Breaking down the $1.8 Trillion American Families Plan

Published: May 11, 2021

Administration TransitionChild CareCONGRESSEducation (Higher)Education (Primary/Secondary)GovernorIRSPolicy and LegislationPublic FinanceSocial ServicesSupplemental Nutrition Assistance ProgramUnemployment InsuranceWHITE HOUSE OFFICE (EXECUTIVE OFFICE OF THE PRESIDENT)

President Biden has released another huge spending package, this time focused on education, social services, and tax reform.

In March, President Joe Biden introduced the American Jobs Plan, a $2.3 trillion infrastructure and jobs proposal. Now, Biden has unveiled an additional $1.8 trillion federal investment in education, child care, paid leave, and several other initiatives – a package he is calling the American Families Plan.

Biden unveiled the American Families Plan last month, shortly before his first address to a joint session of Congress. According to the president, this proposal would leave the United States more competitive, grow the middle class, and expand the benefits of economic growth to all Americans. Here is a breakdown of his proposal:

Education and Preparation for Teachers

  • Add at least four years of free public education
  • Provide up to $1,400 in additional assistance to low-income students by enhancing Pell Grants
  • Address teacher shortages, improve teacher preparation, and strengthen pipelines for teachers of color
  • Help current teachers earn in-demand credentials
  • Invest in educator leadership
  • Invest in universal preschool

Child Care, Nutrition, and Paid Leave

  • Create a national comprehensive paid family and medical leave program
  • Expand summer EBT to all eligible children nationwide
  • Expand school meal programs
  • Launch a healthy foods incentive demonstration
  • Facilitate re-entry for formerly incarcerated individuals through SNAP eligibility

Unemployment Insurance and Tax Cuts

  • Automatically adjust the length and amount of unemployment insurance benefits unemployed workers receive depending on economic conditions
  • Extend expanded ACA premiums tax credits in the American Rescue Plan
  • Extend the Child Tax Credit increases in the American Rescue Plan through 2025 and make the Child Tax Credit permanently fully refundable
  • Permanently increase tax credits to support families with child care
  • Make the Earned Income Tax Credit Expansion for childless workers permanent
  • Give the IRS the authority to regulate paid tax preparers

Tax Reform

  • Revitalize enforcement to make the wealthy pay what they owe
  • Increase the top tax rate on the wealthiest Americans to 39.6 percent
  • End capital income tax breaks and other loopholes

For a detailed summary of what is included in the American Families Plan, the White House released its own Fact Sheet.

During his speech to Congress, Biden highlighted a few key provisions of the American Families Plan. First, he pointed out the changes it would make to universal education and child care, as well as the expansion it would create for paid family and medical leave. He emphasized that the temporary increase in the child tax credit would be extended through 2025. That credit would also become fully refundable, so those who do not earn enough to claim it from their taxes would still receive the benefit. Lastly, the president made it a point to highlight that the earned income tax credit expansion for workers who do not have children would become permanent with his proposal.

Response

Like its companion package, the American Jobs Plan, the new American Families Plan has also been met with mixed reviews. Critics of the plan are primarily concerned it will not truly assist families in becoming self-sufficient and will not provide a foundation for children’s success. Rather, critics are viewing it as a potential big governmental takeover of the family. Many Americans are also worried about the tax increases Biden is calling for to finance the plan.

The president’s plan comes with promises that low- and middle-income families would pay no more than 7% of their income for the care of young children, leaving many Republicans skeptical as to how sustainable that would be. A change would apply to individuals earning more than $452,700 and married couples earning more than $509,300 — meaning each partner could earn less than $400,000 and see their tax bill rise. According to the most recent filing data from the IRS, this change would affect less than 1% of taxpayers.

As with most of Biden’s actions as president, reactions are split along party lines. Democratic Pennsylvania Gov. Tom Wolf praised Biden’s plan for its “crucial investments in the American people” that will “pave the way for a sustained and equitable economic recovery from the COVID-19 pandemic.” Other Democrats like California Gov. Gavin Newsom commended the proposal for making “strategic investments” that “will bolster California’s equitable economic recovery and bring us roaring back.” Similarly, Connecticut Gov. Ned Lamont, another Democrat, believes the proposal “will ensure that everyone has a shot at the American Dream. It proposes to make permanent investments in our children and our families by making health insurance, childcare, and education affordable for all.”

Other the other hand, Republicans have not responded as positively. South Carolina Sen. Tim Scott delivered the Republican rebuttal to Biden’s speech, saying the following about the American Families Plan: “Tonight, we also heard about a so-called family plan. Even more taxing, even more spending, to put Washington even more in the middle of your life — from the cradle to college. The beauty of the American Dream is that families get to define it for themselves.”

While the American Families Plan would make historic investments in education and social services, as well as making major changes to the U.S. tax system, the proposal faces a tough road ahead in Congress.