The Biden administration revealed a $1.8 trillion spending and tax proposal that puts hundreds of billions of dollars toward child care, paid family and medical leave, tuition-free community college and a slew of other initiatives.
The families plan faces a difficult path in Congress. Many Republicans staunchly oppose additional large spending measures and balk at proposed tax increases. Democratic leaders also will be challenged in keeping their party’s lawmakers in line if they intend to get another major bill through the Senate by simple majority, as they did with a sweeping coronavirus relief bill in March.
The plan consists of roughly $1 trillion of investments and $800 billion of tax cuts. The White House says the proposal would be fully paid for over 15 years, though the math behind that timeline is somewhat unclear.
Here’s what’s in the American Families Plan, according to a White House summary and previous reporting by The Washington Post.
- The proposal sets aside $225 billion focused on child care.
- The funding would help families pay for child care on the basis of a sliding income scale. For example, low- and middle-income families would not pay more than 7 percent of their income on child care for children under age 5.
- The plan also invests in child-care providers and workers, including through a $15 minimum wage for early childhood staff.
- Many economists and lawmakers argue that a lack of child care is holding back the economic recovery. Closed day-care centers and schools have taken a disproportionately heavy toll on women, who often must choose between staying home with their children and returning to work.
- Biden’s plan would direct $200 billion to free, universal preschool for all 3- and 4-year olds.
- It also would allot $109 billion to cover two years of free community college.
- Still unclear is how the administration arrives at its math, and how long it would take for all preschoolers or community college students to be eligible for “universal” schooling.
- The proposal also would invest $85 billion in Pell grants. And it would increase the maximum Pell grant award by roughly $1,400, a 20 percent increase, which is short of Biden’s campaign pledge to double the grants but helps students at all schools on the basis of financial need.
- The plan sets aside additional funding to strengthen college retention rates. It also subsidizes tuition for students whose families earn less than $125,000 and who are enrolled in historically Black colleges and universities, tribal colleges and universities and other minority-serving institutions.
- The plan also is intended to support special-education teachers and those seeking certifications in bilingual education.
Paid family and medical leave
- The “families plan” directs $225 billion over a decade toward paid family and medical leave. It would provide workers up to $4,000 a month, when they take family or medical leave, with a minimum of two-thirds of average weekly wages replaced, rising to 80 percent for the lowest-wage workers.
- Within 10 years, it would guarantee 12 weeks of paid parental, family and personal illness leave. It also would cover three days of bereavement leave per year, starting in the program’s first year.
- The United States is the only wealthy nation with no nationally provided paid maternity leave, Jeff Stein reports. The United States also is one of about five wealthy nations with no paid paternity leave and one of two without general paid sick leave, according to Vicki Shabo, a paid-leave expert at the think tank New America.
- Biden’s plan includes $45 billion for nutrition programs.
- Of that, $25 billion would go toward expanding the summer Pandemic EBT program and permanently extend the program that gives free and reduced-price lunches to 29 million children.
- It would put $17 billion toward expanding free meals for children and help formerly incarcerated people become eligible for SNAP benefits.
Unemployment insurance reform
- According to a White House summary, Biden is looking to automatically adjust the length and amount of unemployment insurance benefits workers can receive. However, few other specifics were provided.
- Senate Finance Committee Chair Ron Wyden (D-Ore.) and Sen. Michael F. Bennet (D-Colo.) are pushing for an overhaul of the nation’s unemployment system. The lawmakers have called for major improvements to systems that were overwhelmed during the coronavirus crisis and left large numbers of laid-off workers unable to file claims and receive payments.
- Child tax credit:
- The child tax credit was significantly expanded under Biden’s stimulus package — but only for one year. Under that legislation, most Americans would receive $3,000 a year for each child ages 6 to 17, and $3,600 for each child under 6. The “families plan” would extend that tax credit until 2025 and make it permanently refundable.
- Still, some Democrats have called on Biden to go further. On Tuesday, Rep. Richard E. Neal (D-Mass.), the chairman of the tax-focused House Ways and Means Committee, unveiled a draft proposal that would make the additional aid permanent.
- Health insurance premiums:
- Biden’s stimulus package provides two years of lower health insurance premiums for those who buy coverage on their own. The White House claims that will save families an average of $50 per person per month. The “families plan” would invest $200 billion to make those premium reductions permanent.
- Earned Income Tax Credit:
- Biden’s stimulus package roughly tripled the EITC for childless workers. The “families plan” would make that change permanent.
- Child and Dependent Care Tax Credit:
- The proposal would make permanent the expansion included in Biden’s stimulus package. Families would receive a tax credit for as much as half of their spending on child care for children under age 13, up to a total of $4,000 for one child, or $8,000 for two or more children.
- The White House says that tax increases for high-income Americans would raise $1.5 trillion over a decade. Officials insist tax increases would not affect anyone earning under $400,000 per year.
- The proposal would increase the top income tax rate from 37 percent to 39.6 percent, reversing part of President Trump’s 2017 tax cuts.
- Under the plan, households making over $1 million a year would pay the same 39.6 rate on all their income. The plan also would eliminate a loophole that allows wealthy Americans to avoid taxes on their wealth by passing it down to their heirs.
- Biden officials also intend to improve tax enforcement for the wealthiest Americans. The push would help the Internal Revenue Service execute tax collections and crack down on avoidance with new tools and technology, and more agents, The Post reported. The White House forecasts the plan would raise $700 billion over 10 years.
Not in the plan
- The White House did not include a measure aimed at reducing consumer and government spending on prescription drugs. That proposal had been vehemently opposed by the pharmaceutical industry. House Speaker Nancy Pelosi (D-Calif.) urged the administration to include the measure.
Jeff Stein, Tony Romm and Laura Meckler contributed to this report.