White House expects child tax credit to boost economy, cut unemployment
The Biden administration expects the start of child tax credit payments in July to provide a solid boost to the U.S. economy that should more than offset a halt in extra unemployment benefits by 25 states, a White House official said on Tuesday.
Half the U.S. states are dropping an extra $300 in unemployment benefits in coming weeks, citing concerns that the funds were contributing to labor shortages in some sectors.
The White House official said the moves would have only a short-term impact on spending, and said President Joe Biden’s COVID-19 relief plan was always intended to end when no longer needed.
The child tax credit payments, which will reach millions of American households in July, including 88% of children in the country, would have a more lasting impact in reducing childhood poverty and boosting future earning potential, the official said, underscoring Biden’s push to make the payments permanent.
A view of the White House in Washington, U.S. January 18, 2021. REUTERS/Jim Bourg/File Photo
The overall outlook for the U.S. economy looked bright, the official said, citing upbeat forecasts from the World Bank and Organization for Economic and Cooperation and Development that foresee growth of nearly 7% for 2021.
The official said Biden’s robust rescue plan and long-term investments were underpinning that growth, while the dropoff in supplemental employment benefits would be temporary, lasting just 90 days.
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The White House also remains confident that rising inflation will be transitory, the official said, adding that supply chain challenges, including a shortage of semiconductors that has constrained auto production, would ease in coming months.
Producer prices were up, reflecting supply chain challenges in areas such as lumber, but some of those pressure were beginning to ease, the official said, citing a 40% drop in lumber prices from their peak in May.
(Reporting by Andrea Shalal; Editing by Aurora Ellis)
