Treasury and Federal Reserve Discuss Benefits of Child Tax Credit
WASHINGTON — The Committee on Banking, Housing, and Urban Affairs met this week to discuss the CARES Act and supporting an equitable pandemic recovery through vaccination efforts, supporting small businesses, and longer term needs like broadband infrastructure investments.
The members of the Treasury and Federal Reserve also discussed the impact of the expanded Child Tax Credit in increasing labor force participation, boosting economies, and supporting families’ well-being during the economic recovery.
“The number of families that feel their children don’t have enough to eat dropped substantially after the first round of payments. We see that parents are using the Child Tax Credit payments to pay for basic needs, including food and clothing, and of course it can be used for child care and provide the kind of support that enables parents to take jobs,” said Janet Yellen, secretary of the Department of the Treasury.
The committee discussed how inflation has soared for input prices, raw materials, electrical components, energy, and while some members estimated that inflation would rise 2.5% over the next year, Yellen said she expects the number to be closer to 4% by the end of the year.
“The supply side of restrictions that are so much at the heart of inflation that we are seeing have not gotten better, in some cases, they have gotten worse. Look at car companies, look at the ships docked with their anchors down outside of Los Angeles. This is really a mismatch between demand and supply, and we need those supply blockages to alleviate, to abate, before inflation can come down,” said Jerome Powell, chairman, Board of Governors of the Federal Reserve System.