Biden Promotes $1.8-Trillion Plan for Child Care and Education
The American Families Plan offers a bevy of changes on paid leave, education, child care and taxes.
WASHINGTON — A “once-in-a-generation investment” in families and children proposed by President Biden would spend significantly on education and child care and expand tax credits for families as part of the White House’s attempts to change the economy.
Catholic and pro-family scholars and policy analysts have lauded the intention of focusing on families but have also questioned the economic feasibility of the plan, and whether it would actually empower parents.
The president first presented the American Families Plan April 28 in a speech before a joint session of Congress and has since traveled around the country promoting it. The $1.8-trillion proposal would expand free education, guarantee paid leave, and cap the amount families spend on early child care. Other provisions in the plan address children’s nutrition, changes to the tax code and funding for the child care industry.
In a May 3 appearance at Tidewater Community College in Norfolk, Virginia, Biden called his proposal “a once-in-a-generation investment in our families, in our children that addresses what people care most about and most need — the investment we need to win the competition with other nations for the future.”
The American Families Plan has not been introduced into Congress but a White House fact sheet laid out proposed funding targets. According to the plan, $200 billion would go towards universal preschool for 3- and 4-year-olds and $109 billion would support two years of tuition-free community college. A senior administration official said during a media call the educational provisions would be funded by federal-state partnerships, with states eventually paying about 50% of preschool costs and 25% of community college costs.
The plan also increases Pell Grants, which go to low-income college students, and directs $46 billion toward minority-serving higher-education institutions. $9 billion would be spent on teacher training.
Biden highlighted the importance of child care in his May 3 speech, saying “There’s millions of women out of work today not because they’re not qualified for the jobs they have, but they can’t take care of their children and do their job. And the cost of childcare is extraordinary.”
The American Families Plan allocates $225 billion to improve the affordability and quality of child care, promising that low- and middle-income families would not spend more than 7% of their income on child care for children under 5. It would also direct funding toward child care businesses, mandate a $15 per hour minimum wage for child care workers and support professional development for industry employees.
Another $225 billion would fund a national paid leave policy of 12 weeks, with at least two-thirds of average weekly wages covered at up to $4,000 per month.
Senior administration officials estimated the plan, once passed, would take 10 years to fully implement.
The American Families Plan also includes tax code changes, some of which would make permanent measures that were included on a temporary basis in stimulus legislation passed in March.
The expanded Child Tax Credit, which gives families $3,600 per year for children under 6 and $3,000 per year for children aged 6-17, would continue until 2025 and become permanently refundable, if the credit exceeds what is owed in taxes. The Child and Dependent Care Tax Credit, which offsets up to half of low- and middle-income family expenses on eligible child care, would also become permanent, along with the expanded Earned Income Tax Credit.
According to the White House, the American Families Plan, along with the proposed American Jobs Plan, would reduce long-term deficits and pay for itself fully within 15 years. Spending on the two plans would total more than $4 trillion.
To offset the cost of the proposal and the tax credits, the Biden administration will reverse President Donald Trump’s change to the top tax bracket and return it from 37% to 39.6%. Capital gains and dividends for households making more than $1 million per year would be taxed at the same percentage as income.
The proposal would also eliminate the “stepped-up basis” for capital gains taxes on inherited assets worth more than $1 million, increase IRS funding to audit wealthy taxpayers and require financial institutions to report additional information about earnings in their accounts. Altogether, the Biden administration estimates the plan would raise $1.5 trillion over the next decade.
Maria Sophia Aguirre, economics professor at The Catholic University of America, told the Register she has “serious doubts that as proposed, this is something that will have positive outcomes.”
She said the proposal seemed unfeasible, with no clear path to funding its programs except through further taxation of the finance system, which could result in slower growth.
“We are redistributing and making the government decide how we operate at the level of the household, and I still have yet to see a positive outcome of that in the history of economics,” she said.
“The focus [on families] is a good one, but the means to do it is not a positive one for the future of economic growth,” she said.
A research group at the University of Pennsylvania’s Wharton School of Business released a study May 5 that indicates the Biden administration may be optimistic in its projections about costs. According to its report, the Biden plan for families would spend nearly $2.5 trillion over the next 10 years and bring in $1.3 trillion in additional tax revenue.
“By 2050, the AFP would increase government debt by almost 5% and decrease GDP by 0.4%,” the report authors said.
Strengthening the Family
The U.S. Conference of Catholic Bishops has not commented directly on the plan, but an April 22 letter to Congress, signed by Cardinal Timothy Dolan of New York Archbishop Paul Coakley of Oklahoma City, Archbishop Joseph Naumann of Kansas City, Kansas, Bishop Michael Burbidge of Arlington, Virginia, and Auxiliary Bishop Mario Dorsonville of Washington, D.C., in their capacity as committee chairs, highlighted their collective desire for any infrastructure proposals under consideration.
The five bishops wrote that strengthening family life should be a “core priority” for Congress and expressed support for the expanded Child Tax Credit and making it fully refundable.
“Other helpful provisions include expanding access to in-home care for family members, ensuring quality and affordable childcare options, paid sick leave, parental leave, and other forms of support for working families,” they said.
The bishops said policies should support working parents along with those who remain at home. “These strengthening policies, as well as investments in education, caregiving, and more, must never replace families but empower them,” they said.
Charles Camosy, associate professor of theology and social ethics at Fordham University, told the Register that “Much of what is present in the [Biden] plan —especially direct cash to families who need it and can choose to spend it according to their needs — is very much welcome from a Catholic point of view.”
As written now, however, he said the plan fails in some places to uphold subsidiarity, for example by funding universal pre-school and tuition-free community college regardless of whether parents actually want to use those resources for their children.
Camosy said the federal government “should not be picking and choosing which kind of education it is supporting but should rather give families and students choices about how and where and when to use these resources.”
Camosy also expressed disappointment at the lack of discussion of elders as a constituent part of families in the plan. The omission highlights a particular model of the family as "two-parents-working-with-one-child-and-a-dog,” he said.
“Any plan like this should be thinking about the rootedness of nuclear families in broader communities and encouraging multigenerational relationships,” he said.
Work and Family
The Biden administration pitch for the American Families Plan has emphasized easier access to child care and said it would allow “roughly one million parents, primarily mothers, to enter the labor force.”
Reuters reported that research from the Federal Reserve shows that one-fifth of parents were not employed or had reduced their work hours because they had increased responsibility for child care.
Lyman Stone, a research fellow at the Institute for Family Studies, told the Register the American Families Plan was hard to assess because it has not yet been introduced to Congress. As it stands now, the “vast majority” of the proposal’s benefits go to working parenthood while offering comparatively little to parents outside the workforce, he said.
“If you’re an employed parent, the American Families Plan is very closely targeted to you and your needs,” he said.
Stone said Biden’s other major proposal, the American Jobs Plan, seems oriented toward stimulating demand for labor while the American Families Plan is about labor supply, releasing parents from caring for children and pushing them into formal employment.
He said, “They’re making an effort at helping families, which is laudable, but the paradigm they’re bringing to the issue is not family, it’s work. It’s about making families job friendly, not jobs family friendly.”
Nicholas Wolfram Smith is a correspondent for the National Catholic Register.