Yellen, thank you very much for joining us.
I know the administration has been very eager to roll out these child tax credits. What impact do you believe they're going to have on American families?
Janet Yellen, U.S. Treasury Secretary:
Well, I think it's going to be a tremendously important support for American families.
Today, the families of more than 60 million children will receive an — beginning on a month — today on a monthly basis checks that will help them meet the expenses that they have in caring for their children. And it will be a dependable source of income that they can count on.
It's estimated that the American Rescue Plan will reduce this year child poverty rates by 50 percent. And the child tax credit is the most important reason for that reduction. So, it's a very important source of income support.
How can you be sure the money will be spent on children?
Well, families, of course, care very much about their children.
And the inability to put food on the table or to keep a roof over one's head, these are things that very badly impact children. So, a family that needs the money to be able to provide food and clothing and support for the family at large is improving conditions of life for children.
And, of course, some of the money, much of it may be spent directly on children's needs. But, broadly speaking, helping families lead more secure lives is a tremendous benefit to the children in these households.
I'm sure you know concerns are raised already, questions about how this money will get to the very poorest of families.
Are you confident that it will?
Well, first of all, let me say that we have been able to reach today payments that go to anyone who filed a tax return in 2019 or 2020.
People who don't have to file a tax return, but did file to receive one of the economic impact payments, those children in those families will also automatically today receive the advanced monthly child tax payment.
Now, for some very low-income families that neither filed tax returns nor applied for the economic impact payments, we're making tremendous efforts to reach them as well, working with nonprofits and through advertising campaigns to make sure that they know about their eligibility for these important payments.
But this is the most difficult population to reach.
Madam Secretary, some Republicans are already saying this is going to discourage many parents from working. How do you respond?
Look, this is additional income that people need to be able to take care of their children, and mainly going to households that are working families that need some extra help.
And the money can help with child care expenses that families have to bear in order to be able to go to work. So, I really don't see this as a significant discouragement to work. Quite the contrary.
I want to also ask you today about the economy overall.
As you know, yesterday, we learned the Consumer Price Index is rising at 5.4 percent at an annual rate. The chairman of the Federal Reserve, Jay Powell, Jerome Powell, said he was surprised by this.
Were you surprised?
Well, I would agree that prices over the last several months have increased rapidly.
It's partly a reflection of the fact that our economy is opening back up, that people have spending power. They're quickly returning to spending on services and travel that they had not spent on during the pandemic. And there are really some bottlenecks when you see spending expand on travel, airfares, hotels and the like, of ramping up supply rapidly enough to meet that demand.
So, opening up an economy of our size involves some bottlenecks. Most of the price pressure is in sectors that were affected by the pandemic and in motor vehicles, where there are bottlenecks reflecting a shortage that developed of semiconductors.
Outside of those pandemic-affected sectors, inflation is very moderate and really consistent with inflation rates we think of as normal. And I believe that the price pressures we're seeing are transitory, that inflation will settle down over the medium term.
But, of course, it's something we're monitoring very carefully. And we don't want to see inflation pick up over the medium term. That's something we certainly want to make sure that we avoid.
But in light of this and the picture of potential inflation, is it risky to be enacting a $5 trillion spending bill on infrastructure over the next 10 years?
Well, you said 10 years, and that's an important proviso.
The spending is spaced out. Over time on an annual basis, it is really an amount that our economy can easily handle. And it will support faster economic growth and higher productivity and address structural problems that have plagued our economy and diminished the well-being of so many families for such a long time.
We're investing in infrastructure that we badly need to be a productive and competitive society, in research and development, in training, both early childhood education, which will have a huge payoff for children, and in making community college free, affordable for everyone will make our work force more productive, and in supports for working families, not only continuing the child tax credit, but also the expansion that we have in the American Rescue Plan for support for child and dependent care, for paid family leave, supports for health insurance.
These are things that are necessary for families to work. I believe it will promote participation, especially by women, in the labor force. And we have seen female labor force participation fall off relative to many advanced countries where these supports for working families are available.
And a very quick final question, Madam Secretary, and something else you have been very involved in.
And that is persuading other countries to go along with a corporate minimum income tax. Is that something that you think Congress will pass? What do you think prospects are?
Well, I think it's an historic agreement to get every G20 country and 132 countries on board with the idea that we should stop a decades-long race to the bottom in which one country tries to cut taxes to attract business, only to find that other countries match or go yet lower.
In the end, what that's done is deprive all countries of the ability to raise revenue meaningfully from corporations that are profitable and should be contributing to help us meet government expenditures that address societal needs.
So, this is an historic agreement. And we believe that Congress will pass this, the necessary legislation, in the reconciliation bill that's moving forward.
Treasury Secretary Janet Yellen, thank you very much. We appreciate your joining us today.
Thank you, Judy. It's a pleasure to be with you.
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