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Update on the Stimulus Check: What Happens if the Government Shuts Down!

How Months of Talks Between Biden and Manchin Over Build Back Better Broke Down

WASHINGTON, DC - OCTOBER 28: U.S. President Joe Biden delivers remarks about his proposed ‘Build Back Better’ social spending bill in the East Room of the White House on October 28, 2021 in Washington, DC. Earlier in the day Biden met with House Democrats on Capitol Hill to share details of the $1.75 trillion package which does not include several progressive priorities that were dropped from the legislation during recent negotiations. (Photo by Chip Somodevilla/Getty Images)

Back in September, Congress passed a budget measure funding the federal government until today, Dec. 3. They pushed it back again yesterday night, agreeing to keep the government open until mid-February.

Given the present politicized atmosphere, it was unclear if the two chambers could agree. Just last week, Republican senators stated they intended to shut down the government to delay the president’s vaccination and testing requirement. Even still, neither party would have wanted to be blamed for closure at a time of economic improvement.


What happens next? Why not wait until mid-February? The Child Tax Credit (CTC) will be extended next year if President Biden’s Build Back Better Plan succeeds. What happens if the government shuts off the lights?

Plan B

When a government shutdown is imminent, agencies devise contingency plans to minimize the damage. The IRS, part of the federal government, develops a plan for CTC and Social Security payments.

Good news

As of now, all planned CTC payments will be made, even if our elected leaders in Washington cannot agree on how to fund the government. Why? Some programs and tax incentives are fiscal years financed. Other programs have no “end date” since they are funded indefinitely.

Tax credits will be paid even if the government shuts down in February. The American Rescue Plan funds do not expire at the end of the fiscal year, therefore they are not affected by a government shutdown.

The IRS says it would keep a small number of employees working even if the government shuts down to guarantee payments are made.

Aside: Social Security payments are likewise paid out of indefinite appropriations, so beneficiaries may receive their monthly payments whether or not the government is closed.

CTC works
After the first Child Tax Credit payment in July, ParentsTogether Action conducted a study. Receiving that initial cheque relieved financial worries for 56% of families polled. More than half said the tax credit was “significant,” and 40% said it benefited their family’s finances.

Moreover, Treasury Secretary Janet Yellen told Congress this week that the initial inspections in July reduced food insecurity by 24%. “A huge economic and moral success for the nation,” Yellen said.

Will the CTC be extended?

The key concern is whether the Child Tax Credit will be extended beyond 2022. Initially, Biden proposed for a five-year extension of the tax credit, but Republicans and conservative Democrats objected.

If the president’s Build Back Better Plan is approved, CTC monthly payments will be extended until 2022 and then made permanent for low-income families. This month’s credit is expected to go to Republican legislators and two Democrats, Sens. Joe Manchin and Krysten Sinema, who want big changes to the president’s planned plan.

In the United States, 3.6 million children live in poverty, according to the Center on Budget and Policy Priorities. The figure rises to 4.1 million if the maximum credit is raised to $3,600 per kid.

Those figures are hard to dispute.

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