The poorest kids in the country miss out on the full benefits of the expanded child tax credit in the "big beautiful bill."

Why it matters: The bill now making its way to the Senate provides more tax breaks to higher earners than those at the bottom.

By the numbers: The Republican bill raises the maximum child tax credit to $2,500 per child from $2,000 for three years.

• 20 million children would not fully benefit from the increase, according to an analysis from the Center for Budget and Policy Priorities (CBPP), since their parents don't earn enough income to get the maximum amount.

"A majority of those children get nothing from the proposed expansion," says Kris Cox, director of federal tax policy at the CBPP.

• 17 million children as of now do not receive the full benefit from this tax credit, per the CBPP. None of them will get anything from the expansion.

How it works: Under current law, families need upward of $30,000 a year to receive the full tax credit amount, explains Joe Hughes, senior analyst at the Institute on Taxation and Economic Policy.

• Parents who are poor and don't owe income taxes can only claim up to $1,700 per child, known as the "refundability cap." It's a number which adjusts annually for inflation.
• The new bill didn't raise the refundability cap. Instead, it only increases the maximum that parents, earning less $400,000 a year, can claim.
• A married couple filing jointly would need to earn $48,550 to get the full tax credit under the new bill, per CBPP estimates. Under current law, a married couple needs to earn $36,800.

A married couple with two children earning $400,000 a year would get an additional $1,000 tax credit.

• A single parent with two children, earning $24,000 a year, would get nothing, Cox notes in a recent Bluesky post.

The other side: The standard defense here is that low-income Americans don't pay very much in taxes. Their tax burden is low, and they shouldn't get the full credit because they don't need the tax relief.

• White House spokesman Kush Desai says wealth inequality decreased after the 2017 tax bill, and the new legislation would lock that success in place.
• He adds that it builds on that success "by eliminating taxes on tips and overtime in addition to rewarding American manufacturing with full equipment and factory expensing to turbocharge America's economic resurgence."

Between the lines: This big bill faces big hurdles ahead in the Senate — and the bond market — and it's not clear what will eventually make it through.

The intrigue: The legislation also blocks another 4.5 million children from benefiting from the child tax credit because now to claim it, both parents, if they are filing jointly, must have Social Security numbers.

• Under current law, parents who don't have Social Security numbers can claim the credit if their child has one. For instance, a parent who is a non-citizen immigrant and files taxes with an ITIN number can claim it.
• Before 2017, any parent filing taxes could claim the credit. But when Congress changed the law in the first Trump tax bill, 1 million citizen children lost out, Cox says.

The bottom line: An expanded child tax credit benefits plenty of middle and upper-middle class parents, but the poorest don't catch a break.

One of the riskiest and most speculative trades in financial markets just got a major boost by President Trump, when he announced Wednesday evening he is "giving very serious consideration to bringing Fannie Mae and Freddie Mac public."

Why it matters: The implication is that Trump has decided "the time would seem to be right" to end the conservatorship under which the two companies have operated since the financial crisis of 2008.

• That could mean profound changes to the structure of the mortgage market in the U.S. as well as the potential windfall for owners of their thinly traded common stock.

The big picture: The U.S. government controls both companies. Between them they owe the Treasury hundreds of billions of dollars in something known as a liquidation preference, money they have kept on their balance sheets since the Treasury started letting them to retain all of their earnings in 2019.

• For privatization advocates like hedge-fund billionaire Bill Ackman, that's all money that the federal government should forgive.
• The so-called senior preferred securities owned by the Treasury should be "deemed repaid," he says in a detailed presentation he released in January.
• On the other hand, as JPMorgan managing director Sajjad Hussain notes in an analysis published following Ackman's presentation, "the feasibility and willingness to write off $340 billion owed to taxpayers may not be viable in the current political climate."

Between the lines: Trump does seem broadly sympathetic to Ackman's view that the government has already been repaid enough for the 2008 bailout.

• "The idea that the government can steal money from its citizens is socialism and is a travesty," Trump wrote in a letter back in 2021, implying the money getting claimed by the Treasury is in some way illegitimate.
• For his part, Ackman reacted with a 👍 emoji to Trump's statement on taking the agencies public. (Both stocks rose more than 40% yesterday.)

What's next: Trump administration officials have now been charged with finding a route out of conservatorship for the agencies, one that doesn't destabilize the housing market or unnecessarily raise mortgage rates.

• And in order for that to happen, some sort of government guarantee will likely have to remain in place, probably in the form of Senior Preferred Stock Purchase Agreements, under which the government promises to inject cash into the companies should they ever need it.
• So long as that guarantee remains, Fitch Ratings says, their credit ratings may not need to be adjusted downward. But that said, the ratings agency "expects the process of exiting conservatorship to extend multiple years in order to minimize potential disruption to the U.S. housing market."

The bottom line: Many presidents and many Treasury secretaries have proclaimed a desire to remove Fannie and Freddie from conservatorship.

• Thus far, none of them have found a way to do so, but the stock market seems to believe this time might be different.

While it's possible the U.S. government will save money by abolishing the penny, no one really knows for sure, since there's no sign the nickel will be abolished at the same time.

Why it matters: When the penny leaves, demand for nickels will rise.

• While the government loses 2.7 cents on every penny it mints, it loses 8.8 cents on every nickel, per the New York TImes.

Follow the money: "The economic case for eliminating the penny depends crucially on how payment behavior adapts to its absence," the University of Toronto's Josh Gans writes in a paper titled "Eliminating the Penny Could be Costly."

• Gans calculates that if over 40% of the value of penny usage is replaced by nickel usage, then abolishing the penny will actually cost the government money.

The bottom line: Abolishing the penny could end up a false economy, unless the nickel is next in line.