Congress' Lame Duck Session Leaves Unresolved Issues Affecting Americans' Financial Well-Being

Washington lawmakers are working quickly to get as much done as possible before the end of the year and the lame-duck session of Congress.

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Some changes that are being considered could have a big impact on Americans’ finances, specifically some updates to retirement savings that could be included in a year-end spending bill. Some proposed initiatives have not been approved, which may have a significant financial impact on individuals and families until Congress has the opportunity to revisit them. Secure 2.0 bill on track to usher in retirement system improvements New retirement legislation leaves a 'huge problem untouched' New emergency savings rules may help boost financial security.

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Despite efforts by many policymakers, the year-end omnibus package that would keep the government funded through much of 2023 largely left out policy advances that would address the everyday needs of low-income people and families. This is according to Sharon Parrott, president of the Center on Budget and Policy Priorities.
There is still much work to be done in order to fully address the issues facing the country, according to Speaker Pelosi. She called on lawmakers from both parties to come together and work towards solutions in the coming year.

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The issues that didn't make it onto the agenda this year may come up again in 2023. A year ago, in December, millions of families received their last monthly child tax credit checks. The Covid-19 pandemic has had a profound impact on families across the country. In response, lawmakers have enacted legislation to help parents cope with the financial challenges they are facing. For the 2021 calendar year, the child tax credit has been made more generous, and for the first time, advance monthly payments are available. This will provide much-needed relief for families struggling to make ends meet.

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The maximum child tax credit has increased from $2,000 to $3,600 for children under the age of 6, and from $2,000 to $3,000 for children aged 6 to 17. Families will receive monthly payments of up to half of the total credit, which will be $300 for children under 6 and $250 for children aged 6 to 17. Importantly, the credit was also made available to families with little to no income, which helped reduce child poverty. Now, negotiations to renew more generous terms for the tax credit have fallen flat.

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One key reason why the effort to repeal the Affordable Care Act failed is that lawmakers had hoped to attach it to corporate tax breaks. However, those tax breaks were not ultimately considered as part of the repeal effort.
"There's no question that the exclusion of the child tax credit is the biggest and most unfortunate exclusion for the year," said Chuck Marr, vice president of federal tax policy at the Center on Budget and Policy Priorities.

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Marr noted that the 2021 expansion of the child tax credit was very successful in driving down child poverty to a record low and helping families meet record costs.
Marr believes that a compromise could have been reached, but unfortunately it did not happen. There is a silver lining to the recent corporate tax breaks: the same compromise to extend the child tax credit may come up again in 2023.

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Some lawmakers have insisted that the child tax credit be included in any new tax legislation. "We need to make sure that any tax cuts for corporations are matched by tax cuts for working families," Sen. Sherrod Brown, D-Ohio, recently said. Some leaders want to see more rules attached to the child tax credit, such as work requirements, which could mean any new policy may be less generous than the 2021 expansion. However, compromise may be necessary to get any new policy passed.

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According to Shai Akabas, director of economic policy at the Bipartisan Policy Center, conversations about the economy are set to begin early next year and continue throughout the year. This year marks the 50th anniversary of Supplemental Security Income (SSI), a federal program that provides benefits to the elderly, blind and disabled. Since its inception, SSI has helped millions of Americans live better lives by providing them with much-needed financial assistance. As we celebrate this milestone, we must also remember that there is still more work to be done to ensure that all Americans have the opportunity to thrive.

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A bill from Senators Brown and Portman of Ohio would raise the asset limits for beneficiaries to $10,000 for individuals and $20,000 for couples, while also indexing them for inflation. Despite high hopes from advocates, that proposal did not make the cut in year-end legislation. Today, the program's asset limits are $3,000 per couple and $2,000 for individuals. This not only limits the amount of savings beneficiaries may have, but also imposes a marriage penalty on beneficiaries.

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"The SSI asset limit is one of the most punitive and archaic measures in federal law today," said Rebecca Vallas, senior fellow at The Century Foundation and co-director of the think tank's Disability Economic Justice Collaborative. "This limit prevents people with disabilities from saving for their future, and it creates a barrier to economic security and independence."

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"Despite this, we still see a lack of sufficient political will to allow people with disabilities to save," Vallas said.
The future of the proposal is uncertain since Portman is retiring this year and it is unclear whether another Republican leader will take his place and support it, Akabas said. "It will likely be some time before that gets another opportunity," Akabas said.

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The year-end budget deal provides additional funding for the Social Security Administration, but Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, recently wrote that it is "barely enough to tread water."
The deal includes an increase of 6% over the agency's 2022 funding level, Romig said. President Joe Biden had requested an increase of 11% over the agency's current funding level, she noted. House and Senate committees had also backed more funding for the agency.

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According to Romig, the additional funding could have helped the Social Security Administration reduce its backlog and long waits for service by updating its technology systems and hiring new staff. Instead of getting the Social Security and other benefits they've earned, applicants and beneficiaries will have to wait another year for them, Romig wrote. According to Akabas, Congress is unlikely to revisit funding for the Social Security Administration until next fall.

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New retirement proposals that are poised to move forward now include a boost for emergency savings. Plan providers will be able to automatically enroll employees in separate accounts where they can set aside up to $2,500 for near-term needs alongside their retirement funds. Another provision would let plan participants withdraw $1,000 per year for emergencies without penalty, though some restrictions would apply.

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A proposal that would allow for separate standalone emergency funds outside of retirement accounts did not make it into the legislation. This would help nearly 50 million workers who do not have workplace retirement plans to set aside emergency funds, according to Akabas. He said that the proposal likely did not make it into the year-end legislation because it is still being crafted. I am hopeful that in the next year or two, other legislation will be passed. Akabas said this cautiously, as he does not want to make any promises that may not be kept.