Remarks as prepared for delivery:
Thank you to Inclusiv CEO Cathie Mahon and Pablo DeFilippi, both of whom I’ve had the pleasure of working with for many years, for inviting me to the Inclusiv Annual Conference. I also want to recognize the important partners here, including CUPride, African American Credit Union Coalition, and the National Association of Latino Credit Union Professionals. The work of community development credit unions is deeply important to advancing our shared vision for a more equitable economy. In fact, the work you all do is growing in importance – delivering mission-driven capital to communities that have lacked the resources needed to invest in their future is at the heart of Treasury’s strategy to expand economic opportunity for all. I am so glad you chose Puerto Rico as the location for this year’s conference – the work of cooperativas is having a clear impact on the distribution of capital and the economic recovery of the island.
From day one, racial equity has been a priority for the Biden-Harris Administration, and for good reason. The failure to invest in communities that have been underserved is money left on the table; it is a drag on our national economy.
For Treasury to realize its goals for an inclusive and resilient economy, it must consider how to create opportunity for all Americans – including those at the greatest risk of being left behind. Secretary Yellen has been clear on this point: far too often, the economy has not worked well for Black, Latino, AAPI and native communities. Rural communities, those impacted by climate change and natural disasters, people with disabilities, and many who identify as LGBTQ have also seen limits on their ability to participate in the prosperity of our nation.
Our goal is to foster an economy where everyone can achieve financial security and reach their full economic potential. We will only get there by fixing the broken systems that sideline too many of our families, businesses, and communities. Community finance partners are critical to this mission. We know that community development credit unions reach deep into communities that would otherwise be underserved by mainstream financial services.
Executing on this vision is both a great challenge and a defining opportunity – and it comes at a critical time. When the pandemic hit, Black and Latino workers saw the largest increases in unemployment rates, with the Black unemployment rate peaking at 16.8 percent in May 2020 and Latino unemployment rate peaking at 18.8 percent in April 2020. Here in Puerto Rico, the unemployment rate was around 9 percent in May 2020. The Administration quickly got to work with Congress to pass the American Rescue Plan to infuse $1.9 trillion into the economy to get families back to work safely, help local communities recover, and provide a lifeline to small businesses hit hard by the pandemic.
From the outset, community finance partners like community development credit unions played a critical role in this strategy. High-impact efforts include:
- Treasury’s CDFI Rapid Response Program, which provided $1.25 billion in COVID relief funds to 863 CDFIs.
- The Emergency Capital Investment Program (ECIP), which is designed to build the capacity of CDFIs and MDIs to provide capital to communities that struggled the most during COVID-19. In December 2021, Treasury announced $8.7 billion in investments through the ECIP, marking an unprecedented investment that will strengthen CDFIs and MDIs and position these institutions to make new loans to promote inclusive economic development as the economy recovers.
- Treasury is currently reviewing state plans to administer $10 billion through the State Small Business Credit Initiative. Building on the first iteration of SSBCI, this round includes $2.5 billion targeting businesses owned by socially and economically disadvantaged individuals.
- The CDFI Fund has continued to make available hundreds of millions of dollars through is regular annual program rounds and will soon be making available $1.75 billion that will promote an equitable recovery by supporting lending to borrowers with significant unmet capital and financial services needs that have experienced disproportionate economic impacts from the COVID-19 pandemic.
In addition, the State and Local Fiscal Recovery Funds have provided a fiscal lifeline to Puerto Rico. The program allocated a little over $4.0 billion to Puerto Rico, including $2.5 billion for the Commonwealth and $1.5 billion for the Island’s municipalities. The aid can be used for a broad range of services and capital expenditures that respond to the pandemic’s impacts and support economic growth, including support for job training, housing, childcare, and small business. And as I’ll talk about in a moment, these funds can also be used to support outreach efforts to increase uptake of the Child Tax Credit. Treasury is dedicated to helping governments in Puerto Rico deploy these funds.
Treasury has also provided significant support to help low-income Puerto Ricans stay in their homes through the Emergency Rental Assistance program, which has allocated over $550 million to Puerto Rico and has already made payments to more than 50,000 households.
Another crucial aspect of President Biden’s American Rescue Plan was to provide extraordinary supports through tax cuts to families with children, and low-income workers. Treasury and the IRS took extraordinary steps to reimagine the way the IRS serves families in Puerto Rico.
Specifically, the American Rescue Plan made historic, permanent changes to the Child Tax Credit for Puerto Rico families. Previously, only Puerto Rico families with three or more qualifying children could qualify for any Child Tax Credit benefit. This meant that, before the American Rescue Plan, only about 10 percent of Puerto Rico families qualified for any Child Tax Credit. The American Rescue Plan permanently removed that eligibility barrier by extending the Child Tax Credit to Puerto Rico families with fewer than three qualifying children. As a result of the American Rescue Plan, 97 percent of Puerto Rico families with children are eligible for the 2021 Child Tax Credit.
In addition, for 2021, the American Rescue Plan increased the Child Tax Credit to $3,600 per qualifying child under age 6 and $3,000 per qualifying child under age 18, thereby allowing 17-year-olds to qualify for the first time. The American Rescue Plan also made the Child Tax Credit fully refundable, which ensured that lower-income families could access the full credit.
Building the infrastructure to support Puerto Rican residents filing U.S. Federal income taxes for the first time is a challenge. We are especially grateful for the partners who have helped us spot and troubleshoot problems as they arise and lift up messages and tools to help residents file taxes. Many of you in this room also operate VITA sites or partner closely with VITA providers. I want to thank you for your help in ensuring that all families eligible for the Child Tax Credit can claim this benefit.
As we continue this work, we want to make clear that families in Puerto Rico can continue to claim the Child Tax Credit after last month’s filing deadline. In fact, families who don’t owe taxes to the IRS can file their 2021 tax return and claim the Child Tax Credit for the 2021 tax year at any point in the next three years without any penalty. Our efforts to enroll families in the Child Tax Credit are therefore continuing in the months ahead. As with any new program, we are responding to implementation issues as they arise, and we will continue to do so as we work to make sure that every eligible resident of Puerto Rico is able to access this benefit.
Last month we celebrated the one-year anniversary of the American Rescue Plan; there is a lot to be proud of. We’ve supported the economic stabilization of individuals and households during a period of deep uncertainty, and the economic support provided by ARP helped reinvigorate an economy that added 6.6 million jobs last year. We’re now seeing the unemployment rates for Black and Latino adults nearing their pre-COVID levels, and here in Puerto Rico, unemployment is the lowest it's been since 1976.
Given all we have been through and the economy showing promise, some may be tempted to let the hard truths surfaced by tragic and painful racial violence, such as the massacre in El Paso, the murder of George Floyd, and the random hate crimes against AAPI people, fade into the rearview mirror. The challenges we face today are rooted in our history of structural racism that left Black, Brown, AAPI, and native communities out of policies that built the middle class.
That’s one reason why it’s so important for federal agencies to tackle issues of racial equity head on. A key aspect of my role is to ensure the progress I described above is not fleeting with a single Administration. We are taking steps to weave racial equity into the fabric of Treasury. One way we are doing this is through the Treasury Advisory Committee on Racial Equity. As an official advisory committee, members will provide advice and recommendations to Treasury’s senior leadership on a wide range of topics essential to addressing wealth disparities and meeting the moment of opportunity to invest in the potential of our communities. We are also expanding internal efforts to recruit a Treasury workforce that reflects the diversity of our Nation and build our institutional capacity and expertise on racial economic issues.
Looking ahead, we must pivot from acute crisis mode to renewing our focus on building an economy that works for us all. Treasury cannot do this alone and looks to partners like Inclusiv and your members. Now is the time for us to make bold investments in people and families that will fuel our economy. I look forward to partnering with you on these endeavors and I wish you the best of luck for the rest of your conference!