Fourth stimulus check and Child Tax Credit updates on Tuesday 6 July
US stimulus checks and Child Tax Credit news | 6 July 2021
-Unemployed workers in several states file lawsuits in an attempt to maintain federal benefits. (Full story)
- Michigan introduces vaccine lottery to encourage residents to get the shot (more details)
- IRS reveals that many high-income households, earning more than $200,000, received a stimulus check payment(Full story)
-Why did the US unemployment rate rise late month? Reasons behind the increase explored in detail.
Useful information / links
- Monday 2 August is the next deadline to opt out of Child Tax Credit monthly payments (find out more)
- Some households may need to file taxes or use the Child Tax Credit Non-filer Sign-up Tool to get payments
- Should you update your tax return information? Find out when to contact the IRS
Take a look at some of our related news articles:
A stimulus bill signed last December provides a $100 weekly payment, known as the Mixed Earner Unemployment Compensation, but some states have opted out.
States across the country have withdrawn from a batch of pandemic-era federal programmes which provide extra support for jobless residents, but are now facing a legal backlash.
As the President presses for the bipartisan infrastructure framework, he’s also pressing ahead on a dual track for the full breadth and scope of the Build Back Better agenda, which includes his climate — his critical climate priorities and the American Families Plan.
The President’s Build Back Better agenda provides a once-in-a-generation investment in the foundations of middle-class prosperity: education, healthcare, and childcare. From making education more affordable and expanding key provisions like the Child Care Tax Credit, to providing economic security through programs like paid leave to families, the President will continue advancing his entire economic agenda to build back better.
Congresswoman Underwood, many of you may know, is a registered nurse, health policy expert, and committed advocate for expanding access to high-quality, affordable healthcare, which the Build Back Better agenda accomplishes by permanently lowering health insurance premiums for those who build coverage on their own, saving families an average of $50 per person per month. As a result, 9 million people would save hundreds of dollars per year on their premiums, and 4 million uninsured people would gain coverage.
What do climate experts think about the bipartisan infrastructure proposal?
The World Resouces Institute, a global environmental think tank, released a blog late last week detailing exactly what climate initiatives and investments have been left out of the bipartisan infrastructure bill.
The climate experts who authored the piece believe that while the package does include some funding for climate "it cuts key climate action provisions that would benefit the economy, jobs and public health," compared to the American Jobs Plan.
The experts argue that dropping the climate aspects of the Jobs Plan makes it "impossible for the U.S. to meet its commitment to reduce greenhouse gas emissions 50% by 2030, and it would miss enormous opportunities for cleaner air, quality jobs and resilient communities."
The team also highlighted the high rates of public support for the climate measures and that voters may be "disappointed if climate-friendly investments were left out of the final infrastructure package."
Read the full blog here.
Which states are returning to their pre-pandemic unemployment levels the quickest?
Wallet Hub, an online financial services and news site, published an article looking at which states are recovering the quickest, in terms of employment.
Adam McCann, a financial writer for Wallet Hub, opened the piece highlighting the drop in unemployment claims made from the height of the pandemic. In the last week of June, 364,000 claims were made, compared to 6.1 million last Spring.
So far, twelve states have reached a level of claims lower than what was recorded before the pandemic, including: "New Jersey, Vermont, Kansas, South Carolina, Arizona, Arkansas, Michigan, Mississippi, Florida, Missouri, South Dakota, and Iowa."
The top ten states " Whose Unemployment Claims Are Recovering the Quickest" according to their methodology is (boldindicates that the state has or plans to eliminate the payment of federal unemployment benefits) :
1, South Carolina
6. New Jersey
8. South Dakota
States with the slowest recovery include Rhode Island, New Mexico, Oklahoma, Georgia, Virginia, Deleware, Colorado, Indiana, and Illinois.
Pennsylvania joins Georgia as one of the latest states to re-implement work search requirements. This means that the more than 750,000 people in the state claiming benefits, will soon begin reporting progress on their search for a new job.
Wall Street Journal takes a look at how increases in funding have led educators to come up with creative summer school programs. However, the funding will end and many in the educational community wonder how teachers will be able to continue this innovation movement without more funding.
The local public news outlet, KQED, based in Sacramento, reports on how some 2.2 million low-income residents in California could miss out on new stimulus.
For one undocumented family in San Fransisco, the hurdles to file their taxes were to high to overcome. In California, those without a Social Security Number must file using an Individual Tax Identification Number which is distributed through the IRS. To receive one, a person must provide, "confirm their identities and foreign status by providing documentation like a birth certificate, driver’s license or passport." However, Leydi, the head of the household cannot provide this information because she and her family do not have "a valid passport from Mexico, where they’re from. Only the Mexican consulate could grant them one, and for weeks, they had been trying, unsuccessfully, to book an appointment through Mexitel, the government’s helpline."
Ohio joins a growing list of states where those claiming unemployment benefits are suing the government over the plans to stop the payments.
Mitch McConnell, Senate Minority Leader, has no problem opposing the bipartisan infrastructure plan, saying that the outcome he would like is "politically, right of center." Continuing on, saying that "Right now, this is a 50-50 country. We've got a 50-50 Senate. One of the arguments I've been making against a number of things that [Democrats] like to do is that the voters didn't vote for this."
However, recent polling has shown that more than two-thirds of voters in the US supported President Biden's American Jobs Plan, which includes many progressive policies that Senator McConnell believes the public opposes.
How did spending this Fourth of July compare to 2020 levels?
A sign that many in the US are returning to normal spending levels, this past Fourth of July some businesses saw major increases in sales compared to 2020.
One brewery owner in Colombia, South Carolina, Katelyn Shire reported an increase of over 60% saying, "July 3rd is National Beer Run day. So all of our beer lovers have come out, picked up their six-packs for their Fourth of July festivities. In Irmo, actually saw 60% higher sales on Saturday than we did last year."
Should we be talking about inflation?
Bond markets still aren’t worried about inflation, even if employers and consumers are. Last week brought news of a sharp increase in average hourly earnings—although this may well be a transitory phenomenon as the economy recovers from the pandemic—while new surveys found more companies complaining about higher prices, and consumers bracing for higher inflation. And yet the bond market’s key measures of inflation continued to reduce gently.
Read the full story from Bloomberg
Throughout the pandemic the federal government has been providing additional unemployment benefits for out-of-work Americans to help them deal with the economic consequences of the pandemic.
In recent months 26 states have announced their intention to prematurely withdraw from the pandemic unemployment benefits, saying that the programmes are encouraging workers to stay at home.
Lobby groups write battle plan to beat Biden tax hikes
US business lobbying groups cheered a bipartisan $1.2 trillion infrastructure deal, but are gearing up to fight the corporate tax hikes looming in a separate but linked spending bill that Democrats aim to pass without Republican votes.
The US Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation and other deep-pocketed lobby groups plan to use the same argument they employed in 2017 to secure huge tax cuts from Republicans: higher corporate taxes equal fewer jobs.
"We don't know what's in that package," Rachelle Bernstein, chief tax counsel for the retail group, said of the Democrats' "reconciliation" bill expected to contain new social spending and tax hikes.
"But we don't think it is good to use a corporate tax increase to finance spending," said Bernstein, whose group has spent $1.5 million on lobbying in the first quarter of 2021, according to watchdog OpenSecrets.org.
The Biden administration's pitch for reducing US economic inequality and competing more effectively with China relies on using tax hikes on corporations and wealthy Americans to pay for some $4 trillion in new spending on transportation, communications, research, renewable energy, childcare, housing, education and healthcare.
Ahead of the introduction of the new Child Tax Credit programme the IRS have launched the Advance Child Tax Credit Eligibility Assistant, which aims to help eligible families get prepared for the monthly payments.
Using the tools provided you can opt how you want your entitlement to be paid, update your details and even provide the information needed to register for the payments if required. The system is set to start from 15 July but there's still time to check your eligibility for the expanded Child Tax Credit...
How do I sign up for the new Child Tax Credit monthly payments?
The new Child Tax Credit has the potential to halve the number of children in poverty over the course of the next year but there is concern that some of the most vulnerable recipients might miss out. For most people the payments will arrive automatically but those who do not typically file a tax return will need to submit their personal and banking details to the IRS to trigger the payments.
Luckily the process is fairly straight forward. Check out our handy explainer on How to sign up for the Child Tax Credit payments
The argument against a fourth stimulus check
The Democrats appear split over the prospect of another round of direct payments. President Biden is intent on focusing on some other elements of his agenda, but a number of progressive in Congress have made clear that they think that a fourth stimulus check is vital. Here Vox takes a look at some of the arguments against another round of payment...
Congress is set to break for summer at the end of July, giving Democrats just a few more weeks to concentrate on their legislative priorities. President Biden will be hoping to pass both the American Families Plan and his $1.2 trillion infrastructure package before Congress takes a month-long recess in August.
But not all in his party share the same priorities and some will hope to use that time to pass a fourth stimulus check, something that progressives in Congress have been supporting for months. Also the IRS is still working on sending out the third round of direct payments there is concern that the US' economic recovery is starting to flag, and there is considerable support for a recurring fourth stimulus check for the duration of the pandemic.
Should I opt out of the Child Tax Credit monthly payments?
When it is introduced from 15 July, the new Child Tax Credit programme will automatically begin sending direct payments to tens of millions of families across the United States. The recurring payments are expected to be a great form of support for struggling families but the drip-feed format may not suit everyone.
Some may wish to receive their entire 12-month entitlement in the form of a single tax credit, to be claimed at the end of the year. This would allow parents to knock up to $3,600 per child dependent off their tax bill and will prevent them being forced to pay back the monthly payments if their household income rises in the coming months.
The IRS have confirmed that 163.5 million payments have been made as part of the third round of stimulus checks, costing the federal government a total of $389.9 billion. A recent report from the tax authority revealed that more than 120,000 high-earners have also received at least part of the stimulus check, despite them ostensibly being reserved for low- and middle-income households.
We take a look at the reasons why wealthier individuals were able to get a stimulus check from the IRS, and whther they might be forced to return the money in the future...
Child Tax Credit online calculator
Wondering how much you will get from the new Child Tax Credit monthly payments? From 15 July the IRS will be sending out payments worth up to $300 per child to eligible households, with an estimated 88% of American children covered by the programme.
The vast majority of families will be able to receive a monthly payment but the size of your entitlement varies based on a number of factors. This handy online calculator will estimate how much your family will get from the Child Tax Credit...
Progressive Democrats lead the push for a fourth stimulus check
In recent weeks the White House has appeared more focused on passing the large-scale infrastructure package and securing an extention of the new Child Tax Credit than it is concerned with another stimulus check.
However a number of Democrats in Congress continue to fly the flag for a fourth stimulus check, insisting that additional direct support is needed. However Biden is still thought to be attempting to build bipartisan support for his outstanding relief packages, meaning that he is more likely to cut items from the stimulus bills than he is to add anything major.
Last week the Bureau of Labor Statistics released the June jobs report, which may influence how President Biden chooses to negotiate the next stage of the country’s economic recovery from the pandemic. Although more than 850,000 jobs were added during the month, there is concern that the national unemployment rate actually rose slightly to 5.9%.
In the past the bleak jobs market picture has been used as justification for the three previous rounds of stimulus checks. Proponents argue that the cash influx in vital to revitalising struggling industries and provide a much-needed boost to consumer confidence. So with unemployment apparently on the rise again, how will this affect the likelihood of a fourth stimulus check?
How will the new Child Tax Credit work?
The IRS is set to introduce the new-look Child Tax Credit from 15 July, which will provide a monthly direct payment for an estimated 88% of American children. The programme is unlike any that has gone before and the White House is extremely optimistic about the potential benefits. Here, CBS MoneyWatch takes a look at how to make the monthly Child Tax Credit payments work for you...
More stimulus checks are coming for California residents
The state of California announced a record-breaking $75 billion budget surplus for 2020, triggering the next stage in Gov. Gavin Newsom's recovery agenda. Last week the California legislature approved Newsom's California Comeback Plan, a state-wide relief package that will see two-thirds of Californians receive a $600 stimulus check.
There are additional payments on offer for filers with tax dependents and for those who have non-resident status. The California Comeback Plan is one of a number of packages introduced by states across the country to provide short-term relief for residents. Here's more on the states who have passed their own stimulus checks.
The IRS has confirmed that from 15 July they will begin automatically distributing the new Child Tax Credit monthly payments, worth up to $300 per child to tens of millions of families across the United States.
This new system was included in the recent American Rescue Plan stimulus package. The White House anticipates that the new Child Tax Credit could halve the number of children in poverty over the next 12 months but some may choose to opt out of the monthly payments and instead receive a single, end-of-year tax credit to put towards their tax bill.
Watch out for tax refund scammers
Throughout the pandemic criminals have seen the various federal support programmes as a potential gold mine and have attempted to defraud vulnerable Americans out of their money. The three rounds of stimulus checks and the additional unemployment benefits have attracted a lot of fraudsters, but the IRS is now warning that tax refunds are also being targetted.
If you are waiting for a tax refund they advise that you are vigilant about phishing emails which will attempt to harvest your personal details to take the payments. More people than ever before are expected to be due a tax refund this year after the American Rescue Plan made unemployment benefits received in 2020 tax-free.
Are you eligible for the Child Tax Credit monthly payments?
The White House has been eager to push the importance of the reformed Child Tax Credit over the past couple of months, ahead of the new programme's introduction on 15 July. The new system, which will last for at least one year, will see parents receive up to $300 per child on a monthly basis but little over half of all recipients are aware of the upcoming support.
A recent study from Data For Progress found that just 53% of responders were aware that the payments were coming, which mean that the support may not bee as effective as it could have been.
Biden administration pushes for 'compromise solution' in OPEC+ talks
The Biden administration is pushing for a 'compromise solution' in stalled OPEC+ oil output talks, a White House spokesperson confirmed.
OPEC+ ministers called off those talks on Monday after the United Arab Emirates rejected a proposed eight-month extension to curbs on output. Four OPEC+ sources told Reuters there has been no progress toward a deal.
"The United States is closely monitoring the OPEC+ negotiations and their impact on the global economic recovery from the covid-19 pandemic," the White House spokesperson said in a statement.
"We are not a party to these talks, but Administration officials have been engaged with relevant capitals to urge a compromise solution that will allow proposed production increases to move forward."
A rise in oil prices, which are at their highest levels since 2018, has helped fuel inflation concerns. U.S. President Joe Biden has made the economic recovery from the recession triggered by the coronavirus pandemic a key priority for his administration.
Michigan becomes the latest state to offer its vaccinated residents a chance to win millions. We took a look at what you need to know.
Over 4% of job offers in US add incentives
According to job search engine Indeed, 4.1% of jobs postings advertised hiring incentives through the seven days ending June 18, more than double the 1.8% share in the week ending July 1, 2020. The incentives, which included signing bonuses, retention bonuses or one-time cash payments on being hired, ranged from as low as $100 to as high as $30,000 in the month ended June 18.
Some restaurant jobs are paying as much as $27 per hour plus tips, according to postings on Poachedjobs.com, a national job board for the restaurant/hospitality industry. The federal minimum wage is $7.25 per hour, but is higher in some states.
IRS launches CTC portal
The Internal Revenue Service has launched an online tool to help families who don't file taxes but may be eligible for Child Credit Tax.
Politicians and economists blame enhanced unemployment benefit for June figures
Politicians, businesses and some economists have blamed enhanced unemployment benefits, including a $300 weekly check from the government, for the labor crunch. Lack of affordable child care and fears of contracting the coronavirus have also been blamed for keeping workers, mostly women, at home.
There have also been pandemic-related retirements as well as career changes. Economists generally expect the labor supply squeeze to ease in the fall as schools reopen and the government-funded unemployment benefits lapse but caution many unemployed will probably never return to work. Record-high stock prices and surging home values have also encouraged early retirements.
"Labor shortages may become less of a constraint from September, but there is no guarantee, given evidence to suggest potentially more than 2 million people have taken early retirement in the past year," said James Knightley, chief international economist at ING in New York.
US companies boost perks for workers
US job growth likely picked up in June as companies, desperate to boost production and services amid booming demand, raised wages and offered incentives to lure millions of reluctant unemployed Americans back into the labor force.
The Labor Department's closely watched employment report has shown that the economy closed the second quarter with strong growth momentum, following a reopening made possible by vaccinations against covid-19. More than 150 million people are fully immunized, leading to pandemic-related restrictions on businesses and mask mandates being lifted.
Despite the anticipated acceleration in hiring, employment gains would probably still be less than the million or more per month that economists and others had been forecasting at the beginning of the year.
"There are jobs, but workers are not there," said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles.
The minimum pay workers will accept has risen significantly since the pandemic began, he said, "and many workers have an inflated view of what their skills are worth and as a result they are not willing to go back to work at the prevailing wage."
According to a Reuters survey of economists, nonfarm payrolls likely increased by 700,000 jobs last month after rising 559,000 in May. That would be more than the 540,000 monthly average over the past three months. Still, employment would be about 6.9 million jobs below its peak in February 2020.
Estimates ranged from as low as 376,000 to as high as 1.05 million. The unemployment rate is forecast dipping to 5.7% from 5.8% in May. The jobless rate has been understated by people misclassifying themselves as being "employed but absent from work." There are a record 9.3 million job openings.
The American Rescue Plan included a new programme which will make free health insurance available for the majority of those who claim jobless support in 2021.
A federal programme providing an extra $300 weekly payment for jobless Americans is under threat as 26 states opt to voluntarily withdraw early.
Dollar dips as rate hike fears ebb
The dollar dipped against a basket of major currencies on Monday, after hitting a speed bump when last week's mixed bag of U.S. labour data allayed investor fears about a faster end to monetary stimulus.
While the headline June job creation figure beat forecasts, unemployment ticked higher and workforce participation didn't budge - suggesting positive progress, but space for the Federal Reserve to wait before tapering asset buying or hiking rates.
Bonds rallied, stocks rose and the dollar slipped in the wake of the data - dropping most against the risk-sensitive Australian and New Zealand dollars and the rates-sensitive yen.
While attempting a bounce in Asian and early European trading, by midday in London the greenback had fallen back to its lowest levels since Wednesday .
Stimulus check live updates: welcome
Hello and welcome to our daily live blog for today, Tuesday 6 July 2021, bringing you updates on a possible fourth stimulus check in the US.
We'll also provide you with information on the third round of stimulus checks, which began going out in March as part of President Biden's American Rescue Plan, in addition to news and info on other economic-support programs such as the new, expanded Child Tax Credit.