Yellen Says Universal Pre-K Working Income Tax Credit Is Core to Build Back Better


Treasury Secretary Janet Yellen pauses during testimony before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill in Washington, U.S., November 30, 2021. REUTERS /Elizabeth Frantz

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WASHINGTON, Jan 21 (Reuters) – U.S. Treasury Secretary Janet Yellen said on Friday that two years of universal early childhood education and an expanded tax credit were key elements of the Build Back Better plan of 1, $7 trillion which is still being negotiated with Congress.

US President Joe Biden said this week he must break the signature legislation, passing much of it now and other measures later this year, after facing opposition from fellow Democrats , Senators Joe Manchin and Kyrsten Sinema.

Biden on Wednesday cited strong support for spending the $555 billion climate change bill and noted that Manchin supports early childhood education, but admitted that two-year community college funding plans free and a child tax credit would likely be dropped to secure the pass.

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Yellen said final details were still being worked out with lawmakers, but called “essential” Biden’s proposals to provide two years of universal pre-kindergarten, expand care for the elderly, cap childcare expenses for most families to 7% of their income and extending the earned income tax credit.

These measures would strengthen household economic security and spur economic growth, while encouraging low-income workers to seek employment, Yellen told an event organized by the World Economic Forum, omitting any mention of the expansion of child tax credit payments favored by progressive and moderate Democrats. , but opposed by Manchin.

The child tax credit is a credit for having dependent children under the age of 17. The Earned Income Credit (EIC) is a credit for certain low-income taxpayers, with or without children.

Yellen’s remarks at a virtual event hosted by the World Economic Forum revealed the emerging framework for a slimmed down version of Biden’s original Build Back Better plan.

She said social spending would help reverse the continued decline in U.S. labor force participation, which has been driven down by early retirements and some younger and middle-aged workers remaining.

Biden made a big push in December to push the spending bill through Congress, with higher taxes on big business and wealthy Americans meant to cover the cost.

But the bill’s progress was stalled when Manchin, a conservative Democrat from West Virginia, withdrew his support in December after citing concerns about the deficit and inflation.

With all 50 Republicans in the 100-seat Senate opposed to the spending bill, the White House must win over Manchin and all other Democratic holdouts. If successful, Democratic Vice President Kamala Harris could vote in the event of a tie.

Manchin indicated earlier this month that he was supporting $555 billion in climate spending, including production tax credits for the solar and wind industries, which are considered essential to ensure that the United States achieve their 2030 emissions reduction targets.

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Reporting by Andrea Shalal and David Lawder; Editing by Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

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