At the end of last week, the White House ordered heads of federal departments and agencies prepare for a possible stop. For many, this involved updating their expiry of “contingency plan” allocations, which outline which functions will continue to be conducted during a government to close.
The Treasury Department updated its plans in August, after the debt ceiling suspension adopted in 2019, expired. This suspension is one of the key factors pushing the government towards a shutdown, as Republicans are steadfast in their opposition to another suspension.
What does the plan say about the payment of the child tax credit?
On the basis of the guidelines published by the IRS in their emergency plan, it does not seem likely that the Payment of the October child tax credit will be impacted.
There are specific programs and tax credits that Congress funds throughout the fiscal year, ending on September 30. Other programs, like Social Security, are paid from a “indefinite appropriation, and so [the IRS] may continue to make these payments for a period of to close. “
Likewise, the funds necessary for the distribution of the child tax credit have been allocated within the framework of the American rescue plan and do not run out after this exercise. The IRS says a certain subset of its workforce will be maintained to ensure that the distribution of payments is not interrupted.
The debt ceiling and the child tax credit
While a government shutdown does not prevent the distribution of child tax credit payments, the debt ceiling crisis could.
In August, when the debt ceiling suspension expired, the Treasury had to start using its “extraordinary”Funds to cover costs until Congress decides whether to suspend, increase or remove the debt ceiling.
In testimony on Capitol Hill this week, Treasury Secretary Janet Yellen warned lawmakers that “the Treasury is likely to exhaust its extraordinary measures if Congress has not acted to increase or suspend the debt limit on October 18. “
If the United States did not increase or suspend the debt ceiling by October 18, the country would default for the first time in history, Treasury Secretary Janet Yellen warned on Tuesday, which would lead to a self-inflicted economic recession and financial crisis. https://t.co/kKiY2mVM6H pic.twitter.com/I5kW6wbtEZ
– The New York Times (@nytimes) September 28, 2021
Without these funds in hand, “the Treasury would end up with very limited resources that would quickly run out. It is not certain that we can continue to respond to all nation’s commitments after this date. These commitments include the payment of the Child tax credit and many other essential benefits.
Asked by Ohio Senator Sherrod Brown specifically the impact this could have on the economy, Sec. Yellen responded by saying that it would be “have catastrophic economic consequences. “This would be the first time the United States has defaulted on its debt, which”would be disastrous for the US economy, for global financial markets and for millions of families and workers whose financial security would be in danger by late payments. Speaking directly about the child tax credit, the secretary said, “30 million families who rely on the child tax credit will not receive the monthly payment on time. “