Just weeks after introducing an infrastructure package that would require roughly $2 trillion in new government spending, President Biden is set to unveil another massive spending package during his address to a joint session of Congress Wednesday night, this time in the form of a $1.8 trillion “families” bill designed to bolster education, child care, and provide paid family leave.
The American Families Plan, which also comes after the passage of a $1.9 trillion COVID-relief bill, includes $400 billion to extend the existing child tax credit, $225 billion in childcare subsidies, $225 billion for a national paid family leave program, $200 billion for universal preschool, and much else.
“These are generational investments in our future, in the future of our families and the future of our kids,” a senior administration official said of the plan to CNN.
Biden is preparing to increase taxes on wealthy individuals to finance the program, raising about $1.5 trillion over the next ten years.
To pay for the plan, Biden intends to hike the top marginal tax rate to 39.6% for Americans with incomes above $400,000; tax capital gains at the highest rate; tax capital gains at death and eliminate “step up in basis” loophole, which allows revaluing of estates after the individual’s death; invest $80 billion in IRS tax enforcement and compliance measures; and collect the remaining revenue from the corporate tax increases of the American Jobs Plan.
Biden’s “plan is about cutting taxes for middle-class families, for child care, for health care … and he believes that we should do that in a fiscally responsible way, first and foremost, by making sure the wealthiest Americans actually pay the taxes they already owe,” a senior administration official said to reporters.
“There is broad support among the American people for this approach.”
While Biden’s program extends the child tax credit to 2025, Democrats in Congress have been lobbying for years to make the subsidy permanent.
The initiative also calls for expanding unemployment insurance programs. Senate Democrats are demanding that states be mandated to offer half a year of benefits at 75 percent of a worker’s former pay and to provide benefits to part-time employees and those who leave their jobs with good cause.
Under the education investment umbrella of the bill, an extra $85 million is being allocated to Pell Grants for low-income students seeking undergraduate degrees and $9 billion to train and diversify American teachers, as well as provide two years of free community college to all Americans.
Biden is likely to alienate progressives by excluding a provision which would empower the government to negotiate prescription drug prices. Senator Bernie Sanders (I., Vt.) told reporters that provision would appear in the final bill “if I have anything to say about it.”