The Los Angeles program received $38 million from the city. A small portion of the money comes from private funds.

According to city data, one-third of adults in Los Angeles are unable to support their families on income from full-time work alone.

“When you provide resources to families that are struggling, it can give them the breathing room to realize goals that many of us are fortunate enough to take for granted,” Mayor Eric Garcetti said when the program began.

That breathing room came at an opportune time for Ms. Barajas. After graduating from high school in 2017, she pushed aside dreams of college and began working a string of retail gigs — Claire’s, Old Navy, Walmart. She set aside $300 from her paycheck each month to help cover her family’s rent.

“I had to work,” she said. “We had no foundation, no money in our pockets.”

Last year, Ms. Barajas, 22, received funds from an extension of the child tax credit. She used some of the money for essentials like clothes and food.

On a recent afternoon in Chatsworth, a Los Angeles neighborhood, Ms. Barajas reflected on how the money from the guaranteed income program was helping her stay afloat. She moved out of her mother’s apartment in April, after an argument. Since then, she and her daughter, now 15 months old, have slept on friends’ couches and sometimes stayed at pay-by-the-week motels.

For now, they are living at a 90-day shelter for women and children. Ms. Barajas hopes to attend community college this fall, but is focused first on finding a job. Many mornings, she scrolls her iPhone looking at postings before her daughter wakes up.

Most of the money from the guaranteed-income payments goes toward food, diapers and clothing, but she’s trying to save several hundred dollars, enough for a security deposit for an apartment she hopes to move into with a friend.

“I’m one emergency away from having to spend money and then live on the streets and become homeless,” she said. “A lot of people are just hanging on with the smallest amount of wiggle room financially.”

Zohna Everett, who was part of the Stockton program, knows how it feels to live within that razor-thin margin.

Before the program began in 2019, she was driving for DoorDash five days a week, bringing in about $100 a day. Her husband at the time worked as a truck driver, and the rent for their two-bedroom apartment was $1,000. To help earn gas money, Ms. Everett sometimes collected recyclables and turned them in for cash.

“The money was a godsend,” Ms. Everett said of the Stockton program, adding that while enrolled in it, she got a contract job at the Tesla factory in Fremont, Calif., on a production line.

Until then, Ms. Everett, 51, had been in a perpetual state of hustle, never stopping long enough to realize her exhaustion. After the payments started, she noticed she was sleeping better than she had in years.

“A weight truly was lifted from me,” she said.

The payments stopped during the pandemic, but she then received stimulus money from the federal government. She had started to save some money, but after a case of Covid left her with persistent fatigue and breathing problems, she recently took a leave from her Tesla job.

“With this pandemic, there is a lot of struggling,” she said. “There needs to be a permanent solution to help people.”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Americans Are Flush With Cash and Jobs. They Also Think the Economy Is Awful.

Americans are, by many measures, in a better financial position than they have been in many years. They also believe the economy is in terrible shape.

This is the great contradiction that underlies President Biden’s poor approval ratings, recent Republican victories in state elections and the touch-and-go negotiations over the Biden legislative agenda. It presents a fundamental challenge for economic policy, which has succeeded at lifting the wealth, incomes and job prospects of millions of people — but has not made Americans, in their own self-perception, any better off.

Workers have seized the upper hand in the labor market, attaining the largest raises in decades and quitting their jobs at record rates. The unemployment rate is 4.6 percent and has been falling rapidly. Cumulatively, Americans are sitting on piles of cash; they have accumulated $2.3 trillion more in savings in the last 19 months than would have been expected in the prepandemic path. The median household’s checking account balance was 50 percent higher in July of this year than in 2019, according to the JPMorgan Chase Institute.

Yet workers’ assessment of the economy is scathing.

In a Gallup poll in October, 68 percent of respondents said they thought economic conditions were getting worse. The share who thought things were getting better was lower than in April 2009, when the global financial crisis was still underway. And it is not merely a partisan response to the Biden presidency. In the University of Michigan’s consumer sentiment survey, Republicans rate current economic conditions worse than Democrats do — but both groups give ratings about as low as they did in the early 2010s, when unemployment was much higher and Americans’ finances were a wreck.

shortages and other inconveniences that do not show up in inflation data but reflect the same underlying phenomenon.

data from the Atlanta Fed. Many retirees receive pensions that are not adjusted for inflation.

And it is middle- and high-income earners whose pay gains were least likely to have kept up with inflation. Over the 12 months that ended in September, those in the top quarter of earners experienced 2.7 percent gains in hourly earnings, compared with 4.8 percent for the lowest quarter of earners. For lower earners, that follows years leading up to the pandemic in which pay gains exceeded inflation rates.

The details of what a person buys can have an outsize effect on how acutely he or she feels the pain of inflation. For someone who has had no need to buy an automobile this year, steep inflation in cars and trucks has been a nonissue.

wrote in 1997. The idea of inflation, he continued, evokes “arbitrary injustice, arbitrary redistributions and social bitterness,” and “memories of social situations in which morale and a sense of cooperation were lost.”

That may be what makes the inflation surge such a tricky policy problem: It can be about something more profound than dollars in people’s pockets and the price of a gallon of gas.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Could This Covid Wave Reverse the Recovery? Here’s What to Watch.

The spread of the Delta variant has delayed office reopenings, disrupted the start of school and generally dashed hopes for a return to normal after Labor Day. But it has not pushed the U.S. economic recovery into reverse.

Now that recovery faces a new test: the removal of much of the aid that has helped keep households and businesses afloat for the past year and a half.

The Paycheck Protection Program, which distributed hundreds of billions of dollars in grants and loans to thousands of small businesses, concluded last spring. A federal eviction moratorium ended last month after the Supreme Court blocked the Biden administration’s last-minute effort to extend it. Most recently, an estimated 7.5 million people lost unemployment benefits when programs that expanded the system during the pandemic were allowed to lapse.

Next up: the Federal Reserve, which on Wednesday indicated it could start pulling back its stimulus efforts as early as November.

OpenTable, for example, have fallen less than 10 percent from their early-July peak. That is a far smaller decline than during the last Covid surge, last winter.

“It has moved down, but it’s not the same sort of decline,” Mr. Bryson said of the OpenTable data. “We’re living with it.”

$120 billion in monthly bond purchases — which have kept borrowing cheap and money flowing through the economy — but it will almost certainly keep interest rates near zero into next year. Millions of parents will continue to receive monthly checks through the end of the year because of the expanded child tax credit passed in March as part of President Biden’s $1.9 trillion aid package.

That bill, known as the American Rescue Plan, also provided $350 billion to state and local governments, $21.6 billion in rental aid and $10 billion in mortgage assistance, among other programs. But much has not been spent, said Wendy Edelberg, director of the Hamilton Project, an economic-policy arm of the Brookings Institution.

“Those delays are frustrating,” she said. “At the same time, what that also means is that support is going to continue having an effect over the next several quarters.”

Economists, including officials in the Biden administration, say that as the economy heals, there will be a gradual “handoff” from government aid to the private sector. That transition could be eased by a record-setting pile of household savings, which could help prop up consumer spending as government aid wanes.

A lot of that money is held by richer, white-collar workers who held on to their jobs and saw their stock portfolios swell even as the pandemic constrained their spending. But many lower-income households have built up at least a small savings cushion during the pandemic because of stimulus checks, enhanced unemployment benefits and other aid, according to researchers at the JPMorgan Chase Institute.

“The good news is that people are going into the fall with some reserves, more reserves than normal,” said Fiona Greig, co-director of the institute. “That can give them some runway in which to look for a job.”

recent survey by Alignable, a social network for small business owners. Not all have had sales turn lower, said Eric Groves, the company’s chief executive. But the uncertainty is hitting at a crucial moment, heading into the holiday season.

“This is a time of year when business owners in the consumer sector in particular are trying to pull out their crystal ball,” he said. “Now is when they have to be purchasing inventory and doing all that planning.”

open a new location as part of a development project on the West Side of Manhattan.

Go big. If some aid ended up going to people or businesses that didn’t really need help, that was a reasonable trade-off for the benefit of getting money to the millions who did.

Today, the calculus is different. The impact of the pandemic is more tightly focused on a few industries and groups. At the same time, many businesses are having trouble getting workers and materials to meet existing demand. Traditional forms of stimulus that seek to stoke demand won’t help them. If automakers can’t get needed parts, for example, giving money to households won’t lead to more car sales — but it might lead to higher prices.

That puts policymakers in a tight spot. If they don’t get help to those who are struggling, it could cause individual hardship and weaken the recovery. But indiscriminate spending could worsen supply problems and lead to inflation. That calls for a more targeted approach, focusing on the specific groups and industries that need it most, said Nela Richardson, chief economist for ADP, the payroll processing firm.

“There are a lot of arrows in the quiver still, but you need them to go into the bull’s-eye now rather than just going all over,” Ms. Richardson said.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Poverty in U.S. Declined Thanks to Government Aid, Census Report Shows

The share of people living in poverty in the United States fell to a record low last year as an enormous government relief effort helped offset the worst economic contraction since the Great Depression.

In the latest and most conclusive evidence that poverty fell because of the aid, the Census Bureau reported on Tuesday that 9.1 percent of Americans were living below the poverty line last year, down from 11.8 percent in 2019. That figure — the lowest since records began in 1967, according to calculations from researchers at Columbia University — is based on a measure that accounts for the impact of government programs. The official measure of poverty, which leaves out some major aid programs, rose to 11.4 percent of the population.

The new data will almost surely feed into a debate in Washington about efforts by President Biden and congressional leaders to enact a more lasting expansion of the safety net that would extend well beyond the pandemic. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-supported child care and a permanent expansion of the Child Tax Credit.

Liberals cited the success of relief programs, which were also highlighted in an Agriculture Department report last week that showed that hunger did not rise in 2020, to argue that such policies ought to be expanded. But conservatives argue that higher federal spending is not needed and would increase the federal debt while discouraging people from working.

difficult to assess changes in health coverage last year. Census estimates conflicted with other government counts, and officials acknowledged problems with data collection during the pandemic.

federal supplement to state unemployment benefits lapsed. She fell behind on bills, setting in motion events that ultimately left her family homeless for two months this year.

New aid programs adopted this year, including the expanded Child Tax Credit, helped Ms. Long, who moved into a new home last month. She said she had noticed improvements in her children, particularly her 5-year-old son.

“It was bad, but it could have been so much worse, and we have come out the other side once again unbroken,” Ms. Long said.

By the government’s official definition, the number of people living in poverty jumped by 3.3 million in 2020, to 37.2 million, among the biggest annual increases on record. But economists have long criticized that definition, which dates to the 1960s, and said it did a particularly poor job of reflecting reality last year.

7.5 million people lost unemployment benefits this month after Congress allowed expansions of the program to lapse.

Jen Dessinger, a photographer who lives in New York City and Los Angeles, said work dried up abruptly at the start of the pandemic. A freelancer, she didn’t qualify for traditional unemployment benefits but eventually received help under a federal program created last year to help people who fell outside the regular system.

Now that program has ended in the middle of another surge in coronavirus cases. Ms. Dessinger said a single positive coronavirus case could shut down a photo shoot. “It’s made it a more desperate situation,” she said.

Democrats on Tuesday said experiences like Ms. Dessinger’s showed both the potential for government aid to protect people from financial ruin, and the need for a more expansive, permanent safety net that can support people in bad and good times.

A White House economist, Jared Bernstein, said on Tuesday that the new poverty data should encourage lawmakers to enact the $3.5 trillion Democratic measure that includes much of Mr. Biden’s economic agenda, which the administration argues will create more and better-paying jobs.

“It’s one thing to temporarily lift people out of poverty — hugely important — but you can’t stop there,” said Mr. Bernstein, a member of Mr. Biden’s Council of Economic Advisers. “We have to make sure that people don’t fall back into poverty after these temporary measures abate.”

“reckless taxing and spending spree.”

Conservative policy experts said that although some expansion of government aid was appropriate during the pandemic, those programs should be wound down, not expanded, as the economy healed.

“Policymakers did a remarkable job last March enacting CARES and other legislation, lending to businesses, providing loan forbearance, expanding the safety net,” Scott Winship, a senior fellow and the director of poverty studies at the American Enterprise Institute, a conservative group, wrote in reaction to the data, referring to an early pandemic aid bill, which included around $2 trillion in spending. “But we should have pivoted to other priorities thereafter.”

Jason DeParle and Margot Sanger-Katz contributed reporting.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Child Tax Credit Payments Have Begun. Should You Opt Out?

“The advance of the credit reduces the total amount of taxes paid,” said Rob Seltzer, an accountant in Los Angeles. “So there could be a problem with an estimated tax penalty,” depending on how much the taxpayer earns this year compared with last. It may make sense to run a tax projection with a professional to see if it makes sense to opt out.

You need to live in the United States for more than half of 2021 to be eligible for the advanced payments, but expatriate taxpayers can still claim the expanded credit on their return, according to the I.R.S. (The refundable portion of the credit, however, will be curtailed to the prior $1,400 limit.) Military members stationed abroad are still eligible for the advanced payments.

Some households are simply accustomed to getting a large refund when they file, using it as a forced savings plan. If you have come to depend on a big refund, you can opt out of all future payments and receive the full value of the credit when you file your return next year.

“Opting out or making changes to the payment comes down to personal preference of when and how you want to receive the money,” said Andy Phillips, the director of the Tax Institute at H&R Block. “If you prefer monthly payments of smaller amounts, no need to make changes.”

Sheila Taylor-Clark, a certified public accountant and secretary of the National Society of Black C.P.A.s, has practical advice for clients who don’t necessarily want to opt out but who may be uncertain on where they stand: “Drop that money into an interest-bearing account, so if you owe money you can just send that back next April,” she said.

To opt out of receiving the payments, taxpayers should visit the Child Tax Credit Update Portal. If you don’t already have an account, you’ll need to create one. And if you’re married and file a joint return, both spouses will need to create accounts and opt out; spouses who don’t opt out will continue to receive half of the advance monthly payment.

Besides stopping the checks, the portal can be used to check the status of your payments; change the bank account receiving them; or to switch your payments to direct deposit from paper checks.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

The Week in Business: A Plan for Paid Family Leave

Good morning and happy May. Is anyone else itching for a vacation, or just a chance to go … elsewhere? Good news: If you’re vaccinated, you could escape to Europe (and help boost its ailing tourism industry) as soon as this summer. Here’s what you need to know for the week ahead in business and tech news. — Charlotte Cowles

Credit…Giacomo Bagnara

In his first address to Congress, President Biden detailed his American Families Plan, the third huge spending proposal that he has put forth in his 100 days in office. (The first was the $1.9 trillion stimulus package, signed into law in March, and the second was the American Jobs Plan, which focuses on infrastructure and has yet to pass Congress.) The latest proposal includes financing for universal prekindergarten, federal paid family leave, a permanent expanded child tax credit, subsidized child care for low- and middle-income families and free community college, among other initiatives. To pay for it, Mr. Biden wants to raise taxes on the rich. But most Republicans are opposed to tax increases and say the plan costs too much.

More signs of life from the economy. The country’s first-quarter gross domestic product was up 6.4 percent, at an annualized rate, according to the Commerce Department. That’s almost back to its prepandemic high. Consumer spending is also on the rise, and some analysts believe that it could grow more than 9 percent this year — a record — as health and job conditions continue to improve, and travel and dining open back up.

great for the tech giants. Amazon’s latest quarterly report showed such blockbuster sales — up 44 percent from the previous year — that it beat even the most optimistic forecasts. Meanwhile, Apple’s profits grew 54 percent, mostly thanks to soaring iPhone sales. And Facebook nearly doubled its revenue during the same time period, while Twitter’s jumped 28 percent. (Both companies have barred former President Donald J. Trump and some extremist figures from posting on their platforms since January, but it clearly hasn’t hurt their bottom lines.)

Credit…Giacomo Bagnara

The fight between Apple and Epic Games, which makes the popular video game Fortnite, heads to a federal court in California this week. The dispute began last year when Epic started selling Fortnite directly to its customers, violating its contract with Apple, which makes a 30 percent commission from App Store sales. Apple retaliated by kicking Fortnight off its store, and Epic fought back with a lawsuit. The case will be closely watched by other companies and lawmakers who have raised concerns about the App Store’s anti-competitive practices. Those include European regulators, who on Friday accused Apple of violating antitrust laws by imposing unfair rules and fees on rival music-streaming services.

For the good of your fellow humans, don’t stockpile toilet paper. But bear in mind that it’s about to get more expensive. Companies like Procter & Gamble, General Mills and Kimberly-Clark are all raising prices on everyday necessities like tampons, toilet paper, diapers and cereal this year to make up for increasing costs of production and shipping. Those costs grew during the pandemic, particularly when supply chains were pinched, but companies were reluctant to pass them along to struggling consumers. Now that the economy is starting to stabilize, expect some price adjustments to make up for the past year.

The travel industry is ready for takeoff — if you’re vaccinated, that is. The Centers for Disease Control and Prevention eased rules for cruise lines to resume operations, allowing some ships to set sail as soon as mid-July if they attest that 98 percent of the crew and 95 percent of passengers are fully vaccinated. And the European Union said that American tourists with vaccine certificates would be allowed to visit the bloc this summer, more than a year since it banned nonessential travel from most countries.

a long-anticipated ban on selling menthol cigarettes as well as all flavored cigars. (Possession will remain legal, however.) Amazon will increase pay between 50 cents and $3 an hour for half a million of its workers. And the Federal Reserve left interest rates near zero, playing down a rise in inflation and promising to continue support for the recovering economy.

View Source

A Population Bust

The U.S. population grew by only 7.4 percent over the past decade, the smallest increase since the 1930s, the Census Bureau reported yesterday. This morning, I want to explain why and talk about both the upsides and downsides of slower population growth.

17 percent fewer children than in 1990 — and about 50 percent fewer than in 1960. The U.S. still has a higher fertility rate than Japan and Germany, but it is in the same range as Britain and Sweden and below France and Ireland. There are now more Americans 80 and older than 2 or younger.

The second factor behind the slow population growth is a decline in legal immigration during Donald Trump’s presidency. (Illegal immigration does not appear to have changed significantly.)

relatively flimsy child care programs. Historically, birthrates have declined as societies become more educated and wealthier.

Lower levels of immigration can also have upsides. The big wage gains for American workers during the mid-20th century had many causes, including strong labor unions, rising educational attainment and high tax rates on top incomes. But the tight immigration restrictions of that period also played a role.

“Immigration restriction, by making unskilled labor more scarce, tended to shore up wage rates,” the labor historian Irving Bernstein wrote in a 1960 book. The economists Peter Lindert and Jeffrey Williamson have noted that economic inequality declined more during the mid-20th century in countries with slower labor force growth.

Over all, though, the slowdown in population growth is probably a net negative for the U.S. — as both conservatives (like Ross Douthat) and liberals (like Michelle Goldberg) have argued.

For one thing, polls show that many Americans want more children than they are having, as The Times’s Claire Cain Miller has noted. But the slow-growing incomes and a shortage of good child care options have led some people to decide that they cannot afford to have as many children as they would like. The decline in the birthrate, in other words, is partly a reflection of American society’s failure to support families.

will be part of his speech to Congress tomorrow night.)

A second problem with slow population growth involves global affairs. The U.S. now faces the most serious challenge to its supremacy since the Cold War — from China. The future path of the two countries’ economic growth will help determine their relative strength. And population growth, in turn, helps determine economic growth, especially in an advanced economy. To have any hope of keeping up with China and its vastly larger population, the U.S. will probably need bigger population increases than it has recently had.

Viewed in these terms, the population slowdown is a threat to national security. “I don’t know of a precedent for a dynamic country that has basically stopped growing,” The Atlantic’s Derek Thompson has written.

In Matthew Yglesias’s recent book “One Billion Americans,” he argues that the U.S. should rapidly increase legal immigration to lift economic output. “America should aspire to be the greatest nation on earth,” Yglesias, the author of a Substack newsletter, writes. The only realistic alternative for that role is China, an authoritarian country that is jailing critics and committing egregious human rights abuses.

Higher levels of immigration also have a direct benefit: More of the millions of people around the world who want to move to the U.S. get the chance to do so.

More from the census report:

See for yourself.

Lives Lived: Helen Weaver fell in love with Jack Kerouac months before “On the Road” rocketed him to literary fame, and recorded their romance in an enduring book of her own decades later. She died at 89.

the first player since Babe Ruth to start a game as a pitcher while also leading Major League Baseball in home runs. Nearly every other modern player is either a hitter or a pitcher. Ohtani is simultaneously one of the world’s hardest-throwing pitchers and best sluggers — and a fleet base runner. He is “a unicorn, a miracle, a revelation unto himself,” Sports Illustrated’s Emma Baccellieri has written.

There is a problem, though. Since moving from Japan in 2018 to join the Los Angeles Angels, Ohtani has often been injured. He has needed arm surgery, and has had knee problems and blisters. Many people have begun to wonder if Ohtani should avoid extra strain and stick to only hitting.

“Everybody’s rooting for him, but if he continues to struggle with regular pitching duties, it’s almost like a Bo Jackson kind of career — we know he’s capable of being a two-way star (in Bo’s case, football and baseball),” our colleague Tyler Kepner told us. “But we only get a taste of it, and we’re always left hungry for more.”

In his appearance last night, Ohtani gave up four runs in five innings — and had two RBIs — as the Angels beat the Texas Rangers, 9 to 4.

View Source

Biden Will Seek Tax Increase on Rich to Fund Child Care and Education

WASHINGTON — The next phase of President Biden’s $4 trillion push to overhaul the American economy will seek to raise taxes on millionaire investors to fund education and other spending plans, but it will not take steps to expand health coverage or reduce prescription drug prices, according to people familiar with the proposal.

Administration officials had planned to include a health care expansion of up to $700 billion, offset by efforts to reduce government spending on prescription drugs. But they have decided to instead pursue health care as a separate initiative, a move that sidesteps a fight among liberals on Capitol Hill but that risks upsetting some progressive groups that have pushed Mr. Biden to prioritize health issues.

The president is set to outline his so-called American Family Plan, which includes measures aimed at helping Americans gain skills throughout life and have more flexibility in the work force, before his first address to a joint session of Congress next week. Its details remain a work in progress and could change in the days before the announcement.

But after weeks of work, administration officials have closed in on the final version of what will be the second half of Mr. Biden’s sweeping economic agenda, which also includes the $2.3 trillion American Jobs Plan the president described last month. That plan focused largely on physical infrastructure spending, like repairing bridges and water pipes and building electric vehicle charging stations, and was funded by tax increases on corporations.

expanded tax credit for parents — which is essentially a monthly payment from the government for most families — that was created on a temporary basis by the $1.9 trillion economic aid package Mr. Biden signed into law last month. The duration of that extension was earlier reported by The Washington Post.

Democrats on Capitol Hill have urged Mr. Biden to instead make permanent that credit, which analysts say will drastically cut child poverty this year. Those pushing Mr. Biden include Senators Michael Bennet of Colorado, Cory Booker of New Jersey and Sherrod Brown of Ohio, along with Representatives Rosa DeLauro of Connecticut, Suzan DelBene of Washington and Ritchie Torres of New York.

“Expansion of the child tax credit is the most significant policy to come out of Washington in generations, and Congress has an historic opportunity to provide a lifeline to the middle class and to cut child poverty in half on a permanent basis,” the lawmakers said this week in a joint statement. “No recovery will be complete unless our tax code provides a sustained pathway to economic prosperity for working families and children.”

The family plan will also include some type of extension for an expanded Earned Income Tax Credit, which was included in the earlier aid package on a one-year basis.

The plan’s spending and tax credits will total around $1.5 trillion, according to administration estimates, in keeping with early versions of the two-step agenda first reported last month by The New York Times.

To offset that cost, Mr. Biden will propose several tax increases he included in his campaign’s “Build Back Better” agenda. That starts with raising the top marginal income tax rate to 39.6 percent from 37 percent, the level it was cut to by President Donald J. Trump’s tax overhaul in 2017. Mr. Biden would also raise taxes on capital gains — the proceeds of selling an asset like a stock or a boat — for people earning more than $1 million, effectively increasing the rate they pay on that income to 39.6 percent from 20 percent.

The president will also propose eliminating a provision of the tax code that reduces taxes for wealthy heirs who sell assets they inherit, like art or property, that have gained value over time. And he would raise revenue by increasing enforcement at the Internal Revenue Service to bring in more money from wealthy Americans who evade taxes.

Administration officials were debating other possible tax increases that could be included in the plan this week, like capping deductions for wealthy taxpayers or increasing the estate tax on wealthy heirs.

All of the tax provisions would keep with Mr. Biden’s campaign promise not to raise taxes on individuals or households earning less than $400,000 a year.

Previous versions of the family plan, circulated inside the White House, also called for raising revenues by enacting measures to reduce the cost of prescription drugs bought using government health care programs. That money would have funded a continued expansion of health coverage subsidies for insurance bought through the Affordable Care Act, which were also temporarily expanded by the economic aid bill earlier this year. Speaker Nancy Pelosi of California had pushed for that continued expansion.

Mr. Biden’s team was under pressure from Senator Bernie Sanders, independent of Vermont and the chairman of the Budget Committee, to instead focus his health care efforts on a plan to expand Medicare. Mr. Sanders has pushed the administration to lower Medicare’s eligibility age and expand it to cover vision, dental and hearing services.

View Source

I.R.S. urges taxpayers not to amend already-filed returns to take new tax break.

Taxpayers who already filed their 2020 returns should not amend them to take advantage of tax breaks that were created by the new $1.9 trillion pandemic relief legislation, the Internal Revenue Service commissioner, Charles Rettig, told lawmakers on Thursday, saying that the I.R.S. would automatically send refunds to those who qualify.

Mr. Rettig, speaking at a congressional hearing, was referring to a provision in the law that provides a tax exemption on the first $10,200 of jobless benefits collected in 2020 by unemployed workers whose households earned less than $150,000.

“We believe that we will be able to automatically issue refunds associated with the $10,200,” Mr. Rettig said.

According to The Century Foundation, about 40 million Americans received unemployment insurance last year.

from April 15 to May 17, to give itself and taxpayers more time to handle returns and refunds.

The Treasury Department and the I.R.S. are also racing to develop new regulations and update systems to reflect other aspects of the March relief law.

Treasury officials said at a briefing on Thursday that they are working with the I.R.S. to develop a new online portal to disburse advance payments for the expanded Child Tax Credit, which will provide up to $3,600 per child under age 6 and $3,000 for children ages 6 to 17, regardless of whether a family earns enough to pay income taxes.

The portal will allow taxpayers to upload relevant data for midyear payment adjustments, such as the birth of a child, the officials said.

Treasury officials also said the department is working on additional guidance on how states can use money included in the relief law. That will include clarity about how states must repay relief funds if they decide to cut taxes after receiving aid.

View Source

How Shifting Politics Re-energized the Fight Against Poverty

WASHINGTON — A quarter-century ago, a Democratic president celebrated “the end of welfare as we know it,” challenging the poor to exercise “independence” and espousing balanced budgets and smaller government.

The Democratic Party capped a march in the opposite direction this week.

Its first major legislative act under President Biden was a deficit-financed, $1.9 trillion “American Rescue Plan” filled with programs as broad as expanded aid to nearly every family with children and as targeted as payments to Black farmers. While providing an array of benefits to the middle class, it is also a poverty-fighting initiative of potentially historic proportions, delivering more immediate cash assistance to families at the bottom of the income scale than any federal legislation since at least the New Deal.

Behind that shift is a realignment of economic, political and social forces, some decades in the making and others accelerated by the pandemic, that enabled a rapid advance in progressive priorities.

Rising inequality and stagnant incomes over much of the past two decades left a growing share of Americans — of all races, in conservative states and liberal ones, in inner cities and small towns — concerned about making ends meet. New research documented the long-term damage from child poverty.

economic equity at the forefront of the new administration’s agenda.

Whether the new law is a one-off culmination of those forces, or a down payment on even more ambitious efforts to address the nation’s challenges of poverty and opportunity, will be a defining battle for Democrats in the Biden era.

broadly popular with voters, an intensified focus on worker struggles on both the left and the right, including Republicans’ increasing efforts to define themselves as a party of the working class, has scrambled the politics of economic policy across the ideological spectrum.

prominent conservatives have welcomed the antipoverty provisions, applauding them as pro-family even though they violate core tenets of the Republican Party’s decades-long position that government aid is a disincentive to work.

Many Republicans from conservative-leaning states have turned increased attention to growing social problems in their own backyards, in the middle of an opioid crisis and economic stagnation that has left rural Americans with higher poverty rates than urban Americans, particularly for children.

An emerging strain of conservatism, often supported by a new generation of economic thinkers, has embraced expanded spending for families with children, to help lower-income workers and, in some cases, to encourage families to have more children. The conservative radio host Hugh Hewitt celebrated the expanded child credit in a series of Twitter posts on Friday, urging parents to use the proceeds to send their children to parochial school, and said he would work to make them permanent.

nearly six million children out of poverty, “came to be part of the package because families that earn in the bottom third of the income distribution, or at least of the wage distribution, have been disproportionately hurt by the pandemic,” said Cecilia Rouse, the chairwoman of the White House Council of Economic Advisers.

Democrats and poverty researchers began laying the groundwork for many of those provisions years ago, amid economic changes that exposed holes in the safety net. When a 2015 book by Kathryn J. Edin and H. Luke Shaefer, “$2.00 a Day,” argued that rising numbers of families spent months with virtually no cash income, Mr. Brown arranged for all his Democratic Senate colleagues to receive a copy.

At the same time, many scholars shifted their focus from whether government benefits discouraged parents from working to whether the vagaries of a low-wage labor market left parents with adequate money to raise a child.

A growing body of academic research, which Obama administration officials began to herald shortly before leaving office, showed that a large proportion of children spent part of their childhood below the poverty line and that even short episodes of poverty left children less likely to prosper as adults. A landmark report by the National Academies of Sciences, Engineering and Medicine in 2019 found that aid programs left children better off.

“That allowed us to change the conversation,” away from the dangers of dependency “to the good these programs do,” said Hilary W. Hoynes, an economist at the University of California, Berkeley, who served on the committee that wrote the report.

cut child poverty from prepandemic levels among whites by 39 percent, Latinos by 45 percent and African-Americans by 52 percent.

“Covid exposed the fissures of systemic racism and systemic poverty that already existed,” said the Rev. William J. Barber II, who helps run the Poor People’s Campaign, an effort to get the needy more involved in electoral politics. “It forced a deeper conversation about poverty and wages in this country.”

White House officials and Democratic leaders in Congress say Mr. Biden’s rescue plan has now changed that conversation, creating momentum for permanent expansions of many of its antipoverty efforts. Multiple researchers project the bill will cut child poverty in half this year.

Democrats say they will turn that into an argument against Republicans who might oppose making the benefits permanent. “You’re voting for doubling the child poverty rate — you’re going to do that?” Mr. Brown said.

In selling the plan, Mr. Biden has blurred the lines between the poor and the middle class, treating them less as distinct groups with separate problems than as overlapping and shifting populations of people who were struggling with economic insecurity even before the pandemic. Last week, he at once talked of “millions of people out of work through no fault of their own” and cited the benefits his plan would bring to families with annual incomes of $100,000.

“This is part of why I think it is more transformational,” said Brian Deese, who heads Mr. Biden’s National Economic Council. “This is not just a targeted antipoverty program.”

In coming months, Democrats will face significant hurdles in making provisions like the child benefit permanent, including pressure from fiscal hawks to offset them by raising taxes or cutting other spending.

But the swift passage of even the temporary provisions has left many antipoverty experts delighted.

“A year ago, I would have said it was a pipe dream,” said Stacy Taylor, who tracks poverty policy for Fresh EBT by Propel, a phone application used by millions of food stamp recipients. “I can’t believe we’re going to have a guaranteed income for families with children.”

View Source