88% of children will be covered by monthly payments

Yahoo Finance’s Rick Newman joins the Yahoo Finance Live panel to discuss the news that 88% of children will be covered by monthly payments starting in July as part of President Biden's COVID relief plan.

Video Transcript

ZACK GUZMAN: All right, as part of President Biden's COVID relief package, 39 million American families are set to feel the boost of extended child tax benefits. According to the Treasury Department, monthly payments of up to $300 per child are slated to begin for qualifying parents beginning July 15. And for more on that, I want to bring on Yahoo Finance's Rick Newman, who has the latest. Rick.

RICK NEWMAN: Hey, yeah, the new thing about this, Zack, is really that this used to be a tax credit that you would claim the following year when you did your taxes. So you would get the money, but it would be after the fact. And it came amid the tedium of filling out your tax forms. What's new-- and this was part of the American Rescue Plan that Congress passed in March-- is this is now going to be an advanceable credit.

At least, half of it is. So instead of waiting until next year when you file your taxes, if you qualify, you're actually going to get either a check in the mail or a direct deposit into your bank account for half of what you qualify for. This is temporary. It's going to go from starting in July through December. So for six months, 39 million families are going to get some extra money from the government. And then it expires.

So you are going to hear Democrats. For sure, President Biden wants to make this-- he wants to extend this all the way through 2025. And that's going to be one of the things they're arguing about in Congress as they talk about Biden's legislative agenda for the next several months.

ZACK GUZMAN: Yeah, and when you talk about this kind of being a piece of that $1.8 trillion package that was passed here-- or actually, it's a piece of the package that he's proposing to extend it through 2025. I mean, you start to add up these costs-- about $100 billion a year, if you do expand that. I mean, at what point do we start to reel in? It seems like we're already seeing that in kind of the infrastructure debate here. But it seems like we are now starting to approach kind of that push back where it does seem like at some point, President Biden is going to chop some of these things, in terms of the social programs he wants to push through, off the table to kind of meet Republicans in the middle.

RICK NEWMAN: Right, so I think the real battle here-- I mean, clearly, Biden and many Democrats, they want to make these kinds of benefits permanent. I mean, this is not exactly Universal Basic Income, UBI, but it's a form of it. I mean, it's basically a subsidy for people with kids. So, you know, this is kind of a societal question. Is this something that we feel that taxpayers ought to finance on an ongoing basis or not? So, you know, where do you come down? Is this reckless overspending? Or is it generous and overdue? We're going to find out.

But when you think about this, I think this is politically shrewd. A bunch of-- you know, millions of voters are going to get a check from the government that helps them bear the cost of having kids. And then it's going to expire. So this is going to be a huge political battle. You can see how this is going to shape up. Democrats are going to say, if you want to keep getting these checks, you need to keep us in power and go with us. And Republicans are going to say, we can't afford this as a country, you know? People just need to work harder, I guess.

ZACK GUZMAN: Yeah, and as you said, I mean, getting a check in the mail very different than filling out your tax return and getting a finite number there. After all of the tough calculations that go into it, not exactly the same effect. But Rick Newman, appreciate you coming on here to chat that with us today.