President Joe Biden plans to unveil a $1.8 trillion spending and tax credit package aimed at buoying families during his address to a joint session of Congress.
Billed as the “American Families Plan,” the package proposes $1 trillion in social welfare investments over a decade, in addition to $800 billion in tax benefits, which Biden will say can be paid for over 15 years.
And while Democrats will be pleased with much of the plan’s contents, its price tag will strain Democrats while further provoking Republicans who are already balking at the cost of Biden’s $2.25 trillion infrastructure package.
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The American Families Plan proposes free universal preschool to all 3- and 4-year-olds and two years of free community college, senior administration officials said Tuesday. Neither program, estimated to cost a combined $309 billion, would be means-tested, meaning that they would be available to rich families as well as to poor ones.
The preschool initiative would be run in conjunction with state governments, the officials said. And Dreamers, meaning immigrants brought to the United States as young children without authorization, would be eligible for the community college scheme.
If passed as is, the American Families Plan proposes to dedicate part of a $225 billion effort focused on child care to subsidize services for low- to middle-income families. Another $225 billion would be used to create a national paid family and medical leave program over the next 10 years.
The American Families Plan also proposes making permanent certain additional Obamacare subsidies that were included in the previous relief bill. It would also extend through 2025 the one-year expansion of the Child Tax Credit implemented as part of the relief bill and make the credit fully refundable permanently.
The administration insists its proposed tax reforms would cover the cost of Biden’s “Build Back Better” agenda over 15 years, without hiking taxes on anyone earning $400,000 a year.
Changes outlined include raising $700 billion by increasing Internal Revenue Service funding for better enforcement, upping the top marginal rate on labor income to its pre-2017 level of 39.6%, and taxing capital gains earned by households making more than $1 million as ordinary income — effectively doubling the rate on such gains.
“The American Families Plan invests in our children and our families, helping families cover the expenses that so many struggle with now, lowering health insurance premiums, cutting child poverty, and producing a larger, more productive, and healthier workforce,” a senior official said.
Biden will present the American Families Plan during his first presidential report to Congress Wednesday as the second installment of his infrastructure-plus legislative priority. Along with the American Jobs Plan, both proposals form his $4 trillion “Build Back Better” agenda introduced after the passage of the American Rescue Plan.
But Biden’s “Build Back Better” agenda faces an unfriendly Congress. Despite Democratic majorities, the party and its independent allies only have 51 votes in the Senate, when the tiebreaking vote of Vice President Kamala Harris is included. That is shy of the 60 votes needed to end debate and avoid a filibuster. The process of reconciliation could be relied on to pass a bill without Republicans, but its provisions have to affect the federal budget.
The Biden administration hinted Tuesday it is not as amenable to negotiations regarding the American Families Plan as it is on the American Jobs Plan. A senior official framed the latest proposal as indispensable, language that has not been deployed in the context of the first pitch. The administration has called the American Jobs Plan “a generational opportunity.”
“We’ll be encouraging, as he has in the context of the jobs plan, an openness to others’ ideas and an openness to a conversation but a commitment that these are investments that we can’t afford not to make as a country,” the official said of Biden.
Senate Republicans, led by West Virginia’s Shelley Moore Capito, last week counteroffered the American Jobs Plan with a narrower $568 billion infrastructure package.
The White House has been mocked for its broad infrastructure definition. It proposed, for example, $400 billion for caregivers and senior and disabilities services in the American Jobs Plan. Yet, Capito’s offer includes $66 billion for broadband and $35 billion for drinking water improvements, in addition to $299 billion for roads and bridges, $61 billion for public transit, and $20 billion for rail projects.
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Biden’s speech to Congress takes place one day before his 100th day in office, an arbitrary milestone for presidents since Franklin Roosevelt. However, for Biden, it marks the start of a roadshow tour of the country to tout his accomplishments and push for his “Build Back Better” agenda. Stops have already been scheduled for Georgia on Thursday and Pennsylvania on Friday, two key electoral battleground states in 2022 and 2024.
