When President Biden signed EO 13985 calling for all federal agencies to conduct a top-to-bottom review to identify potential barriers that Americans may face when benefitting from government policies, he acknowledged the need to do far more to expand opportunity for all Americans. The lasting legacies of policies that intentionally excluded people of color and women and the disproportionate impact of structural economic shifts that eliminated good paying jobs in rural communities and urban centers show that the path for families and businesses to reach their full economic potential often depends on local context and circumstances. President Biden’s focus on reaching underserved people and places is grounded in the understanding that being intentional about the scope and design of policies and programs helps produce better outcomes for all Americans. A one-size-fits-all approach leaves many Americans out, denying communities the benefits of neighbors working and investing in small businesses.
President Biden’s call to remove barriers for the underserved preceded four generational investments in the American economy: the American Rescue Plan, the Bipartisan Infrastructure Law, the Chips and Science Act, and the Inflation Reduction Act. Under Secretary Yellen’s leadership, Treasury has used these investments as opportunities to unlock the economic potential of people and places that have long been overlooked. And, last week, Treasury released the 2024 Racial Equity Report detailing the impact of our efforts for all Americans. Here are 10 highlights from the report:
- The Expanded Child Tax Credit and other policies in the American Rescue Plan Act cut child poverty by more than half for Black and Hispanic children. Expanding and making the CTC fully refundable cut child poverty rates to historic lows for children of all backgrounds. Because Black and Hispanic children are concentrated in lower income quartiles, the impact for them was particularly dramatic. Both Black and Hispanic poverty rates were cut from nearly 20 percent in 2019 to 8 percent in 2021 thanks in part to the expanded Child Tax Credit in effect that year.[i]If the expanded CTC had been in place in 2022, the child poverty rate would have been 4.0 percentage points lower than it was, equating to 3 million fewer impoverished children.
- A focus on renters and homeowners has kept more than 12 million families in their homes in the wake of COVID-19. The Emergency Rental Assistance (ERA) program provided assistance to more than 12.3 million renting families in need through Q2 2023. More than 60% of ERA assistance went to communities of color and more than 66% of ERA assistance went to female-headed households. The Homeowner Assistance Fund (HAF) program provided assistance for nearly 400,000 homeowners at risk of foreclosure. As of Q2, 50% of HAF assistance was delivered to very low-income homeowners; 35% self-identified as Black, 18% self-identified as Latino, and 59% self-identified as female.
- A new IRS tool enables families in 12 states to file their taxes for free directly with the IRS. During the 2024 filing season, the IRS piloted Direct File, a new tool that allows eligible taxpayers to file their tax returns online, for free, directly with the IRS. Direct File is one way the IRS is helping taxpayers get their refunds more quickly and access all the credits and deductions to which they are entitled. The new tool is available in English and Spanish for eligible tax filers with Social Security Numbers or Individual Tax Identification Numbers (ITINs). Customer service functions, including a live chat feature, are also available in English and Spanish.
- In filing season 2024, the IRS exceeded customer service goals, making it easier for families to get their refunds in a timely manner. Thanks to the Inflation Reduction Act, the IRS has the resources needed to dramatically improve customer service and support. The IRS cut phone wait times to three minutes, answered more than 1 million more calls through live assistance, and served more than 170,000 additional taxpayers in person at Taxpayer Assistance Centers compared to last filing season. By resolving taxpayer issues more quickly, families get their refunds faster.
- Treasury is supporting the creation of good jobs in the clean energy sector. The Inflation Reduction Act amended or created several clean energy tax incentives so that the base amounts of the incentives are increased by five times if certain prevailing wage and registered apprenticeship requirements are met. This marks the first time that workers on projects supported by clean energy tax incentives are benefitting from protections on pay that have long benefitted workers on projects supported by federal contracts. In August 2023, Treasury published proposed rules to implement these requirements, which included incentives for employers to adopt worker-centric practices and to use Project Labor Agreements for clean energy projects. Treasury’s guidance to implement this critical piece of the Inflation Reduction Act ensures that workers benefit from the clean energy economy they are building.
- Treasury has ensured mission-driven lenders received [$12] billion to support community projects and local businesses. Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) make loans to financially underserved communities and businesses. Through the Emergency Capital Investment Program (ECIP), Treasury invested nearly $9 billion in 175 community financial institutions across the country, including $1.6 billion invested in Latino-owned and Latino-majority shareholder depository institutions and $1.4 billion invested into Black-owned and Black-majority shareholder depository institutions. Based on preliminary analysis, investments across the entire ECIP portfolio could increase lending in Latino communities by nearly $50 billion over the next decade and lending in Black communities up to nearly $80 billion over the next decade. In addition, the CDFI Fund made $1.25 billion in grants to CDFIs through the Rapid Response Program and close to $1.75 billion in grants to CDFIs through the CDFI Equitable Recovery Program (ERP). Just one example of the expected impact of the CDFI ERP, 179 recipients that committed to provide lending and development services to minority individuals or to minority-owned or controlled businesses received a total of $420.6 million in awards.[ii]
- State Small Business Credit Initiative (SSBCI) jurisdictions have deployed over $1 billion as of the end of 2023. SSBCI is a nearly $10 billion investment in small businesses nationwide, catalyzing lending and investment in small businesses, ecosystems of opportunity and entrepreneurship, high-quality jobs, and opportunities for entrepreneurs to build generational wealth. As of the end of 2023, more than $1 billion has been lent to or invested in small businesses or has been spent or formally committed to support programs and venture capital funds that will support small businesses across states, territories, the District of Columbia, and Tribal governments. SSBCI also allocates over $2 billion in funding and incentives to support underserved businesses and jurisdictions that successfully reach those businesses. Preliminary data as of April 2024 suggests that of the 47 venture capital funds that have received an SSBCI capital commitment, 29 are either owned or managed by traditionally underserved fund managers or have an investment strategy that includes a focus on supporting companies with traditionally underserved founders and leaders.
- Treasury’s strategic partnerships with private companies and philanthropy are bringing billions in additional capital to support small businesses and mission lenders. Treasury has engaged extensively with the private sector and philanthropic organizations as a force-multiplier on Departmental racial equity efforts. For example, the Economic Opportunity Coalition announced a new goal to secure $3 billion in committed deposits by fall of 2024 from companies for community lenders with a proven record of reaching low-income, rural, and other underserved communities. The Initiative for Inclusive Entrepreneurship (IIE), launched an investment fund to leverage $80 million in private and philanthropic capital to help the Department’s State Small Business Credit Initiative expand access to capital for underserved small businesses.
- Treasury is opening doors to making it easier to become a vendor. In 2023 and 2024, Treasury bureau procurement offices began using data-driven tools to define their small business marketing strategy and establish performance measures. By reducing barriers and enhancing outreach, Treasury obligated over $1.2 billion in prime contracting dollars to small, disadvantaged businesses in Fiscal Year 2023, a $244 million increase over Fiscal Year 2022.
- Treasury is making renewable energy accessible to low-income communities. The Low-Income Community Bonus Tax Credit provides a significant incentive to deploy renewable energy technology in low-income communities, on Indian lands, as part of affordable housing, and benefitting low-income households. Treasury prioritized at least 50 percent of the program’s capacity for energy facilities in areas with the highest energy costs and the least investment and energy facilities owned by Tribal enterprises, non-profits including local and Tribal governments, consumer or worker cooperatives, and emerging market businesses. In its first year, the program received over 46,000 applications within the first 30 days.
[i] U.S. Census Bureau. 2023. Table B-2 – Number and Percentage of People in Poverty Using the Supplemental Poverty Measure by Age, Race, and Hispanic Origin: 2009 to 2022. Current Population Survey, 2010 to 2023 Annual Social and Economic Supplements (CPS ASEC). Last accessed February 29, 2024.
[ii] For more information, please see CDFI Fund. (2022b). CDFI ERP AWARD BOOK. https://www.cdfifund.gov/sites/cdfi/files/2023-08/FY_21_ERP_Award_Book_Final_072023.pdf