Final Stimulus Questions Answered: Child Tax Credit, Inflation Risks and the State of Bipartisanship

The House is poised to send the $1.9 trillion Covid-19 relief plan to President Joe Biden for his signature, providing an economic boost that will last long after $1,400 stimulus checks start arriving in Americans’ accounts this month.

With four days until supplemental unemployment benefits begin running out, House Democratic leaders are planning for passage Wednesday. While a Republican congresswoman delayed the schedule, the final vote is still expected in the afternoon.

The bill is far bigger than initial Wall Street expectations of what could be accomplished in a closely divided Congress. It provides a template for a potential longer-term expansion of an American social-safety net that has long been much smaller than its European counterparts. Democrats say the near-$110 billion temporary expansion of the child-tax credit will help cut child poverty in half, while tax forgiveness on jobless benefits and student-debt relief will give help to millions more.

Economists this week were upping their projections for growth to incorporate the impact. Morgan Stanley on Tuesday raised their 2021 forecast for U.S. economic growth to 7.3% from 6.5%, a pace unsurpassed since the Korean War boom in 1951. The OECD the same day more than doubled its own estimate.

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