Congress Is Debating A New Stimulus Package, But Is It A Good Idea?

The economy is still on uncertain ground and tax season is rapidly approaching, so it’s not surprising that many Americans are worried about their personal finances. For their part, lawmakers across the political spectrum seem to be aware of this public sentiment and there’s some discussion about whether a new budget deal should include roughly $70 billion in incentives like tax breaks for households and businesses.

What would it mean?

Giving struggling families and entrepreneurs a boost would certainly address some short-term problems, but critics say it could also prolong the broader economy’s rough patch. Specifically, more spending would likely fuel inflation, which ticked higher than expected last month.

The debate is on … and time is starting to run out. A pair of upcoming deadlines (Jan. 19 and Feb. 2) will determine whether there’s a government shutdown. And if the stimulus is approved, it would likely address a couple of key groups:

• Tax breaks for businesses: One aspect of the proposed deal would reintroduce incentives meant to spark investment in domestic companies, though naysayers wonder whether the payoff would be worth the cost.
• Expanded child tax credit: Although the current proposal falls short of a tax credit for parents that was implemented during the pandemic, if approved it would still constitute an increase from the maximum available right now.

What does the White House think?

Although the debate is playing out on Capitol Hill, any legislative deal would have to be signed by President Joe Biden. And his National Economic Council director is pushing for a “balanced package.”

According to a recent statement from Lael Brainard, the “critical” element for Biden “is that the child tax credit be extended and particularly be made available for low and moderate income families, because it is so powerful in reducing child poverty.”

Chris Agee January 16th, 2024

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