(CBS San Francisco) — Last week President Biden announced the American Families Plan. The $1.8 trillion package focuses on reforming childcare, education and paid family leave. A fact sheet on the plan calls it “an investment in our children and our families—helping families cover the basic expenses that so many struggle with now, lowering health insurance premiums, and continuing the American Rescue Plan’s historic reductions in child poverty.”
This is the administration’s next step in its bid to rebuild and remake the economy in what are hopefully the waning days of the COVID pandemic and into the future. The first step was the American Rescue Plan, which included $1,400 stimulus checks, extended federal unemployment benefits and an upgraded Child Tax Credit. It was signed into law in mid-March, and implementation is ongoing.
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The American Jobs Plan was announced a few weeks later. The companion bill to the American Families Plan is worth about $2.3 trillion in its current form. It aims to rebuild roads, repair bridges, do away with lead pipes, extend broadband, and modernize the country’s electric grid, among other things. While restoring the country’s infrastructure, the plan also seeks to create jobs and a climate-friendly future.
The far-reaching Jobs Plan includes many items that don’t qualify as infrastructure in the traditional sense. Those range from $213 billion earmarked for affordable housing to $100 billion set aside for workforce development among underserved groups. The plan also looks to increase pay for caregivers who tend to the elderly and disabled. Each of these efforts would mean more money for those affected. On a broader scale, the plan also has the potential to create many jobs across a wide swath of the economy. Spending would be spread out over eight years.
The Families Plan could have a more direct and noticeable effect on households and bank accounts than the Jobs Plan. Spread over 10 years, it includes investments worth approximately $1 trillion and tax cuts worth about $800 billion. Many of its key components address issues that affect household budgets on a month-to-month basis.
As proposed, this sweeping piece of legislation can be divided into three loose categories — childcare, education and paid family leave. It also includes a variety of tax cuts, along with support for nutrition.
Many economists — and parents, if they had time to weigh in — would argue that childcare is one of the biggest economic issues of the day. Parents of children too young to care for themselves need childcare in order to work. But childcare is expensive and often unavailable, as the pandemic brought into stark relief. A sizeable percentage of the population is limited in its ability to work because they lack someone to watch their kids or the money to pay them. Parents, particularly women, end up leaving the workforce.
The American Families Plan seeks to invest $225 billion in childcare over the coming decade. The money would be used to cap childcare expenses for low and middle-income families. Those earning up to 1.5 times a state’s median income would spend no more seven percent of their income on childcare for kids under five years old. Expenses would be determined on a sliding scale. Childcare workers and providers are also part of the equation, with a minimum wage of $15 per hour for early-childhood staff and what the fact sheet describes as “job-embedded coaching and professional development.”
The Plan looks to address inadequacies in the education system, including access early-childhood and post-secondary programs. Evidence shows that a strong foundation of early education sets up students for more success throughout their school career. But in many parts of the country, only wealthier parents can afford to provide that education. Likewise, college is becoming increasingly unaffordable with each passing year. A less educated populace leads to a less educated workforce.
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According to the fact sheet, “investing in education is a down payment on the future of America.” The Families Plan sets aside $200 billion to establish universal preschool programs for three and four-year olds and another $109 billion to ensure two years of free community college. An additional $85 billion would be used to strengthen the Pell grant program, which awards money to financially needy undergraduate students. Another $62 billion will be devoted to improving retention and completion rates at schools enrolling lower-income students. And another $39 billion will be dedicated to helping pay tuition for students at historically black colleges whose families take home less than $125,000 per year.
The plan also looks to deal with teacher shortages by raising scholarships for future teachers and helping current teachers attain additional certifications in needed areas.
Paid Family Leave
The United States is one of the few countries that doesn’t offer a national paid family leave program. It’s the only wealthy country without paid maternity leave provided by the national government. Families currently have to deal with a child’s birth or a loved one’s long-term illness by taking off work and taking home a fraction of their usual income. Some states have their own policies in place, and many companies also help. But most policies fall short of what is needed at an especially difficult time for a household. Often an employee has to return to work too soon or leave the workforce entirely.
The American Families Plan includes 12 weeks of paid family leave that could reach as high as $4,000 per month, depending on a worker’s income. The plan would replace between 66 percent and 80 percent of the affected employee’s wages at a cost of $225 billion over a decade. It would also allow for three days per year of bereavement leave.
The plan also looks to help families through the tax system. The proposed changes mostly extend programs set up by the American Rescue Plan passed in March. According to the fact sheet, “direct assistance to families in the form of tax credits paid on a regular basis lifts children and families out of poverty, makes it easier for families to make ends meet, and boosts the academic and economic performance of children over time.”
The stimulus package lowered premiums on individually purchased health insurance for two years. The American Families Plan aims to spend $200 billion to make those reductions permanent.
The stimulus package also reformatted the Child Tax Credit to pay out $3,600 per year for each child up to five years old and $3,000 per year for each child ages six through 17. Payments are set to be issued automatically on a monthly basis from July to December of 2021, with the remainder issued when the recipient files their 2021 taxes. The upgrade is only for this year, but the American Families Plan wants to extend it for four more years and keep it refundable on a permanent basis.
The temporary boost to the Child and Dependent Care Tax Credit (CDCTC) in the Rescue Plan gives households a tax credit on half their childcare spending. That could be up to $4,000 per child per year, though not more than $8,000 total for two or more children. The proposed plan looks to make the change permanent.
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The American Rescue Plan approximately tripled the Earned Income Tax Credit (EITC) for low-wage workers without children. According to the Biden administration, roughly 17 million workers benefited. The proposed plan looks to make the change permanent as well.