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Ahead of President Biden‘s address to a joint session of Congress tonight, the White House released the final details of the American Families Plan, Joe Biden’s third major package that would pump trillions into the economy and into people’s pockets.
The $1.8 trillion proposal, which follows the American Rescue Plan and the American Jobs Plan, would allocate funds to a series of new and expanded social programs and tax credits if passed that would directly benefit American families. Unfortunately, that’s a big “if” at the moment thanks to what’s likely to be unified Republican opposition and differences of opinion with Democrats from Sinema to Sanders.
It’s better to think of Biden’s proposal as the first round in what will be a long series of negotiations with Congressional leaders over the details of the bill. But as a starting point, it’s a remarkable statement both of specific policies and a vision of government taking a more active role in people’s lives and trying to make them more affordable, and better. Here’s what you should know about it.
It would transform education.
Currently, the American public education system guarantees 13 years of free education to every student. The American Families Plan would add two years on the front end—free, universal preschool for three- and four-year-olds—and two years on the back end—two years of tuition-free community college—to bring that total to 17 years.
Speaking of higher education, the plan would also increase Pell Grants by $1,400, reserve $62 billion in grant money for programs to increase college retention and completion rates, and provide $39 billion in tuition subsidies to colleges and universities that specifically serve Black, Native American, and other students of color. Those same schools would also get $7 billion to expand their programming into high-demand fields.
For secondary education, the main focus of the plan is on educating and preparing teachers. It would double scholarships for future teachers to $8,000 per year, invest $2.8 billion in a paid teacher residency program, and $900 million to develop more special education teachers. And for current teachers, the plan provides $1.6 billion to fund additional certifications for over 100,000 educators and $2 billion for programs that provide teachers with leadership opportunities (e.g. mentorship).
It would improve childcare for families and providers.
The American Families Plan would establish a sliding scale for families and guarantee that they only pay a certain percentage of their income toward childcare. And when they send their kids to daycare, they’d be sending them to providers receiving funding to pay for a developmentally appropriate curriculum with limited class sizes.
The early childhood care workforce is also getting a boost. The profession, which is dominated by women, a sizeable share of whom are women of color, is among the most underpaid in the country despite the high prices parents pay. Biden’s plan would set a $15 minimum wage in the industry, provide professional development opportunities, and ensure that those with similar qualifications to kindergarten teachers receive comparable compensation and benefits.
National guaranteed paid leave would finally become a reality.
While some states and localities have been able to guarantee paid family leave to their citizens, the U.S. is still one of the only countries in the world in which the federal government doesn’t provide for workers to take time off to care for a new child, sick family member, or recover from their own serious illness. It’s wrong on moral terms, and as a practical matter, it also depresses women’s participation in the workforce, which depresses the potential earnings of lower- and middle-class families.
The American Families Act would dedicate $225 billion to create a national comprehensive paid family and medical leave program over the next decade. Partial wage replacement would be available for a variety of reasons, from taking time off to deal with the death of a loved one to bonding with a newly adopted child.
It could make a serious dent in child hunger and obesity.
Collectively, American kids simultaneously don’t have enough to eat, and are eating too much unhealthy food. Biden’s plan would tackle these twin problems by expanding a few existing programs. It would spend $25 billion to expand Summer EBT that the Biden administration just chose to continue for two more summers, a program akin to the Pandemic EBT program, permanently to all eligible children nationwide, ensuring that they have enough to eat even when school—where two meals a day are served—isn’t in session.
The proposal would also make meals free to all students at high-poverty schools, removing the need to apply and ensuring that schools are reimbursed at a level that covers the cost of the meals themselves. If enacted, 9.3 million more kids (70 percent of whom are in elementary school) would receive free meals. It would also launch a new $1 billion healthy foods incentive demonstration to support schools expanding healthy food offerings.
It would make a slew of very progressive changes to the tax system that would give parents cash.
The American Rescue Plan beefed up Affordable Care Act subsidies for two years; the American Families Plan would make those premium reductions permanent at a price tag of $200 billion. It would similarly extend the expanded Child Tax Credit through 2025, make permanent the expanded Earned Income Tax Credit and another tax credit that helps families pay for childcare.
These changes would benefit low- and middle-income earners, and they (along with the rest of this plan) would largely be paid for with tax increases on the wealthy. The top marginal income tax rate would go from 37 to 39.6 percent, the capital gains tax would increase dramatically, and multiple loopholes that benefit the wealthy would be closed. Biden’s plan would also ensure that everyone making $400,000 or more pays a 3.8 percent Medicare tax on their earnings.
And beyond the tax code itself, Biden’s plan would seek to ensure that the wealthy pay their fair share of taxes. After years of cuts to its budget, the IRS would receive a cash infusion that would allow it to enforce tax laws on those with the highest incomes and require financial institutions to report information on account flows, treating the now opaque ways the rich earn income with a similar level of oversight as current wage reporting systems.
The administration estimates that these changes would mean collecting $700 billion in taxes that otherwise would not have been paid over the next decade.
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