Personal Finance

GOP opposition to child tax credit bill could be softening in Senate

Published

11 months ago

April 9, 2024

Bipartisan legislation to cut taxes for working families and extend certain corporate tax breaks has stalled in the Senate over Republican opposition. But the bill’s prospects could be growing rosier as lawmakers prepare to return to Washington next week from a long recess.

Privately, some GOP lawmakers have said they’re increasingly willing to support the bill with small changes that the measure’s Democratic sponsor has already offered, according to four people involved in the conversations who spoke on the condition of anonymity to discuss private talks.

In a sign of possible momentum, Senate Majority Leader Charles E. Schumer (D-N.Y.) wrote to lawmakers Friday that the upper chamber could consider the bill — along with measures to regulate TikTok, address rail safety and lower health-care costs — “in the weeks and months ahead.”

Once the Senate wraps up impeachment proceedings against Homeland Security Secretary Alejandro Mayorkas, expected to take up most of lawmakers’ time next week, Schumer could put the tax bill to a vote on or shortly after the April 15 tax deadline.

The $79 billion legislation pairs an expansion to the child tax credit — a major priority for President Biden and Democrats that nonpartisan estimates say would lift 400,000 children out of poverty — with business tax incentives initially authorized in 2017 under President Donald Trump.

The Internal Revenue Service has said it could apply the credit retroactively, but lawmakers have still been eyeing the filing deadline as a possible time peg for action on the measure.

It was the product of a deal struck between Sen. Ron Wyden (D-Ore.) and Rep. Jason T. Smith (R-Mo.), the chairs of Congress’s tax-writing committees, after seven months of talks, and it passed the House with broad bipartisan support in January.

The bill has run into opposition from Sen. Mike Crapo (Idaho), Wyden’s Republican counterpart on the Finance Committee, over a provision that would allow low-income families to use a prior year’s return to earn a larger tax credit. Many Republicans have publicly followed Crapo’s lead, hoping to give him more leverage to seek changes to the legislation that dial back the credit for families.

Privately, though, numerous Republican senators say they could support the legislation without some of those changes, but don’t want to outwardly break with a well-liked and powerful member of their caucus, the four people who have discussed the measure with them said.

These people — three lobbyists and a senior GOP Senate staffer who have had in-depth conversations with lawmakers and senior staffers about the bill — said that in private, a sufficient number of Republicans to overcome a filibuster support the legislation, but many of them do not want to cross Crapo and other GOP leaders who hope to extract more concessions from Wyden and Smith.

“The thing that we see differently now is there does not seem to be the willingness that anyone is going roll Crapo,” one of those people said. “That’s pretty clear from Republicans now. We see that the path forward for this bill is that concessions need to be made.”

A left-leaning advocacy group had a similar read.

“We’ve had conversations with over a dozen Republican Senate offices and heard significant support for the bipartisan tax package and enthusiasm both for the [research-and-development] credit as well as for the child tax credit provision,” Adam Ruben, director of Economic Security Project Action. “I would predict that if this comes to a vote, I think the votes are there. … Will it come to a vote [and overcome a GOP filibuster threat] is another question.”

Wyden offered to alter the legislation to address some of Crapo’s concerns, swapping out the “look back” section and instead further expanding eligibility for the poorest families who qualify for the credit. Crapo rejected that offer: He has said negotiations with Wyden were “at a standstill.”

“The issue set is the same issue set that’s been out there for a couple of weeks now,” Crapo told The Washington Post before Congress went on recess at the end of March.

Ultimately, public support for the bill hinges on Crapo’s stance in negotiations, the people and multiple lawmakers said. Lawmakers say Crapo, who is in line to chair the Finance Committee if Republicans retake the Senate in November’s elections, is eyeing a larger tax package in 2025 that could contain more conservative policies and hopes to use the prospect of a GOP-written tax plan next year to extract more changes from Wyden — or defeat the measure entirely.

Trillions of dollars in tax cuts enacted under Trump are slated to expire at the end of 2025, which means Congress will probably be working on tax policy next year regardless of who wins the elections.

“I think Crapo wants to make it better,” Sen. Lindsey Graham (R-S.C.) said. “I like to help people raising children with the child tax credit, and there’s a bunch of other business things in there that I hear a lot about from my constituents. But with work requirements, there’s some things that Crapo wants to do and I sort of trust his judgment.”

Another key Republican, Sen. Mike Rounds (S.D.), echoed that sentiment.

“I have spoken with our ranking member, Mike Crapo, and I don’t think it’s ready for prime time yet,” Rounds said. “I think they’re still negotiating. But I’ll take my cue right now based on what his analysis is.”

Wyden is still offering to drop the ability for taxpayers to use a previous year’s return to quality if it will draw Republicans on board.

“While I think the policy is important, I’ve offered to take it out of the bill if it gets this over the finish line,” he said during a committee hearing in late March. “Working with groups, we have found a way to do this and still lift the same number of kids out of poverty. As of this morning, my offer on the look back is still on the table.”

Some key Republicans hope Wyden succeeds. A high-profile Finance Committee member, Sen. Todd Young (R-Ind.), urged Senate leaders to move forward even if Crapo cannot secure more changes to the legislation. And a member of GOP leadership, Sen. Steve Daines (Mont.), has said the bill even without changes was “very important for global competitiveness” because of the corporate tax provisions.

The new legislation would expand the child tax credit to allow low-income families to claim the benefit for multiple children; under current law, the lowest-earning families can only receive the credit for one child. Starting in 2025, for the 2024 tax year, the benefit would be linked to inflation, which would add up to a roughly $100 boost next year.

The proposed larger refundable tax credits for more low-income parents could lift 400,000 children out of poverty, according to nonpartisan estimates. And Democrats and Republicans alike have cheered provisions that would allow businesses to write off research-and-development and interest expenses and investments in new equipment.

The tax credit was expanded temporarily in 2021, increasing the amount it provided and extending eligibility. Those changes kept 3 million children out of poverty, according to research conducted by Columbia University’s Center on Poverty & Social Policy. But the expansion expired at the end of 2021, and child poverty rates jumped back up after that.

Personal Finance

Social Security plans to cut about 7,000 workers. That may affect benefits

Published

6 hours ago

March 3, 2025

Business Finance News

The Social Security Administration office in Brownsville, Texas.

Robert Daemmrich Photography Inc | Corbis Historical | Getty Images

The Social Security Administration plans to shed 7,000 employees as the Trump administration looks for ways to cut federal spending.

The agency on Friday confirmed the figure — which will bring its total staff down to 50,000 from 57,000.

Previous reports that the Social Security Administration planned for a 50% reduction to its headcount are “false,” the agency said.

Nevertheless, the aim of 7,000 job cuts has prompted concerns about the agency’s ability to continue to provide services, particularly benefit payments, to tens of millions of older Americans when its staff is already at a 50-year low.

“It’s going to extend the amount of time that it takes for them to have their claim processed,” said Greg Senden, a paralegal analyst who has worked at the Social Security Administration for 27 years.

“It’s going to extend the amount of time that they have to wait to get benefits,” said Senden, who also helps the American Federation of Government Employees oversee Social Security employees in six central states.

Officials at the White House and the Social Security Administration were not available for comment at press time.

The Social Security Administration on Friday said it anticipates “much of” the staff reductions needed to reach its target will come from resignations, retirement and offers for Voluntary Separation Incentive Payments, or VSIP.

More reductions could come from “reduction-in-force actions that could include abolishment of organizations and positions” or reassignments to other positions, the agency said. Federal agencies must submit their reduction-in-force plans by March 13 to the Office of Personnel Management for approval.

Cuts may affect benefit payments, experts say

Former Social Security Administration Commissioner Martin O’Malley last week told CNBC.com that the continuity of benefit payments could be at risk for the first time in the program’s history.

“Ultimately, you’re going to see the system collapse and an interruption of benefits,” O’Malley said. “I believe you will see that within the next 30 to 90 days.”

Other experts say the changes could affect benefits, though it remains to be seen exactly how.

“It’s unclear to me whether the staff cuts are more likely to result in an interruption of benefits, or an increase in improper payments,” said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and a former public trustee for Social Security and Medicare.

Improper payments happen when the agency either overpays or underpays benefits due to inaccurate information.

Top Social Security official exits after refusing DOGE access to sensitive data

With fewer staff, the Social Security Administration will have to choose between making sure all claims are processed, which may lead to more improper payments, or avoiding those errors, which could lead to processing delays, Blahous said.

Disability benefits, which require more agency staff attention both to process initial claims and to continue to verify beneficiaries are eligible, may be more susceptible to errors compared to retirement benefits, he added.

Cuts may have minimal impact on trust funds

Under the Trump administration, Social Security also plans to consolidate its geographic footprint to four regions down from 10 regional offices, the agency said on Friday.

Ultimately, it remains to be seen how much savings the overall reforms will generate.

The Social Security Administration’s funding for administrative costs comes out of its trust funds, which are also used to pay benefits. Based on current projections, the trust funds will be depleted in the next decade and Social Security will not be able to pay full benefits at that time, unless Congress acts sooner.

The efforts to cut costs at the Social Security Administration would likely only help the trust fund solvency “in some miniscule way,” said Andrew Biggs, senior fellow at the American Enterprise Institute and former principal deputy commissioner of the Social Security Administration.

What President Donald Trump is likely looking to do broadly is reset the baseline on government spending and employment, he said.

“I’m not disagreeing with the idea that the agency could be more efficient,” Biggs said. “I just wonder whether you can come up with that by cutting the positions first and figuring out how to have the efficiencies later.”

Personal Finance

Student loan borrowers pursuing PSLF are ‘panicking.’ Here’s what to know

Published

7 hours ago

March 3, 2025

Business Finance News

Students walk through the University of Texas at Austin on February 22, 2024 in Austin, Texas.

Brandon Bell | Getty Images

As the Trump administration overhauls the student loan system, many borrowers pursuing the Public Service Loan Forgiveness program are worried about its future.

“There’s a lot of panicking by PSLF borrowers due to the uncertainty,” said higher education expert Mark Kantrowitz.

PSLF, which President George W. Bush signed into law in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

Here’s what borrowers in the program need to know about recent changes affecting the program.

IDR repayment plan applications down

Some borrowers’ PSLF progress has stalled

While the legal challenges against SAVE were playing out, the Biden administration paused the payments for enrollees through a forbearance, as well as the accrual of any interest.

Unlike the payment pause during the pandemic, borrowers in this forbearance aren’t getting credit toward their required 120 payments for loan forgiveness under PSLF. It’s unclear when the forbearance will end.

But while the applications for other IDR plans remain unavailable, borrowers in SAVE are stuck on their timeline toward loan forgiveness, Kantrowitz said. If you were on an IDR plan other than SAVE, you will continue to get credit during this period if you’re making payments and working in eligible employment.

The Education Department is now tweaking the applications to make sure all their repayment plans comply with the new court order, an agency spokesperson told CNBC last week.

It will likely be months before the Department has reworked all the applications and made them available again, Kantrowitz said.

Those who switch to the Standard plan will continue to get PSLF credit, but the payments are often too high for those working in the public sector or for a nonprofit to afford, experts said.

‘Buy back’ opportunity can help

While it’s frustrating not to be inching toward loan forgiveness for the time being, an option down the road may help, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

The Education Department’s Buyback opportunity lets people pay for certain months that didn’t count, if doing so brings them up to 120 qualifying payments.

For example, time spent in forbearances or deferments that suspended your progress can essentially be cashed in for qualifying payments.

The extra payment must total at least as much as what you have paid monthly under an IDR plan, according to Studentaid.gov.

Borrowers who’ve now been pursuing PSLF for 10 years or more should put in their buyback request sooner than later, Kantrowitz said.

“The benefit is likely to be eliminated by the Trump administration,” he said.

Keep records

Borrowers have already long complained of inaccurate payment counts under the PSLF program. While the student loan repayment options are tweaked, people could see more errors, Kantrowitz said.

“A borrower’s payment history and other student loan details are more likely to get corrupted during a transition,” he said.

As a result, he said, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov.

“It would also be a good idea to create a spreadsheet showing all of the qualifying payments so they have their own count,” Kantrowitz said.

With the PSLF help tool, borrowers can search for a list of qualifying employers and access the employer certification form. Try to fill out this form at least once a year, Kantrowitz added.

Personal Finance

Treasury Department halts enforcement of BOI reporting for businesses

Published

10 hours ago

March 3, 2025

Business Finance News

The US Treasury building in Washington, DC, US, on Monday, Jan. 27, 2025.

Stefani Reynolds | Bloomberg | Getty Images

The U.S. Department of the Treasury on Sunday announced it won’t enforce the penalties or fines associated with the Biden-era “beneficial ownership information,” or BOI, reporting requirements for millions of domestic businesses.

Enacted via the Corporate Transparency Act in 2021 to fight illicit finance and shell company formation, BOI reporting requires small businesses to identify who directly or indirectly owns or controls the company to the Treasury’s Financial Crimes Enforcement Network, known as FinCEN.

After previous court delays, the Treasury in late February set a March 21 deadline to comply or risk civil penalties of up to $591 a day, adjusted for inflation, or criminal fines of up to $10,000 and up to two years in prison. The reporting requirements could apply to roughly 32.6 million businesses, according to federal estimates.

The rule was enacted to “make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures,” according to FinCEN.

In addition to not enforcing BOI penalties and fines, the Treasury said it would issue a proposed regulation to apply the rule to foreign reporting companies only.

President Donald Trump praised the news in a Truth Social post on Sunday night, describing the reporting rule as “outrageous and invasive” and “an absolute disaster” for small businesses.

Other experts say the Treasury’s decision could have ramifications for national security.

“This decision threatens to make the United States a magnet for foreign criminals, from drug cartels to fraudsters to terrorist organizations,” Scott Greytak, director of advocacy for anticorruption organization Transparency International U.S., said in a statement.

Greg Iacurci contributed to this reporting.