The White House provided this fact sheet on how President Biden’s Build Back Better framework will support the “sandwich generation”:
Too many Americans struggle with the high costs of raising children, caring for a sick family member, providing long-term care for people with disabilities or older adults, and addressing the myriad other caregiving challenges. These pressures are particularly acute for those with multiple caregiving responsibilities. As of 2018, more than one-in-ten parents (12 percent, or over 8 million parents) had a child under 18 in the home and were providing unpaid care to an adult, making them part of the “sandwich generation.” This work is especially likely to fall on women, as 5 million mothers are part of the sandwich generation, compared to 3.2 million fathers. Three-quarters of these mothers are employed, and more than half work full-time, making their schedules especially hard-stretched.
These millions of sandwich generation adults are caring for multiple generations of family members with few or no formal support, leading them to face difficult, if not impossible, decisions and high economic costs.
The price of child care has risen sharply, increasing faster than incomes over the last several decades. Child care prices increased by 210 percent from 1990 to 2019, while the median family income rose by 143 percent during the same period. Research suggests that lower-income families experience these cost pressures more than higher-income families, which means that basic goods and services, including child care, cut into family budgets more today than in the past. In turn, only 57 percent of children under six years old have parents who report that there are good options for child care where they live. And the United States is one of the only countries in the world that does not guarantee paid leave – 95 percent of the lowest wage workers, who are predominately women and workers of color, lack any access to paid family and medical leave. Still, the United States invests fewer public dollars in early childhood education and care relative to gross domestic product (GDP) than almost all developed countries – ranking 35th out of 37 countries tracked by OECD.
The need for high-quality, accessible, and affordable elder care is also increasing. By 2060, there will be nearly 95 million adults over the age of 65, which is almost twice the number of adults over the age of 65 in 2016. People age 65 today are estimated to have an almost 70 percent chance of needing some type of long-term care services in their remaining years, and 20 percent will need care for five or more years.
Meanwhile, there are not enough care workers to provide the care that is needed, in part because care jobs are often not family-sustaining jobs, making it challenging to recruit and retain a high-skilled workforce. Child care workers are among the most underpaid workers – the average pay is only $24,320 a year and nearly half of child care workers rely on public assistance. With low pay, child care workers turn over frequently – national estimates suggest that 26 to 40 percent of the workforce leave their job each year. Similarly, home care workers are extremely underpaid and 40 to 60 percent of home care workers turn over each year – high levels of churn even relative to other low-wage jobs. An analysis conducted in 2017 estimates that there will be a national shortage of 151,000 direct care workers by 2030 and 355,000 workers by 2040.
Limited access to high-quality care leaves many Americans to fill the gap in professional caregiving by providing unpaid care to their loved ones. The disproportionate caregiving burden that women bear makes them more likely to reduce working hours, choose lower-paying jobs, or leave the labor force entirely, all of which contribute to the gender wage gap and reduce family economic security.
To keep the middle-class in reach for millions of Americans and strengthen our economic security, we need to address our caregiving crisis. President Biden’s Build Back Better plan will lower costs both for families with young children and households with elderly members – and for millions of sandwich generation adults.
The President’s Build Back Better plan:
Expands Access to Long-Term Care Services under Medicaid. Families feel the financial impact of caring for aging relatives and family members with disabilities, and there is a financial strain for people with disabilities living independently to ensure that they are getting care in their homes. At the same time, hundreds of thousands of people who need better care are unable to access it, even though they qualify under Medicaid. Aging relatives and people with disabilities deserve high-quality care that meets their unique needs and personal choices. President Biden is calling on Congress to invest billions toward expanding access to quality, affordable home- or community-based services (HCBS).
Cuts costs of child care by more than half for most American families. The President’s plan also enables families to access more convenient, higher quality care where workers receive a better wage and benefits. It fully covers the cost of high-quality child care for young children for the most hard-pressed working families, and ensures that families earning up to 1.5 times their state’s median income will pay no more than seven percent of their income for high-quality child care for all children under age five. In addition to reducing the cost of child care and freeing up money for other spending, providing access to affordable, high-quality child care also increases parents’ incomes, as they continue working and earn more over time.
Offers universal free preschool to all three- and four-year old children. Only about one-fifth of all preschool aged children are enrolled in a preschool program, and free preschool will help offset the costs of child care that families face or help parents providing unpaid caregiving to go back to work. The President is calling for a national-state partnership that offers preschool to all families in the setting of their choice – whether in a school, Head Start, or child care setting. These investments will especially benefit low-income families and families of color, whose children are less likely to be enrolled in preschool.
Lowers Seniors’ Health Care Costs. The Build Back Better plan would reduce health insurance premiums, saving 9 million people an average of $50 per person per month, and add dental, vision, and hearing coverage to Medicare. By closing the Medicaid coverage gap for low-income Americans, the President’s plan would help 4 million people gain coverage. President Biden’s plan will lower prescription drug costs for Americans by letting Medicare negotiate drug prices, so consumers are no longer at the whim of pharmaceutical companies. Lowering these costs will help reduce the burdens families face. Take, for example, a family in Arizona with two parents who together earn $85,000 per year and care for an elderly parent who needs arthritis medicine, which costs $5,500 per year out-of-pocket, and an eye exam to get a new pair of glasses. Prescription drug reform like that outlined in the Build Back Better plan would cap out-of-pocket costs for the elderly parent’s prescription drugs, saving the family $2,400 per year, while new vision benefits under Medicare would pay for the elderly parent’s eye exam and new glasses and lenses.
Creates a National Comprehensive Paid Family and Medical Leave Program. The program will ensure workers receive partial wage replacement to take time to bond with a new child; care for a seriously ill loved one; deal with a loved one’s military deployment; find safety from sexual assault, stalking, or domestic violence; heal from their own serious illness; or take time to deal with the death of a loved one. This program guarantees twelve weeks of annual paid parental, family, and personal illness/safe leave, and also ensures workers get three days of bereavement leave per year, by year 10. The program will provide workers up to $4,000 a month, with a minimum of two-thirds of average weekly wages replaced, rising to 80 percent for the lowest wage workers. A study of California’s paid leave program, which began in 2004, indicated that paid leave also helped to reduce nursing-home utilization: About one in ten person-years spent in nursing homes were prevented by paid leave, likely because the policy gave workers sufficient flexibility to provide informal care to family members on the side.
Boosts compensation of child care and home care workers. The President’s plan would ensure child care and preschool teachers are paid a living wage, one that is comparable to kindergarten teachers if they have similar credentials. The President’s plan to expand HCBS under Medicaid will support well-paying caregiving jobs that include benefits and the ability to collectively bargain. Investment in higher labor standards for care workers improves these jobs and attracts more workers to the care industry.
Significantly Expands the Child Tax Credit. The Build Back Better plan increases the amount of the credit from $2,000 per child to $3,000 per child six-years-old and above, and from $2000 to $3,600 per child for children under six. It also makes 17-year-olds eligible for the first time, and makes the credit fully refundable on a permanent basis, so that low-income families—the families that need the credit the most—can benefit from the full tax credit. For a family with two parents who earn a combined $100,000 per year and have two children under six, the Child Tax Credit expansion means the family’s credit would go from $4,000 total to $7,200 total, an additional $3,200 per year in tax relief. For a family with two parents who earn a combined $24,000 per year and have two children under six, the expansion means even more; they would see roughly $4,400 in additional tax relief because the full credit was not previously available to them.
Provides low- and middle-income families a tax cut based on care expenses. Families would receive a tax credit for up to half of their expenses related to caring for a child under age 13 or a loved one with disabilities. This would extend the dramatic expansion of the Child and Dependent Care Tax Credit (CDCTC) enacted in the American Rescue Plan. With this expanded credit, families earning $125,000 can receive up to a total of $4,000 for one dependent or $8,000 for two or more. And families earning up to $400,000 would get at least as generous of a credit as they receive today.
Over the first three full months of the Biden-Harris Administration, the economy added more than 1.5 million jobs, or more than 500,000 jobs per month on average. That compares to an average of 60,000 jobs per month in the three previous months. These three months have seen the strongest first three months of job growth of any administration.
Despite this progress, there’s more work to do to climb out of the economic crisis brought on by the pandemic. The Biden-Harris Administration is acting aggressively to ensure that the millions of Americans who remain unemployed, through no fault of their own, can find safe, good-paying work as quickly as possible. That’s why the President is announcing today that the Administration will take steps to remove barriers that are preventing Americans from returning safely to good-paying work and take steps to make it easier for employers to hire new workers.
And, the President and the Administration will reaffirm the basic rules of the unemployment insurance (UI) program. Anyone receiving UI who is offered a suitable job must take it or lose their UI benefits. A core purpose of the UI program is helping workers get back to work, and UI provides laid-off workers with temporary assistance to help pay bills and relieve hardship. By reaffirming these rules and purposes, the Administration will ensure that the UI program continues to support workers and facilitate hiring.
“Let’s be clear,” President Joe Biden stated, “our economic plan is working. I never said — and no serious analyst ever suggested — that climbing out of the deep, deep hole our economy was in would be simple, easy, immediate, or perfectly steady. Remember, 22 million Americans lost their jobs in this pandemic.
“So, some months will exceed expectations; others will fall short. The question is, ‘What is the trendline? Are we headed in the right direction? Are we taking the right steps to keep it going?’ And the answer, clearly, is yes…
“Twenty-two million people lost their jobs in this pandemic through no fault of their own. They lost their jobs to a virus, and to a government that bungled its response to the crisis and failed to protect them.
“We still have 8 million fewer jobs than we did when the pandemic started. And for many of those folks, unemployment benefits are a lifeline. No one should be allowed to game the system and we’ll insist the law is followed, but let’s not take our eye off the ball…
“So we need to stay focused on creating jobs and beating this pandemic today, and building back better for tomorrow. The American Rescue Plan is just that: a rescue plan. It’s to get us out of the crisis and back on the track, but it’s not nearly enough.
“That’s why we need the American Jobs Plan, which is an eight-year investment — an eight-year investment strategy to make sure working people of this country get to share in the benefits of a rising economy, and to put us in a position to win the competition with China and the rest of the world for the 21st century.”
Specifically, today the President is:
REMOVING BARRIERS THAT ARE KEEPING AMERICANS FROM RETURNING SAFELY TO GOOD-PAYING WORK
Accelerating the Provision of Assistance to Hard-Hit Child Care Providers to Get More Parents Back to Work
Between February 2020 and March 2021, 520,000 mothers and 170,000 fathers between ages 20 and 54 left the labor force and have not returned. Many need or want to work but cannot because of child care disruptions. At the same time, early childhood and child care providers – nearly all small businesses, overwhelmingly owned by women and disproportionately owned by people of color – have been hit hard by the pandemic. According to one survey, as of December, about one in four child care providers open at the start of the pandemic were closed, hindering access to care, especially for families of color. Child care providers that have stayed open have gone to enormous lengths to do so and are struggling to stay open: two in five providers report taking on debt for their programs using personal credit cards to pay for increased costs and three in five work in programs that have reduced expenses through layoffs, furloughs, or pay cuts. And, there are 150,000 fewer child care jobs today than there were at the beginning of the pandemic.
The American Rescue Plan provides funding to address the child care crisis caused by COVID-19 to help parents who need or want to work to return to their jobs. This includes funding to stabilize the child care industry so that parents can send their children to safe, healthy, stable child care environments and additional funding to help families access affordable, high-quality care, including by providing subsidized care to more than 800,000 families with the greatest need and by providing resources for hard-hit child care providers.
Today, the Department of Health and Human Services is releasing guidance to states, tribes, and territories so that states can start getting the child care stabilization funding to providers immediately. The guidance will encourage states to get funding out quickly and to make it as easy as possible for hundreds of thousands of child care providers, including centers and family-based providers, to receive the funding. It will also encourage states to allow the funds to be used broadly to meet the unique needs of providers so they can reopen or maintain essential services. It will explain, for example, how they can use the funds to bolster their workforce, cover expenses like rent and utilities, and pay for goods and services needed to stay open or reopen. And, it will provide guidance on ways providers can use funds to help them operate according to CDC guidelines, so that as parents return to work, they can have peace of mind their children are in a safe and healthy learning environment. In all, these funds will support child care providers in keeping their doors open, benefiting the parents of more than 5 million children who rely on them to stay in or return to the labor force.
And, thanks to the historic expansion of the Child and Dependent Care Tax Credit (CDCTC) in the American Rescue Plan, families can rest assured that they can receive up to half of their child care expenses this year when they file taxes for 2021. A median income family with two kids under age 13 will receive a tax credit of up to $8,000 towards this year’s expenses, compared with a maximum of $1,200 previously.
Directing the Secretary of Labor to Safely Expand States’ Reemployment Services and Workforce Development Boards’ Jobs Counseling for Unemployment Beneficiaries.
States receive federal funding for Reemployment Services and Eligibility Assessments (RESEA) of UI beneficiaries to help them find employment while ensuring they remain eligible for benefits. These services shorten workers’ time on unemployment benefits by helping them match with good jobs and confirm their eligibility for benefits. States significantly and appropriately slowed in-person RESEA meetings in the midst of historic unemployment and the COVID-19 pandemic. With the economy and jobs growing again, the President will direct the Secretary of Labor to issue guidance to states to quickly and safely – consistent with CDC and OSHA guidance – expand their RESEA programs so that more UI beneficiaries can return to work.
Similarly, the public workforce system’s Workforce Development Boards (WDB) collectively receive hundreds of millions of dollars they can use to provide individualized career counseling, called “individual career services,” to job seekers. However, because of the pandemic’s risks, many WDBs stopped providing in-person services and had to quickly transition to remote services. Now that tens of millions of Americans have been vaccinated, and we know how to operate physical locations safely, the President will direct the Secretary of Labor to work with the public workforce system to provide the maximum level possible of individual career services to UI beneficiaries and other unemployed workers using existing resources, and in a manner consistent with CDC and OSHA guidance.
MAKING IT EASIER FOR EMPLOYERS TO HIRE NEW WORKERS
Supporting Hard-Hit Restaurants and Bars
Restaurants, bars, and other small businesses offering on-site food and beverages are vital to our communities and economy. From big cities to small towns, these restaurants and bars offer communities a place to gather, celebrate, and share ideas. They also employed nearly 12 percent of all workers prior to the pandemic. Despite their importance, restaurants and bars have suffered severely during the pandemic. The leisure and hospitality sector, which includes restaurants and bars, had 17 percent fewer jobs this April than in February 2020.
Though we have seen significant progress under the Biden-Harris Administration – leisure and hospitality added 331,000 jobs in April, by far the most of any industry and more than it added in March – there is still more work to do to help this critical sector recover. Established through the American Rescue Plan, the Biden-Harris Administration recently launched the Restaurant Revitalization Fund (RRF) – a program to aid restaurants, bars, food trucks, and other food and drink establishments. These grants will give restaurants and bars the flexibility to hire back workers at good wages. In the first two days of the program, 186,200 restaurants, bars, and other eligible businesses in all 50 states, Washington, D.C., and five U.S. Territories applied for relief.
Today, the Administration is sending the first grants under the program to 16,000 hard-hit restaurants. These include restaurants in states and territories throughout the country, and restaurants owned and controlled by women, veterans, and socially and economically disadvantaged individuals.
Providing States and Localities with the Resources They Need to Help Return Americans to Work
The American Rescue Plan delivered flexible Coronavirus State and Local Fiscal Recovery Funds that will help state and local governments hire back public sector workers; ramp up the effectiveness of their COVID response and vaccination programs to make return to work, school, and care safer; and bolster efforts to help workers negatively affected by the pandemic to train for and secure good-paying jobs. With today’s announcement, the U.S. Department of Treasury is making the first segment of these funds available to states and localities and laying out how these funds can be used to address pandemic-response needs and support the communities and populations hardest-hit by the COVID-19 crisis.
State and local employment remains 1.3 million jobs down since before the pandemic. Learning from the mistakes of the Great Recession, when state and local government budget cuts were a drag on GDP growth for 23 of the 26 quarters following the crisis, the funds will provide these governments with the resources needed to help address challenges in returning Americans to work. This includes in the public sector, where state and local employment remains down over one million jobs since the start of the pandemic. Fiscal Recovery Funds will help bring firefighters, teachers, school staff, cops, and other public servants back to work.
Helping Employers – Especially Small Businesses – Rehire and Retain Workers Through the Extended and Expanded Employee Retention Credit
To help hard-hit employers rehire and retain workers, President Biden extended and expanded the Employee Retention Credit (ERC) in the American Rescue Plan. This year, the ERC offers eligible employers with 500 or fewer employees a tax credit of 70 percent of the first $10,000 in wages per employee per quarter. In other words, this refundable, advanceable credit will cover up to $7,000 in wages per quarter or $28,000 per year for each employee. For example:
A small independent retailer in Milwaukee, Wisconsin with 25 employees has $130,000 in payroll expenses per quarter (all for employees earning less than $10,000 in the quarter), and experiences a 25 percent decline in gross receipts in the first quarter of 2021 compared to the first quarter of 2019. The retailer is eligible for the Employee Retention Credit in the first quarter since it experienced a greater than 20 percent decline in gross receipts. The retailer is also eligible for the ERC in the second quarter because of the decline as compared to 2019 in the immediately preceding first quarter. The retailer can claim a tax credit of $91,000 in both the first and second quarters (for a total of $182,000). The amount of the tax credit would be applied against the retailer’s quarterly federal payroll tax amount, and then, assuming that the $91,000 was in excess of the total liability for the quarter, the excess would be advanced (or paid by the government directly to the retailer). If the retailer experienced declines in gross receipts in the third quarter as compared to 2019, it could claim an additional tax credit (in a similar amount) for the third quarter and the fourth quarter. The small retail business could use this advance – which could amount to tens of thousands of dollars – to rehire workers, raise wages, improve facilities, and purchase new inventory.
While more than 30,000 small businesses have already claimed more than $1 billion in ERCs this year, the Biden-Harris Administration is working to increase awareness of and participation in this beneficial program. Specifically, this week, the Treasury Department will disseminate clear and concise steps on how businesses can determine their eligibility and claim the ERC. These and other efforts will help businesses bring employees back sooner and keep them on the job as the economy recovers.
Helping Employers Ramp Back Up
As businesses ramp back up without knowing how many workers they will need to operate as the economy recovers, some will look to bring workers on part-time. The UI system offers options for these employers and their returning workers. Workers shouldn’t have to choose between losing their full UI benefits to take part-time work that represents only a portion of their original salary. The Department of Labor will announce this week how unemployed workers who are rehired part-time don’t have to face that choice. They can work part-time while still receiving part of their UI benefits so they can work and still make ends meet.
There are two programs that can help and the Department of Labor this week will help highlight them:
Short-Time Compensation: Short-time compensation was designed to help prevent layoffs by allowing workers to remain employed at reduced hours and still collect a portion of their UI benefits. But it can also be used to help employers rehire their already laid off workers. If an employer brings a laid-off employee back part-time and participates in the short-time compensation program, that worker will receive pro-rated UI benefits to help cover reduced compensation for not working full time, as well as the $300 weekly supplement until that supplement expires September 6th.
The Biden-Harris Administration will highlight this program to help employers rehire their laid-off employees in the coming weeks and work to make it as easy as possible for employers and workers to participate. Short-time compensation programs are currently available in . These benefits are fully federally funded through September 6 for those states.
Partial UI: Another overlooked option for helping employers ramp up is the partial UI program, which allows workers to return to work at a new employer at reduced hours while still receiving some unemployment benefits. This is a good option for workers who may not qualify for short-time compensation because they are not returning to their previous employer. States can enhance the capacity of partial UI by raising the income threshold where workers can both work and receive some UI benefits, and the Department of Labor will be encouraging states to do so.
CLARIFYING RULES OF THE UI PROGRAM
This week, the Department of Labor will reaffirm longstanding UI requirements to make sure everyone, including states, employers, and workers, understands the rules of the road for UI benefits. These clarifications will also help ease a return to work. Specifically, the Secretary of Labor will issue a letter to states to reaffirm that individuals receiving UI may not continue to receive benefits if they turn down a suitable job due to a general, non-specific concern about COVID-19. In addition, the President is directing the Secretary of Labor to work with states to reinstate work search requirements for UI recipients, if health and safety conditions allow.
Clarifying Rules of UI Programs: The Department of Labor will clarify that, under all UI programs including the Pandemic Unemployment Assistance (PUA) program put in place last year, workers may not turn down a job due to a general, non-specific concern about COVID-19 and continue to receive benefits. Under the PUA program, a worker may receive benefits if the worker certifies weekly that one of the few specific COVID-related reasons specified by Congress is the cause of their unemployment. These reasons include, for example, that the worker has a child at home who cannot go to school because of the pandemic or that the worker is offered a job at a worksite that is out of compliance with federal or state health requirements. Moreover, workers may not misreport a COVID-related reason for unemployment. The President is directing the Department of Labor to take concrete steps to raise awareness about these and other requirements.
Directing the Secretary of Labor to Work with States on Work Search Requirements: The President is directing the Secretary of Labor to work with states to reinstate work search requirements for UI recipients, if health and safety conditions allow. As part of the Families First Coronavirus Response Act signed into law last year by the previous Administration, states receiving certain federal relief funds were required to waive their requirements that workers search for work in order to continue receiving unemployment benefits. While 29 states have already reinstated their work search requirements, the President is directing the Department of Labor to work with the remaining states, as health and safety conditions allow, to put in place appropriate work search requirements as the economy continues to rebound, vaccinations increase, and the pandemic is brought under control.
A core purpose of the UI program is helping workers get back to work. UI keeps workers connected to the labor market during spells of unemployment by providing workers with income that allows them to look for a job match commensurate with their skills or prior wages. UI recipients also gain access to crucial reemployment services to help with job search or retraining where necessary. Ensuring a good job match is good for workers, as well as employers who want the best candidates for their jobs.
Returning to work during a pandemic is more complicated than searching for work in ordinary times. The COVID-19 pandemic remains a genuine challenge for our country, with infections, hospitalizations, and deaths down substantially when compared with last year, but still at unacceptably high levels. While vaccinations are on the rise with over half of American adults having received at least one shot, around a quarter of those aged 18 to 29 and around a third of those aged 30 to 39 are fully vaccinated. There is a great deal more to do.
At the same time, our economy is growing again at an annual rate of more than 6% and more than 1.5 million jobs have been created over the last three months. Many more workers would like to return to work if they can overcome the barriers that stand in the way. We can and will continue to ensure workers and their families are protected from COVID-19, while also helping those who are able and available to search for good jobs in safe and healthy workplaces.
‘Key to Getting Funds Into Hands of Providers’
Katie Hamm, acting deputy assistant secretary for Early Childhood Development at HHS’ Administration for Children and Families, stated, “Today, the Administration for Children and Families (ACF) released guidance to support states, territories, and tribes in distributing $24 billion in relief funds for child care providers. The guidance explains specific requirements related to the child care stabilization funds and identifies opportunities for states, territories, and tribes to leverage these resources to support a wide range of child care providers.
“The guidance is key to getting funds into the hands of providers that employ essential workers and help make child care accessible to working families. These funds essentially help stabilize the industry and spur economic growth in communities hit hardest by the pandemic. Most of these funds will go to providers and can be used for a variety of operating expenses, including wages and benefits, rent and utilities, personal protective equipment and sanitization and cleaning.
“This guidance lays out a roadmap for stabilizing the child care sector. The document is meant to support and guide child care agencies in awarding grants to child care centers and family child care providers, which are vital to our nation’s economic recovery.”
The White House released fact sheets that highlight the need for and impact of the investments proposed by President Biden in the American Families Plan in states and territories across the country. The American Families Plan is a once-in-a-generation investment in the foundations of middle-class prosperity: education, health care, and child care.
The fact sheets highlight how many families would benefit from free community college and universal pre-K, the high costs of child care, the number of workers who lack access to paid family leave, and the thousands of dollars families and workers would save in tax cuts and credits.
Individual fact sheets for each of the 50 states, the District of Columbia, Puerto Rico, and other territories are linked below.
These fact sheets are the latest in a series from the White House highlighting the benefits of the American Families Plan for communities, in addition to a series of fact sheets on the American Jobs Plan. Fact sheets on how the American Families Plan advances racial equity and supports rural America have been released in recent weeks.
The White House issued a fact sheet explaining how President Joe Biden’s American Families Plan will support children, teachers and working families and advances equity and racial justice:
On his first day in office, President Biden signed an Executive Order directing the whole of the federal government to advance equity and racial justice. Today, the President announced a historic new set of investments to deliver on his vision of a more equitable America through the American Families Plan. The American Families Plan will help restore the promise of America for communities who have been left behind and locked out of opportunity—investing in teachers and students, empowering workers and their families, and reimagining a tax code that rewards work over wealth. By extending and building upon the provisions of the American Rescue Plan, the American Families Plan would lift more than 10 million people out of poverty in 2022. This means a 29 percent reduction in Black poverty, a 31 percent reduction in Latino poverty, and a 15 percent reduction in Asian American, Native Hawaiian, and Pacific Islander poverty, relative to the projected poverty rate for 2022. Among children, it would reduce poverty by more than 47 percent.
President Biden’s American Families Plan will deliver a fairer and more equitable America by:
Closing opportunity gaps for low-income children and children of color by providing universal access to preschool, and making quality, affordable child care more accessible across the nation.
Investing in educational opportunity for underserved communities by providing two years of free community college for Americans, including DREAMers; making Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and institutions such as Hispanic-serving institutions (HSIs), Asian American and Native American Pacific Islander-serving institutions (AANAPISIs), and other Minority-serving Institutions (MSIs) more affordable; increasing the value of Pell Grants to help more low-income students attend college; and ensuring more students are supported through completion.
Empowering teachers by investing in the training and support they need and ensuring more teachers of color can reach the classroom.
Creating a right to paid family and medical leave to ensure working parents and caregivers, including workers of color and low-wage workers, can equitably access the time off they need to support their families.
Closing gaps in our social safety net to ensure that kids have the nutritious food they need to be healthy and succeed in school.
Extending the American Rescue Plan’s historic expansions of the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit to provide income support and cut poverty among families and workers.
Together, these investments will give millions of children across the country a fair shot at the American dream.
UNIVERSAL PRE-SCHOOL FOR ALL 3- AND 4-YEAR-OLDS
Preschool is critical to ensuring that children start kindergarten with the skills and supports that set them up for success in school. In fact, research shows that kids who attend universal Pre-K are more likely to take honors classes and less likely to repeat a grade, and another study finds low-income children who attend universal programs do better in math and reading as late as eighth grade. Unfortunately, most children, and especially children of color and low-income children, do not have access to the full range of high-quality pre-school programs available to their peers. In addition, children with disabilities benefit from inclusive, accessible pre-school programs with their peers, and all children benefit when we create socio-economically diverse Pre-K classrooms where all students thrive.
President Biden’s American Families Plan will:
Close opportunity gaps by providing universal pre-school to all 3- and 4-year-olds. President Biden is calling for a national partnership with states to offer free, high-quality, accessible, and inclusive preschool to all 3-and 4-year-olds—benefitting 5 million children. This historic investment in America’s future will first prioritize high-need areas and enable communities and families to choose the setting that works best for them, whether that’s a preschool classroom in a public school, a center, or a Head Start program. The President’s plan will also ensure that all publicly-funded preschool is high-quality with low student-to-teacher ratios, a high-quality and developmentally appropriate curriculum, and supportive classroom environments that are inclusive for all students. The President’s plan will leverage investments in tuition-free community college and teacher scholarships to support those who wish to earn a bachelor’s degree or other credential that supports their work as an educator or their work to become an early childhood educator. And, educators will receive job-embedded coaching, professional development, and wages that reflect the importance of their work. All employees in participating Pre-K programs and Head Start will earn at least $15 per hour, and those with comparable qualifications will receive compensation commensurate with that of kindergarten teachers. These investments will give American children a head start and pave the way for the best-educated generation in U.S. history
FREE COMMUNITY COLLEGE AND OTHER POSTSECONDARY INVESTMENTS
For much of the 20th century, graduating from high school was a gateway to a stable job and a living wage. But over the last 40 years, we have seen the most growth in jobs requiring higher levels of job preparation, including education and training. Today, 70 percent of jobs are held by people with more than a high school degree. American workers, and especially workers of color, need support to build their skills, increase their earnings, remain competitive, and share in the benefits of the new economy. President Biden’s American Families Plan will:
Offer two years of free community college to all Americans, including DREAMers. Community colleges provide educational opportunities for students who are often underserved by four-year universities, including first-generation students, students of color, low-income students, and adult learners. President Biden’s proposal creates a federal-state, -territory, and -tribal partnership that allows first-time college students and workers wanting to reskill to enroll in a community college to earn a degree or credential for free. Students can use the benefit for up to three years and, if circumstances warrant, up to four years, recognizing that many students’ lives and other responsibilities can make full-time enrollment difficult. If all states, territories, and tribes participate, about 5.5 million students would pay $0 in tuition and fees.
Provide up to approximately $1,400 in additional assistance to low-income students by increasing the Pell Grant award. Nearly 60 percent of Black, almost half of Latino, half of American Indian or Alaska Native, and more than one-third of Native Hawaiian or Pacific Islander students depend on Pell Grants to help pay for college. But the grant has not kept up with the rising cost of postsecondary education; over the last 50 years, the maximum Pell Grant value has plummeted from nearly 80 percent of the cost of a four-year college degree to just 30 percent — leading millions of low-income students to take out debt to finance their education. The American Families Plan would increase the maximum Pell Grant award by approximately $1,400 and allow DREAMers to access the funding.
Increase college retention and completion rates. Just 40 percent and 54 percent of first-time Black and Latino students at four-year colleges and universities, respectively, go on to earn their degree, compared to 64 percent of white students. And overall, just 40 percent of community college students, who are disproportionately low-income and people of color, graduate within 6 years. The President is proposing a $62 billion formula grant program that will provide funding to states, territories, and Tribes to support retention and completion activities at colleges and universities that serve high numbers of low-income students, including wraparound services ranging from child care and mental health services to faculty and peer mentoring; emergency basic needs grants; practices that recruit and retain faculty; transfer agreements between colleges; and evidence-based remediation programs.
Provide two years of subsidized tuition and expand programs in high-demand fields at HBCUs, TCUs, and MSIs. Research has found that HBCUs, TCUs, and MSIs are vital to helping underrepresented students move to the top of the income ladder. But despite their record of success, these institutions have significantly fewer resources than other top colleges and universities, undermining their ability to grow and support more students. The President is calling for $39 billion to provide tuition subsidies to low- and middle-income students attending HBCUs, TCUs, and MSIs. The President is also calling for $5 billion to expand existing institutional aid grants to HBCUs, TCUs, and MSIs, which can be used by these institutions to strengthen their academic, administrative, and fiscal capabilities, including by creating or expanding educational programs in high-demand fields (e.g., STEM, computer sciences, nursing, and allied health), with an additional $2 billion funding directed towards building a pipeline of skilled health care workers with graduate degrees. These proposed investments, combined with the $45 billion proposed in the American Jobs Plan targeted to these institutions, will enable America’s HBCUs, TCUs, and MSIs to help advance underrepresented students and make the U.S. more competitive on the global stage.
EDUCATION AND PREPARATION FOR TEACHERS
Few people have a bigger impact on a child’s life than a great teacher. Unfortunately, the U.S. faces a large and growing teacher shortage. Before the pandemic, schools across the nation needed an estimated additional 100,000 certified teachers, resulting in key positions going unfilled, granting of emergency certifications, or teachers teaching out of their certification area. Shortages of certified teachers disproportionately impact schools with higher percentages of students of color, which have a higher proportion of teachers that are uncertified and higher shares of inexperienced teachers, exacerbating educational disparities. President Biden is calling for investments to improve the impact of new teachers entering the profession, increase retention rates, and increase the number of teachers of color, all of which will improve student outcomes.
President Biden’s American Families Plan will:
Address teacher shortages, improve teacher preparation, and strengthen pipelines for underrepresented teachers, including teachers of color. Our country faces a serious teacher shortage problem, which disproportionately impacts students of color. The percentage of teachers in their first or second year of teaching in schools with the highest percentage of students of color is 7 percentage points higher than schools with the lowest percentage of students of color (17 percent vs. 10 percent). The percentage of teachers who are uncertified is more than three times as large (4.8 percent vs. 1.3 percent). At the same time, while teachers of color can have a particularly strong impact on students of color, around one in five teachers are people of color, compared to more than half of K-12 public school students. These disparities help drive gaps in student outcomes. Strengthening the teacher pipeline and improving teacher preparation, supporting teachers so they stay in the classroom, and investing in the recruitment and preparation of underrepresented teachers will help narrow persistent educational disparities. President Biden is calling on Congress to invest in America’s teachers, including by doubling scholarships for future teachers from $4,000 to $8,000 per year, which would help underrepresented teachers, including teachers of color, access high-quality teacher preparation programs that best prepare them for the work ahead. The plan also will invest $2.8 billion in Grow Your Own programs and year-long, paid teacher residency programs, which have a greater impact on student outcomes, teacher retention, and are more likely to enroll underrepresented teacher candidates, including candidates of color; and invest $400 million in teacher preparation programs at HBCUs, TCUs, and MSIs.
Support the development of special education teachers. There has been a 17 percent decline in the number of special educators over the last decade. Additionally, while only about half of the students receiving special education services are white, approximately 82 percent of special education teachers are white. The American Families Plan will invest $900 million in personnel preparation funds under the Individuals with Disabilities Education Act (IDEA), funding pathways to additional certifications, and strengthening existing teacher preparation programs for special educators.
Help current teachers earn in-demand credentials. Many teachers are eager to answer the call to get certified in areas their schools need, like bilingual education, but are deterred due to the high cost of getting an additional certification. President Biden is calling on Congress to create a new fund to provide more than 100,000 educators with the opportunity to obtain additional certifications in high-demand areas like special education, bilingual education, and certifications that improve teacher performance. This will particularly benefit students with disabilities and English learners.
Invest in educator leadership. Millions of teachers – and the students they educate – would stand to benefit from greater mentorship and leadership opportunities. President Biden is calling on Congress to invest $2 billion to support programs that leverage teachers as leaders, such as high-quality mentorship programs for new teachers and underrepresented teachers, including teachers of color.
CHILD CARE
High-quality early care and education helps ensure that children can take full advantage of education and training opportunities later in life, especially for children from low-income families, who face learning disparities before they even can go to preschool. One study by Nobel Laureate James Heckman found that every dollar invested in a high-quality, comprehensive birth to five program for the most economically disadvantaged children resulted in $7.30 in benefits as children grew up healthier, were more likely to graduate high school and college, and earned more as adults. But we have grave disparities when it comes to child care in our country. One analysis finds that more than half of Latino and Native American families live in child care deserts. Difficulty finding high-quality, affordable child care leads some parents, especially mothers, to drop out of the labor force entirely, some to reduce their work hours, and others to turn down a promotion – leading to lifetime consequences in terms of earnings, savings, and retirement. Lack of affordable child care can be especially challenging for the families of the nearly 7 in 10 Black women who are their families’ primary or sole breadwinners.
President Biden’s American Families Plan will:
Ensure low- and middle-income families can access affordable child care for children under the age of five. Under the President’s plan, families will pay only a portion of their income based on a sliding scale. For the most hard-pressed working families, child care costs for their young children would be fully covered and families earning 1.5 times their state median income will spend no more than 7 percent of their income on child care for their young children. The plan will also provide families with a range of inclusive and accessible options to choose from for their child, from child care centers to family child care providers to Early Head Start programs.
Invest in high-quality care. The last time the U.S. prioritized major, long-term investments in child care was when President Roosevelt signed the Lanham Act to provide free, high-quality child care in an effort to support women going to work during World War II. Not only did it enable women to work, but children who participated experienced long-lasting economic benefits, proving most beneficial for the most disadvantaged children. Under the President’s plan, child care providers will receive funding to support the true cost of quality early childhood education–including a developmentally appropriate curriculum, small class sizes, and culturally and linguistically responsive environments that are accessible and inclusive of children with disabilities. These investments support positive interactions between educators and children that promote children’s social-emotional and cognitive development.
Invest in the care workforce, including the women of color who make up a substantial percentage of the field. More investment is needed to support early childhood providers and educators, more than nine in ten of whom are women and more than four and ten of whom are women of color. They are among the most underpaid workers in the country. The typical child care worker earned $12.24 per hour in 2020, and one report found nearly half rely on public income support programs. The American Families Plan includes a $15 minimum wage for early childhood educators and ensures that those with similar qualifications as kindergarten teachers receive comparable compensation and benefits.
When fully implemented, the President’s plan will provide 3 million children from low- and middle-income families with high quality care, saving the average family $14,800 a year on child care expenses.
PAID LEAVE
Paid family and medical leave supports workers and families and is a critical investment in the strength and equity of our economy. Paid leave has been found to reduce racial disparities in wage loss between workers of color and white workers, improve child health and well-being, support employers by improving employee retention and reducing turnover costs, and increase women’s labor force participation. However, currently, 95 percent of the lowest wage workers, mostly women and workers of color, lack access to any paid family leave. Sixty-two percent of Black adults and 73 percent of Latino adults are either ineligible for or cannot afford to take unpaid leave, compared to 60 percent of white adults. Additionally, Black and Latina mothers are more likely than white women to report being let go by an employer or quitting their jobs after giving birth in order to have some leave.
President Biden’s American Families Plan will:
Create a national comprehensivepaid family and medical leave program. Paid family and medical leave can help reduce racial disparities in wage loss between workers of color and white workers. People with disabilities may also have less access to paid leave due to higher rates of part time and low wage employment. The program will ensure workers receive partial wage replacement to take time to bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, find safety from sexual assault, stalking, or domestic violence, heal from their own serious illness, or take time to deal with the death of a loved one. It will guarantee twelve weeks of paid parental, family, and personal illness/safe leave by year 10 of the program, and also ensure workers get three days of bereavement leave per year starting in year one. The program will provide workers up to $4,000 a month, with a minimum of two-thirds of average weekly wages replaced, rising to 80 percent for the lowest wage workers. The plan has an inclusive definition of family, ensuring workers can care for and be cared by a loved one who is not related by blood, which will greatly impact LGBTQ individuals and people with disabilities. We estimate this program will cost $225 billion over a decade.
NUTRITION
The pandemic has added urgency to the moral travesty of nutrition insecurity among children, which disproportionately affects low-income families and children of color. No one should have to worry about whether they can provide nutritious food for themselves or their children. A poor diet jeopardizes a child’s ability to learn and succeed in school. Nutrition insecurity can also have long-lasting negative impact on overall health and put children at higher risk for diseases such as diabetes, heart disease, and high blood pressure.
President Biden’s American Families Plan will:
Expand summer EBT to all eligible children nationwide. The Summer EBT Demonstrations help low-income families with children eligible for free- and reduced-price meals during the school year purchase food during the summer. The American Families Plan builds on the American Rescue Plan’s support for Summer Pandemic-EBT by making the successful program permanent and available to all 29 million children receiving free- and reduced-price meals. Research shows that this program decreases food insecurity among children and led to positive changes in nutritional outcomes.
Expand school meal programs. Currently, just 70 percent of eligible schools have adopted Community Eligibility Provision (CEP), which allows high-poverty schools to provide meals free of charge to all of their students—breaking down barriers for students who may be eligible for school meals but may not apply for them due to stigma or not fully understanding the application process. The President’s plan will allow more schools in high poverty districts to offer meals free of charge to all of their students by reimbursing a higher percentage of meals at the free reimbursement rate through CEP. Additionally, the plan will target elementary schools by reimbursing an even higher percentage of meals at the free reimbursement through CEP and lowering the threshold for CEP eligibility for elementary schools. The plan will also expand direct certification to automatically enroll more students for school meals based on Medicaid and Supplemental Security Income data.
Facilitate re-entry for formerly incarcerated individuals through SNAP eligibility. Individuals convicted of a drug-related felony are currently ineligible to receive SNAP benefits unless a state has taken the option to eliminate or modify this restriction. Denying these individuals—many of whom are parents of young children—SNAP benefits jeopardizes nutrition security and poses a barrier to re-entry into the community in a population that already faces significant hurdles to obtaining employment and stability. SNAP is a critical safety net for many individuals as they search for employment to support themselves and their families. This restriction disproportionately impacts African Americans, who are convicted of drug offenses at much higher rates than white Americans.
TAX CUTS FOR AMERICAN FAMILIES AND WORKERS
While the American Rescue Plan provided meaningful relief for hundreds of millions of Americans, that is just a first step. Now is the time to build back better, to help families and workers who for too long have felt the squeeze of stagnating wages and an ever-increasing cost-of-living. 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.
President Biden’s American Families Plan will:
Extend expanded ACA premiums tax credits in the American Rescue Plan. Health care should be a right, not a privilege, and Americans facing illness should never have to worry about how they are going to pay for their treatment. No one should face a choice between buying life-saving medications or putting food on the table. President Biden has a plan to build on the Affordable Care Act and lower prescription drug costs for everyone by letting Medicare negotiate prices, reducing health insurance premiums and deductibles for those who buy coverage on their own, creating a public option and the option for people to enroll in Medicare at age 60, and closing the Medicaid coverage gap to help millions of Americans gain health insurance. The American Families Plan will build on the American Rescue Plan and continue our work to make health care more affordable. The biggest improvement in health care affordability since the Affordable Care Act, the American Rescue Plan provided two years of lower health insurance premiums for those who buy coverage on their own. With these changes, about three in four uninsured Black adults and nearly four in five uninsured Hispanic or Latino adults are now eligible for low-cost health care. The American Families Plan will make those premium reductions permanent, a $200 billion investment. As a result, nine million people will save hundreds of dollars per year on their premiums, and four million uninsured people will gain coverage. The Families Plan will also invest in maternal health and support the families of veterans receiving health care services.
Extend the Child Tax Credit (CTC) increases in the American Rescue Plan through 2025 and make the CTC permanently fully refundable. The President is calling for the Child Tax Credit expansion, first enacted in the American Rescue Plan, to be extended. This legislation expands the Child Tax Credit from $2,000 per child to $3,000 per child six-years old and above, and $3,600 per child for children under six. It also makes 17-year-olds eligible for the first time and makes the credit fully refundable on a permanent basis, so that low-income families—the families that need the credit the most—can benefit from the full tax credit. The expanded Child Tax Credit in the American Rescue Plan will benefit nearly 66 million children, and is the single largest contributor to the plan’s historic reductions in child poverty, including by 52 percent for Black children, 45 percent for Latino children, 37 percent for Asian American, Native Hawaiian, and Pacific Islander children, and 61 percent for Native American children.
Permanently increase tax credits to support families with child care needs. To help even more low- and middle-income families, President Biden is calling on Congress to make permanent the temporary Child and Dependent Care Tax Credit (CDCTC) expansion enacted in the American Rescue Plan. Families will get back as a tax credit as much as half of their spending on child care for children under age 13, so that they can receive a total of up to $4,000 for one child or $8,000 for two or more children. The CDCTC will be fully refundable, making the credit more equitable by allowing low-income working families to receive the full value of the credit towards their eligible child care expenses regardless of how much they owe in taxes. This is a dramatic expansion of support to low- and middle-income families. In 2019, a family claiming a CDCTC for the previous year got less than $600 on average towards the cost of care, and many low-income families got nothing.
Make the Earned Income Tax Credit expansion for childless workers permanent. President Biden believes our tax code should reward work and not wealth. And that means rewarding workers who work hard every day at modest wages to provide their communities with essential services. Before this year, the federal tax code taxed low-wage childless workers into poverty or deeper into poverty — the only group of workers it treated this way. The American Rescue Plan addressed this problem by roughly tripling the EITC for childless workers, benefitting 17 million low-wage workers, many of whom are essential workers including cashiers, cooks, delivery drivers, food preparation workers, and childcare providers. For example, a childless worker who works 30 hours per week at $9 per hour earns income that, after taxes, leaves them below the federal poverty line. By increasing her EITC to more than $1,100, this EITC expansion helps pull such workers out of poverty. The President is calling on Congress to make this expansion permanent. Extending these changes will give a critical boost in earnings of an estimated 2.8 billion Black, 2.8 million Latino, and 678,000 Asian American workers.
To view this fact sheet in your browser, click here.
President Joe Biden is expected to lay out his American Families Plan – a $1 trillion investment “in our kids, our families and our economic future” over 10 years, including universal pre-K, paid parental leave, child care, free community college and how he proposes to pay for it ($800 billion in tax enforcement, higher rates for the wealthiest payers and corporations) – in his first speech to the joint session of Congress on the eve of his 100th day in office.
The White House provided a fact sheet:
Today, President Biden announced the American Families Plan, an investment in our kids, our families, and our economic future.
In March, the President signed into law the American Rescue Plan, which continues to provide immediate relief to American families and communities. Approximately 161 million payments of up to $1,400 per person have gone out to households, schools are reopening, and 100 percent of Americans ages 16 and older are now eligible for a COVID-19 vaccine. The Rescue Plan is projected to lift more than five million children out of poverty this year, cutting child poverty by more than half. While too many Americans are still out of work, we are seeing encouraging signs in the labor market, as businesses begin to rehire and some of the hardest hit sectors begin to reopen.
But the President knows that we need to do more. It is not enough to restore where we were prior to the pandemic. We need to build a stronger economy that does not leave anyone behind – we need to build back better. President Biden knows a strong middle class is the backbone of America. He knows it should be easier for American families to break into the middle class, and easier to stay in the middle class. He knows that we need to continue to enable those who dropped out of the workforce – particularly the approximately two million women who left due to COVID – to rejoin and stay in the workforce. And, he knows that, unlike in past decades, policies to make life easier for American families must focus on bringing everyone along: inclusive of gender, race, or place of residence – urban, suburban, or rural.
The American Jobs Plan and the American Families Plan are once-in-a-generation investments in our nation’s future. The American Jobs Plan will create millions of good jobs, rebuild our country’s physical infrastructure and workforce, and spark innovation and manufacturing here at home. The American Families Plan is 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. Together, these plans reinvest in the future of the American economy and American workers, and will help us out-compete China and other countries around the world.
To grow the middle class, expand the benefits of economic growth to all Americans, and leave the United States more competitive, President Biden’s American Families Plan will:
Add at least four years of free education. Investing in education is a down payment on the future of America. As access to high school became more widely available at the turn of the 20th Century, it made us the best-educated and best-prepared nation in the world. But everyone knows that 12 years is not enough today. The American Families Plan will make transformational investments from early childhood to postsecondary education so that all children and young people are able to grow, learn, and gain the skills they need to succeed. It will provide universal, quality-preschool to all three- and four- year-olds. It will provide Americans two years of free community college. It will invest in making college more affordable for low- and middle-income students, including students at Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and institutions such as Hispanic-serving institutions, Asian American and Native American Pacific Islander-serving institutions, and other minority-serving institutions (MSIs). And, it will invest in our teachers as well as our students, improving teacher training and support so that our schools become engines of growth at every level.
Provide direct support to children and families. Our nation is strongest when everyone has the opportunity to join the workforce and contribute to the economy. But many workers struggle to both hold a full-time job and care for themselves and their families. The American Families Plan will provide direct support to families to ensure that low- and middle-income families spend no more than seven percent of their income on child care, and that the child care they access is of high-quality. It will also provide direct support to workers and families by creating a national comprehensive paid family and medical leave program that will bring the American system in line with competitor nations that offer paid leave programs. The system will also allow people to manage their health and the health of their families. And, it will provide critical nutrition assistance to families who need it most and expand access to healthy meals to our nation’s students – dramatically reducing childhood hunger.
Extend tax cuts for families with children and American workers. While the American Rescue Plan provided meaningful relief for hundreds of millions of Americans, too many families and workers feel the squeeze of too-low wages and the high costs of meeting their basic needs and their aspirations. At the same time, the wealthiest Americans continue to get further and further ahead. The American Families Plan will extend key tax cuts in the American Rescue Plan that benefit lower- and middle-income workers and families, including the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit. In addition to making it easier for families to make ends meet, tax credits for working families have been shown to boost child academic and economic performance over time. The American Families Plan will also extend the expanded health insurance tax credits in the American Rescue Plan. These credits are providing premium relief that is lowering health insurance costs by an average of $50 per person per month for nine million people, and will enable four million uninsured people to gain coverage.
Leading economic research has shown that the investments proposed in the American Families Plan will yield significant economic returns – boosting productivity and economic growth, producing a larger, more productive, and healthier workforce on a sustained basis, and generating savings to states and the federal government. Evidence shows that a dollar invested in high-quality early childhood programs for low-income children will result in up to $7.30 in benefits, including increased wages, improved health, and reduced crime. Parental paid leave has been shown to keep mothers in the workforce, increasing labor force participation and boosting economic growth. And, sustained tax credits for families with children have been found to yield a lifetime of benefits, ranging from higher educational attainment to higher lifetime earnings
In all, the American Families Plan includes $1.8 trillion in investments and tax credits for American families and children over ten years. It consists of about $1 trillion in investments and $800 billion in tax cuts for American families and workers. Alongside the American Families Plan, the President will be proposing a set of measures to make sure that the wealthiest Americans pay their share in taxes, while ensuring that no one making $400,000 per year or less will see their taxes go up. When combined with President Biden’s American Jobs Plan, this legislation will be fully paid for over 15 years, and will reduce deficits over the long term.
ADD AT LEAST FOUR YEARS OF FREE PUBLIC EDUCATION, CLOSE EQUITY GAPS, AND MAKE COLLEGE MORE AFFORDABLE
Early in the 20th century, the United States set a new global standard by expanding access to free public education through high school. Direct public investment in our children’s future propelled U.S. economic growth and enhanced our global competitiveness. Now, mounting evidence suggests that 12 years of school is no longer sufficient to prepare our students for success in today’s economy. Research tells us that we must invest early to support our children’s development and readiness for academic success; our transforming economy requires that we provide every student the opportunity to obtain a postsecondary degree or certificate.
That is why the American Families Plan calls for an additional four years of free, public education for our nation’s children. Specifically, President Biden is calling for $200 billion for free universal pre-school for all three- and four-year-olds and $109 billion for two years of free community college so that every student has the ability to obtain a degree or certificate. In addition, he is calling for an over $80 billion investment in Pell Grants, which would help students seeking a certificate or a two- or four-year degree. Recognizing that access to postsecondary education is not enough, the American Families Plan includes $62 billion to invest in evidence-based strategies to strengthen completion and retention rates at community colleges and institutions that serve students from our most disadvantaged communities. This is alongside a $46 billion investment in HBCUs, TCUs, and MSIs. President Biden is also calling for $9 billion to train, equip and diversify American teachers in order to ensure that our high school graduates are ready for success. These investments, combined with those laid out in the President’s American Jobs Plan, will boost earnings, expand employment opportunities, and enable the U.S. to win the 21st century.
UNIVERSAL PRE-SCHOOL FOR ALL THREE- AND FOUR-YEAR-OLDS
Preschool is critical to ensuring that children start kindergarten with the skills and supports that set them up for success in school. In fact, research shows that kids who attend universal pre-K are more likely to take honors classes and less likely to repeat a grade, and another study finds low-income children who attend universal programs do better in math and reading as late as eighth grade. Unfortunately, many children, but especially children of color and low-income children, do not have access to the full range of high-quality pre-school programs available to their more affluent peers. In addition to providing critical benefits for children, preschool has also been shown to increase labor force participation among parents – especially women — boosting family earnings and driving economic growth. By some estimates, the benefits of a universal pre-K system to U.S. GDP are more than three times greater than the investment needed to provide this service.
President Biden is calling for a national partnership with states to offer free, high-quality, accessible, and inclusive preschool to all three-and four-year-olds, benefitting five million children and saving the average family $13,000, when fully implemented. This historic $200 billion investment in America’s future will prioritize high-need areas and enable communities and families to choose the settings that work best for them. The President’s plan will also ensure that all publicly-funded preschool is high-quality, with low student-to-teacher ratios, high-quality and developmentally appropriate curriculum, and supportive classroom environments that are inclusive for all students. The President’s plan will leverage investments in tuition-free community college and teacher scholarships to support those who wish to earn a bachelor’s degree or another credential that supports their work as an educator, or to become an early childhood educator. And, educators will receive job-embedded coaching, professional development, and wages that reflect the importance of their work. All employees in participating pre-K programs and Head Start will earn at least $15 per hour, and those with comparable qualifications will receive compensation commensurate with that of kindergarten teachers. These investments will give American children a head start and pave the way for the best-educated generation in U.S. history.
FREE COMMUNITY COLLEGE AND OTHER POSTSECONDARY EDUCATION INVESTMENTS For much of the 20th century, graduating from high school was a gateway to a stable job and a living wage. But over the last 40 years, we have seen the most growth in jobs requiring higher levels of job preparation, including education and training. Today, 70 percent of jobs are held by people with more than a high school degree. American workers need and deserve additional support to build their skills, increase their earnings, remain competitive, and share in the benefits of the new economy. President Biden’s plan will expand access to affordable postsecondary education, laying the groundwork for innovation and inclusive economic growth for all Americans. Specifically, President Biden’s plan will:
Offer two years of free community college to all Americans, including DREAMers. The current crisis has led to a steep college enrollment decline, particularly for low-income students and students of color. As of Fall 2020, high-minority and high-poverty high schools saw a 9.4 percent and 11.4 percent decline in college enrollment, respectively. But even before the pandemic, cost remained a barrier to attending and graduating from community college for many Americans. President Biden’s $109 billion plan will ensure that first-time students and workers wanting to reskill can enroll in a community college to earn a degree or credential for free. Students can use the benefit over three years and, if circumstances warrant, up to four years, recognizing that many students’ lives and other responsibilities can make full-time enrollment difficult. If all states, territories, and Tribes participate, about 5.5 million students would pay $0 in tuition and fees.
Provide up to approximately $1,400 in additional assistance to low-income students by increasing the Pell Grant award. While nearly 7 million students depend on Pell Grants, the grant has not kept up with the rising cost of college. Over the last 50 years, the value of Pell Grants has plummeted. The maximum grant went from covering nearly 80 percent of the cost of a four-year college degree to under 30 percent — leading millions of low-income students to take out debt to finance their education. One in three community college students receive Pell Grants to pay for their education. Among students of color, nearly 60 percent of Black, half of American Indian or Alaska Native, almost half of Latino, and over one-third of Native Hawaiian or Pacific Islander students rely on Pell Grants to pay for college. The American Families Plan will increase the maximum Pell Grant award by approximately $1,400, a down payment on President Biden’s commitment to double the maximum award. The plan also allows DREAMers to access Pell Grants.
Increase college retention and completion rates. An education beyond high school can lead to higher pay, financial stability, social mobility, and better health outcomes. It also has public benefits such as a reduction in crime rates and higher civic engagement. However, far too many students enter college but do not graduate. Research shows that only approximately three out of five students finish any type of degree or certificate program within six years. To complete, students need additional support. The President is proposing a bold $62 billion grant program to invest in completion and retention activities at colleges and universities that serve high numbers of low-income students, particularly community colleges. States, territories, and Tribes will receive grants to provide funding to colleges that adopt innovative, proven solutions for student success, including wraparound services ranging from child care and mental health services to faculty and peer mentoring; emergency basic needs grants; practices that recruit and retain diverse faculty; transfer agreements between colleges; and evidence-based remediation programs.
Provide two years of subsidized tuition and expand programs in high-demand fields at HBCUs, TCUs, and MSIs. Research has found that HBCUs, TCUs, and MSIs are vital to helping underrepresented students move to the top of the income ladder. For example, while HBCUs are only three percent of four-year universities, their graduates make up approximately 80 percent of Black judges, half of Black lawyers and doctors, and 25 percent of Black undergraduates earning STEM degrees. Yet, these institutions have significantly less resources than other top colleges and universities, undermining their ability to grow and support more students. President Biden is calling on Congress to make a historic investment in HBCU, TCU, and MSI affordability. Specifically, he is calling for a new $39 billion program that provides two years of subsidized tuition for students from families earning less than $125,000 enrolled in a four-year HBCU, TCU, or MSI. The President is also calling for $5 billion to expand existing institutional aid grants to HBCUs, TCUs, and MSIs, which can be used by these institutions to strengthen their academic, administrative, and fiscal capabilities, including by creating or expanding educational programs in high-demand fields (e.g., STEM, computer sciences, nursing, and allied health), with an additional $2 billion directed towards building a pipeline of skilled health care workers with graduate degrees. These investments, combined with the $45 billion proposed in the American Jobs Plan targeted to these institutions, will enable America’s HBCUs, TCUs, and MSIs to tackle longstanding inequities in postsecondary education and make the U.S. more competitive on the global stage.
Address teacher shortages, improve teacher preparation, and strengthen pipelines for teachers of color. President Biden is calling on Congress to double scholarships for future teachers from $4,000 to $8,000 per year while earning their degree, strengthening the program, and expanding it to early childhood educators. The President’s plan also invests $2.8 billion in Grow Your Own programs and year-long, paid teacher residency programs, which have a greater impact on student outcomes, teacher retention, and are more likely to enroll teacher candidates of color. His plan targets $400 million for teacher preparation at HBCUs, TCUs, and MSIs and $900 million for the development of special education teachers.
Help current teachers earn in-demand credentials. Many teachers are eager to answer the call to get certified in areas their schools need, like special education, but are deterred due to the high cost of professional programs. President Biden is calling on Congress to invest $1.6 billion to provide educators with opportunities to obtain additional certifications in high-demand areas like special education, bilingual education, and certifications that improve teacher performance. This funding will support over 100,000 educators, with priority for public school teachers with at least two years of experience at schools with a significant portion of low-income students or significant teacher shortages. All funds will be available immediately, flowing through the states, and available until expended.
Invest in educator leadership. Millions of teachers – and the students they educate – would stand to benefit from greater mentorship and leadership opportunities. President Biden is calling on Congress to invest $2 billion to support programs that leverage teachers as leaders, such as high-quality mentorship programs for new teachers and teachers of color. These programs are proven tools to improve both student outcomesand teacher retention by providing new teachers with the support they need. The President’s plan will also leverage teachers as leaders of other key priorities within their school buildings, and compensate teachers for this work, recognizing the incredible expertise of our veteran educators, and their value in supporting the next generation of great teachers.
PROVIDE DIRECT SUPPORT TO CHILDREN AND FAMILIES
The hope of a middle-class life has gotten further and further out of reach for too many American families, as the costs of raising children – from child care to taking paid leave time to care for a new child or when a child is ill – have grown. Middle-class families and those trying to break into the middle class increasingly feel the strain of these rising costs, while wage growth has failed to keep up. These rising costs impact our economy as a whole as well. In part due to the lack of family friendly policies, the United States has fallen behind its competitors in female labor force participation. One study found that a lack of child care options costs the United States economy $57 billion per year in lost earnings, productivity, and revenue. Another study found that lack of paid leave options cost workers $22.5 billion each year in lost wages.
CHILD CARE
The high cost of child care continues to make it hard for parents – especially women — to work outside the home and provide for their families. Difficulty in finding high-quality, affordable child care leads some parents to drop out of the labor force entirely, some to reduce their work hours, and others to turn down a promotion. When a parent drops out of the workforce, reduces hours, or takes a lower-paying job early in their careers—even temporarily—there are lifetime consequences on earnings, savings, and retirement. These costs are especially significant for mothers and people of color, exacerbating inequality and harming the economic security of their families, as 91 percent of the income gains experienced by middle-class families over the last forty years were driven by women’s earnings.
High-quality early care and education lay a strong foundation so that children can take full advantage of education and training opportunities later in life. The evidence is clear: for early years, quality care is education. This especially important for children from low-income families, who too often start school without access to high-quality educational opportunities. A study by Nobel Laureate James Heckman found that every dollar invested in a high-quality, birth to five program for the most economically disadvantaged children resulted in $7.30 in benefits as children grew up healthier, were more likely to graduate high school and college, were less likely to be involved in crime, and earned more as adults.
Building on the American Jobs Plan’s investments in school and child care infrastructure and workforce training, President Biden’s American Families Plan will ensure low and middle-income families pay no more than 7 percent of their income on high-quality child care, saving the average family $14,800 per year on child care expenses, while also generating lifetime benefits for three million children, supporting hundreds of thousands of child care providers and workers, allowing roughly one million parents, primarily mothers, to enter the labor force, and significantly bolstering inclusive and equitable economic growth. Specifically, President Biden’s plan will invest $225 billion to:
Make care affordable. Families will pay only a portion of their income based on a sliding scale. For the most hard-pressed working families, child care costs for their young children would be fully covered and families earning 1.5 times their state median income will pay no more than 7 percent of their income. The plan will also provide families with a range of options to choose from for their child, from child care centers to family child care providers, Early Head Start, and public schools that are inclusive and accessible to all children.
Invest in high-quality care. Child care providers will receive funding to cover the true cost of quality early childhood care and education–including a developmentally appropriate curriculum, small class sizes, and culturally and linguistically responsive environments that are inclusive of children with disabilities. These investments support positive interactions that promote children’s social-emotional and cognitive development.
Invest in the care workforce. More investment is needed to support early childhood care providers and educators, more than nine in ten of whom are women and more than four and ten of whom are women of color. They are among the most underpaid workers in the country and nearly half receive public income support programs. The typical child care worker earned $12.24 per hour in 2020—while receiving few, if any, benefits, leading to high turnover and lower quality of care. This investment will mean a $15 minimum wage for early childhood staff and ensure that those with similar qualifications as kindergarten teachers receive comparable compensation and benefits. And, it will ensure child care workers receive job-embedded coaching and professional development, along with additional training opportunities funded by the American Jobs Plan and American Families Plan. These investments will lead to better quality care, while also enabling these workers to care for their own families, reducing government spending on income support programs and increasing tax revenues. The Families Plan will also invest in maternal health and support the families of veterans receiving health care services.
PAID LEAVE
The United States has fallen behind our economic competitors in the number of women participating in the labor force. The pandemic has exacerbated this problem, pushing millions of people—especially women—out of the workforce, eroding more than 30 years of progress in women’s labor force participation and resulting in a $64 billion loss in wages and economic activity per year. A lack of family-friendly policies, such as paid family and medical leave for when a worker need time to care for a new child, a seriously ill family member, or recover from their own serious illness, has been identified as a key reason for the U.S. decline in competitiveness. The United States is one of the only countries in the world that doesn’t guarantee paid leave. Nearly one in four mothers return to work within two weeks of giving birth and one in five retirees left or were forced to leave the workforce earlier than planned to care for an ill family member. Further, today nearly four of five private sector workers have no access to paid leave. 95 percent of the lowest wage workers, mostly women and workers of color, lack any access to paid family leave.
Paid family and medical leave supports workers and families and is a critical investment in the strength and equity of our economy. President Biden’s American Families Plan will:
Create a national comprehensive paid family and medical leave program. The program will ensure workers receive partial wage replacement to take time to bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, find safety from sexual assault, stalking, or domestic violence, heal from their own serious illness, or take time to deal with the death of a loved one. It will guarantee twelve weeks of paid parental, family, and personal illness/safe leave by year 10 of the program, and also ensure workers get three days of bereavement leave per year starting in year one. The program will provide workers up to $4,000 a month, with a minimum of two-thirds of average weekly wages replaced, rising to 80 percent for the lowest wage workers. We estimate this program will cost $225 billion over a decade.
President Biden’s paid leave plan has broad benefits for working families and the economy as a whole. Studies have shown that, under state paid leave laws, new mothers are 18 percentage points more likely to be working a year after the birth of their child. In addition, paid leave can reduce racial disparities in wage loss between workers of color and white workers, improve child health and well-being, support employers by improving employee retention and reducing turnover costs, and increase women’s labor force participation. Over 30 million workers, including 67 percent of low-wage workers, do not have access to a single paid sick day. Low-wage and part-time workers, a majority of whom are women, are less likely to have access to paid sick days.
The COVID pandemic has highlighted the need for a national paid sick leave policy, to help workers and their loved ones quickly recover from short-term illness and prevent the spread of disease. Therefore, the President calls upon Congress to pass the Healthy Families Act which will require employers to allow workers to accrue seven days paid sick leave per year to seek preventative care for them or their family– such as getting a flu shot, recovering from short-term illness, or caring for a sick child or family member or a family member with disability-related needs.
NUTRITION
The pandemic has added urgency to the issue of nutrition insecurity, which disproportionately affects low-income families and families of color. No one should have to worry about whether they can provide nutritious food for themselves or their children. A poor diet jeopardizes a child’s ability to learn and succeed in school. Nutrition insecurity can also have long-lasting negative impact on overall health and put children at higher risk for diseases such as diabetes, heart disease, and high blood pressure. Today, one-fifth of American children are obese, and research shows that childhood obesity increases the likelihood of obesity in adulthood. In addition to the incredible financial burden on the health care system, diet-related diseases carry significant economic and national security implications by decreasing work productivity, increasing job absenteeism, and threatening military readiness. A recent study found that U.S. children are getting their healthiest meals at school, demonstrating that school meals are one of the federal government’s most powerful tools for delivering nutrition security to children. To ensure the nutritional needs of families are met, President Biden’s plan will invest $45 billion to:
Expand summer EBT to all eligible children nationwide. The Summer EBT Demonstrations helps low-income families with children eligible for free and reduced-price meals during the school year purchase food during the summer. Research shows that this program decreases food insecurity among children and has led to positive changes in nutritional outcomes. The American Families Plan builds on the American Rescue Plan’s support for Summer Pandemic-EBT by investing more than $25 billion to make the successful program permanent and available to all 29 million children receiving free and reduced-price meals.
Expand school meal programs. The Community Eligibility Provision (CEP) allows high-poverty schools to provide meals free of charge to all of their students. It is currently available to individual schools, groups of schools within a district, or an entire district with at least 40 percent of students participating in the Supplemental Nutrition Assistance Program (SNAP). The program is particularly important because some families whose children would be eligible for free meals may not apply for them due to stigma or not fully understanding the application process. In addition, other families in high-poverty schools may still be facing food insecurity but make just enough to not qualify for free school meals. However, only 70 percent of eligible schools have adopted CEP, because some schools would receive reimbursement below the free meal rate. The President’s plan will fund $17 billion to expand free meals for children in the highest poverty districts (those with at least 40 percent of students participating in SNAP) by reimbursing a higher percentage of meals at the free reimbursement rate through CEP. Additionally, the plan will expand free meals for children in elementary schools by reimbursing an even higher percentage of meals at the free reimbursement through CEP and lowering the threshold for CEP eligibility for elementary schools to 25 percent of students participating in SNAP. Targeting elementary students will drive better long-term health outcomes by ensuring low-income children are receiving nutritious meals at an early age. The plan will also expand direct certification to automatically enroll more students for school means based on Medicaid and Supplemental Security Income data. This proposal will provide free meals to an additional 9.3 million children, with about 70 percent in elementary schools.
Launch a healthy foods incentive demonstration. To build on progress made during the Obama Administration to improve the nutrition standards of school meals, this new $1 billion demonstration will support schools that are further expanding healthy food offerings. For example, schools adopting specified measures that exceed current school meal standards will receive an enhanced reimbursement as an incentive.
Facilitate re-entry for formerly incarcerated individuals through SNAP eligibility. Individuals convicted of a drug-related felony are currently ineligible to receive SNAP benefits unless a state has taken the option to eliminate or modify this restriction. Denying these individuals—many of whom are parents of young children—SNAP benefits jeopardizes nutrition security and poses a barrier to re-entry into the community in a population that already faces significant hurdles to obtaining employment and stability. SNAP is a critical safety net for many individuals as they search for employment to support themselves and their families. This restriction disproportionately impacts African Americans, who are convicted of drug offenses at much higher rates than white Americans.
UNEMPLOYMENT INSURANCE REFORM
The unemployment insurance (UI) system is a critical lifeline to workers at the hardest times. During the pandemic, it saved millions from poverty and helped people put food on the table. But, the system is in desperate need of reform and strengthening. Too often Americans found themselves waiting weeks to get the benefits they deserved. Too often the benefits Americans would automatically receive would’ve been too low and would not have gone long enough absent Congress stepping in. Too often the safeguards to prevent fraud in the system have been insufficient. And it has been unemployed people of color who have borne the brunt of the UI system’s weaknesses. President Biden is committed to strengthening and reforming the system for the long term. That’s why he won $2 billion in the American Rescue Plan to put toward UI system modernization, equitable access, and fraud prevention. And, that’s why he wants to work with Congress to automatically adjust the length and amount of UI benefits unemployed workers receive depending on economic conditions. This will ensure future legislative delay doesn’t undermine economic recovery and it will enable permanent reform of the system to provide the safety net that workers deserve in the hardest times.
TAX CUTS FOR AMERICA’S FAMILIES AND WORKERS
While the American Rescue Plan provided meaningful relief for hundreds of millions of Americans, that is just a first step. Now is the time to build back better, to help families and workers who for too long have felt the squeeze of stagnating wages and an ever-increasing cost-of-living. 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. But if Congress does not act, millions of American families and workers will see their taxes go up at the end of the year.
President Biden believes we must extend the American Rescue Plan’s expanded tax credits that lifted millions of children out of poverty, made it easier for families to afford child care, and ensured that low-income workers without children would not continue to be taxed into poverty.
Specifically, President Biden’s plan will:
Extend expanded ACA premiums tax credits in the American Rescue Plan. Health care should be a right, not a privilege, and Americans facing illness should never have to worry about how they are going to pay for their treatment. No one should face a choice between buying life-saving medications or putting food on the table. President Biden has a plan to build on the Affordable Care Act and lower prescription drug costs for everyone by letting Medicare negotiate prices, reducing health insurance premiums and deductibles for those who buy coverage on their own, creating a public option and the option for people to enroll in Medicare at age 60, and closing the Medicaid coverage gap to help millions of Americans gain health insurance. The American Families Plan will build on the American Rescue Plan and continue our work to make health care more affordable. The American Rescue Plan included a historic investment in reducing Americans’ health care costs. The biggest improvement in health care affordability since the Affordable Care Act, the American Rescue Plan provided two years of lower health insurance premiums for those who buy coverage on their own, saving families an average of $50 per person per month. The American Families Plan will make those premium reductions permanent, a $200 billion investment. As a result, nine million people will save hundreds of dollars per year on their premiums, and four million uninsured people will gain coverage. The Families Plan will also invest in maternal health and support the families of veterans receiving health care services.
Extend the Child Tax Credit increases in the American Rescue Plan through 2025 and make the Child Tax Credit permanently fully refundable. The President is calling for the Child Tax Credit expansion, first enacted in the American Rescue Plan, to be extended. This legislation expands the Child Tax Credit from $2,000 per child to $3,000 per child for six-years old and above, and $3,600 per child for children under six. It also makes 17-year-olds eligible for the first time and makes the credit fully refundable on a permanent basis, so that low-income families—the families that need the credit the most—can benefit from the full tax credit. The expanded Child Tax Credit in the American Rescue Plan benefited nearly 66 million children, and it was the single largest contributor to the plan’s historic reductions in child poverty.
For a family with two parents earning a combined $100,000 per year and two children under six, the Child Tax Credit expansion means an additional $3,200 per year in tax relief. For a family with two parents earning a combined $24,000 per year and two children under six, the expansion means even more, with a credit increase of than $4,400 because the full credit was not previously fully available to them.
The credit would also be delivered regularly. This means that families will not need to wait until tax season to receive a refund. Instead, they will receive regular payments that allow them to cover household expenses as they arise.
The American Families Plan will make permanent the full refundability of the Child Tax Credit, while extending the other expansions to the Child Tax Credit through 2025—when the 2017 law’s individual provisions expire. The President is committed to working with Congress to achieve his ultimate goal of making permanent the Child Tax Credit as well as all of the expansions he signed into law in the American Rescue Plan.
Permanently increase tax credits to support families with child care needs. To help families afford child care, President Biden is calling on Congress to make permanent the temporary Child and Dependent Care Tax Credit (CDCTC) expansion enacted in the American Rescue Plan. Families will receive a tax credit for as much as half of their spending on qualified child care for children under age 13, up to a total of $4,000 for one child or $8,000 for two or more children. A 50 percent reimbursement will be available to families making less than $125,000 a year, while families making between $125,000 and $400,000 will receive a partial credit with benefits at least as generous as those they receive today. The credit can be used for expenses ranging from full-time care to after school care to summer care.
This is a dramatic expansion of support to low- and middle-income families. In 2019, a family claiming a CDCTC for the previous year got less than $600 on average towards the cost of care, and many low-income families got nothing. If Congress fails extend the CDCTC expansion, more than 6 million families could see their taxes go up at the end of the year – many by thousands of dollars – making obtaining affordable child care more difficult. Importantly, this tax credit works in tandem with the American Families Plan’s direct investments in childcare affordability for families with young children.
Make the Earned Income Tax Credit Expansion for childless workers permanent. Before this year, the federal tax code taxed low-wage childless workers into poverty or deeper into poverty — the only group of workers it treated this way. The American Rescue Plan addressed this problem by roughly tripling the EITC for childless workers, benefitting 17 million low-wage workers, many of whom are essential workers including cashiers, cooks, delivery drivers, food preparation workers, and childcare providers. For example, a childless worker who works 30 hours per week at $9 per hour earns income that, after taxes, leaves them below the federal poverty line. By increasing her EITC to more than $1,100, this EITC expansion helps pull such workers out of poverty.
The President is calling on Congress to make this expansion permanent. President Biden believes our tax code should reward work and not wealth. And that means rewarding workers who work hard every day at modest wages to provide their communities with essential services.
Give IRS the authority to regulate paid tax preparers. Tax returns prepared by certain types of preparers have high error rates. These preparers charge taxpayers large fees while exposing them to costly audits. As preparers play a crucial role in tax administration, and will be key to helping many taxpayers claim the newly-expanded credits, IRS oversight of tax preparers is needed. The President is calling on Congress to pass bipartisan legislation that will give the IRS that authority.
TAX REFORM THAT REWARDS WORK – NOT WEALTH
The President’s tax agenda will not only reverse the biggest 2017 tax law giveaways, but reform the tax code so that the wealthy have to play by the same rules as everyone else. It will ensure that high-income Americans pay the tax they owe under the law—ending the unfair system of enforcement that collects almost all taxes due on wages, while regularly collecting a smaller share of business and capital income. The plan will also eliminate long-standing loopholes, including lower taxes on capital gains and dividends for the wealthy, that reward wealth over work. Importantly, these reforms will also rein in the ways that the tax code widens racial disparities in income and wealth.
President Biden’s plan uses the resulting revenue to rebuild the middle class, investing in education and boosting wages. It will also give tax relief to middle-class families, dramatically reducing child poverty and cutting the cost of child care in half for many families. The result of the President’s individual tax reforms will be a tax code with fewer loopholes for the wealthy and more opportunity for low- and middle-income Americans.
Altogether, these tax reforms focused on the highest income Americans would raise about $1.5 trillion across the decade. In combination with the American Jobs Plan, which produces long-term deficit reduction through corporate tax reform, all of the investments would be fully paid for over the next 15 years.
President Biden’s plan will:
Revitalize enforcement to make the wealthy pay what they owe. We have a two-tiered system of tax administration in this country: regular workers pay the taxes they owe on wages and salaries while some wealthy taxpayers aggressively plan to avoid the tax laws. Those with the highest incomes generate income in opaque categories where misreporting rates can reach 55 percent. A recent study found that the top one percent failed to report 20 percent of their income and failed to pay over $175 billion in taxes that they owed. But today, the IRS does not even have the resources to fully investigate this evasion. As a result of budget cuts, audit rates on those making over $1 million per year fell by80 percent between 2011-2018.
The President’s proposal would change the game—by making sure the wealthiest Americans play by the same set of rules as all other Americans.It would require financial institutions to report information on account flows so that earnings from investments and business activity are subject to reporting more like wages already are.It would also increase investment in the IRS, while ensuring that the additional resources go toward enforcement against those with the highest incomes, rather than Americans with actual income less than $400,000. Additional resources would focus on large corporations, businesses, and estates, and higher-income individuals. Altogether, this plan would raise $700 billion over 10 years.
Increase the top tax rate on the wealthiest Americans to 39.6 percent. One of the 2017 tax cut’s clearest giveaways to the wealthy was cutting the top income tax rate from 39.6 percent to 37 percent, exclusively benefitting the wealthiest households—those in the top one percent. This rate cut alone gives a couple with $2 million in taxable an annual tax cut of more than $36,400. The President’s plan restores the top tax bracket to what it was before the 2017 law, returning the rate to 39.6 percent, applying only to those within the top one percent.
End capital income tax breaks and other loopholes for the very top. The President’s tax reform will end one of the most unfair aspects of our tax system: that the tax rate the wealthy pay on capital gains and dividends is less than the tax rate that many middle-class families pay on their wages. Households making over $1 million—the top 0.3 percent of all households—will pay the same 39.6 percent rate on all their income, equalizing the rate paid on investment returns and wages. Moreover, the President would eliminate the loophole that allows the wealthiest Americans to entirely escape tax on their wealth by passing it down to heirs. Today, our tax laws allow these accumulated gains to be passed down across generations untaxed, exacerbating inequality. The President’s plan will close this loophole, ending the practice of “stepping-up” the basis for gains in excess of $1 million ($2.5 million per couple when combined with existing real estate exemptions) and making sure the gains are taxed if the property is not donated to charity. The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business. Without these changes, billions in capital income would continue to escape taxation entirely.
The President is also calling on Congress to close the carried interest loophole so that hedge fund partners will pay ordinary income rates on their income just like every other worker. While equalizing tax rates on wages and capital gains will address this disparity, permanently eliminating carried interest is an important structural change that is necessary to ensure that we have a tax code that treats all workers fairly. The President would also end the special real estate tax break—that allows real estate investors to defer taxation when they exchange property—for gains greater than $500,000, and the President would also permanently extend the current limitation in place that restricts large, excess business losses, 80 percent of which benefits those making over $1 million.
Finally, high-income workers and investors generally pay a 3.8 percent Medicare tax on their earnings, but the application is inconsistent across taxpayers due to holes in the law. The President’s tax reform would apply the taxes consistently to those making over $400,000, ensuring that all high-income Americans pay the same Medicare taxes.
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The Biden Administration has recognized that the availability of affordable child care is the essential grease to the economy’s gears. The White House has issued a fact sheet detailing $39 billion in American Rescue Plan funding “to rescue the child care industry so the economy can recover”:
Today, the Biden Administration is announcing the release of $39 billion of American Rescue Plan funds to states, territories, and tribes to address the child care crisis caused by COVID-19. These funds will help early childhood educators and family child care providers keep their doors open. These providers have been on the frontlines caring for the children of essential workers and support parents, especially mothers, who want to get back to work. These funds are a critical step to pave the way for a strong economic recovery and a more equitable future.
Over the past 40 years, as more women entered the labor force and brought home larger paychecks, they have driven 91 percent of the income gains experienced by middle-class families. But, since the start of the COVID-19 public health emergency, roughly 2 million women have left the labor force, disproportionately due to caregiving needs and undoing decades of progress improving women’s labor force participation rate. Even as many fathers have returned to work, mothers, especially those without a four-year college degree, have not done so at similar rates. As a result, the gender earnings gap is predicted to increase by 5 percentage points in this recession, hurting our families and economy. As women work to regain employment, families with young children, and especially families of color where mothers are more likely to be sole or primary breadwinners, may face financial burdens for years to come. Parents need access to safe, quality child care to get back to work.
At the same time, early childhood and child care providers – nearly all small businesses, overwhelmingly owned by women and disproportionately owned by people of color – have been hit hard by the pandemic and are struggling to continue to provide essential services. Providers have faced decreasing revenues due to lower enrollment while also shouldering higher expenses – 47 percent higher by one estimate – for personal protective equipment (PPE), sanitation, additional staff, and other needs to operate safely. They were already operating on extremely thin margins before the pandemic. According to one survey, as of December, about one in four child care providers open at the start of the pandemic were closed, hindering access to care, especially for families of color. These closures exacerbated access challenges that existed before the pandemic when half of all Americans lived in a child care desert. Child care providers who have stayed open have gone to enormous lengths to do so: two in five providers report taking on debt for their programs using personal credit cards to pay for increased costs and three in five work in programs that have reduced expenses through layoffs, furloughs, or pay cuts. One in six child care jobs, generally held by women of color, still haven’t come back – much more than the one in twenty jobs that have been lost throughout the economy.
That is why President Biden prioritized addressing the child care crisis caused by COVID-19 as part of the American Rescue Plan. Today’s $39 billion funding release will provide a lifeline to hundreds of thousands of childcare providers and early childhood educators, provide a safe and healthy learning environment for more than 5 million children, and help parents, especially mothers, get back to work. States, tribes, and territories can use these funds to:
Help hundreds of thousands child care centers and family child care providers, which are mostly very small businesses, stay open or reopen including by making rent or mortgage payments, helping with utility or insurance bills, maintaining or improving facilities, and paying off debt incurred during the pandemic.
Support providers with funds to enable safe and healthy learning environments for more than 5 million of children, including by purchasing masks, implementing physical distancing, improving ventilation, and cleaning consistently, so both centers and family providers can comply with CDC’s Guidance for Operating Child Care Programs during COVID-19. This funding complements the President’s efforts to prioritize early childhood educators for vaccination – child care workers remain eligible for vaccinations and nearly 80 percent of the educators who work with children from birth to 12th grade received at least their first shot of a COVID-19 vaccine during the month of March. Providers can also use these funds to support the mental health of both children and early educators so that they can meet any social and emotional needs exacerbated by the pandemic as centers reopen and parents go back to work.
Keep child care workers, disproportionately women of color and immigrants, on the payroll and rehire those who have been laid off. Child care workers are essential to meeting the child care needs of families and providing quality are to children, but providers have been forced to lay off, furlough, or reduce pay of workers to survive – exacerbating issues faced by a workforce that has long faced low pay and high turnover. Providers can use these funds to keep workers on payroll, rehire laid off workers and recruit new workers, and increase the pay and benefits of child care workers and family child care providers.
Provide families with the greatest need access to affordable care. States, tribes, and territories can provide direct subsidies to more than 800,000 hard-pressed families earning below 85% state median income and families performing essential work, to help cover the cost of care.
Start to lay the foundation for a stronger child care system, so families can access the high-quality care they need. As states, tribes, and territories address the immediate crisis, they can also make a down payment on President Biden’s commitment to a stronger, more equitable early childhood education system. For example, states, tribes, and territories can set reimbursement rates at a level that will help children receive high-quality care and can increase access to care, including on the evenings and weekends when many essential workers need care.
The American Rescue Plan also included an historic increase in support for child care through the tax code, helping millions of working families afford needed care. Last year, a family claiming a Child and Dependent Care Tax Credit (CDCTC) got less than $700 on average towards the cost of care, and many low-income working families often got nothing. Thanks to the historic expansion of the CDCTC in the American Recovery Plan, a median income family with two kids under age 13 will receive up to $8,000 towards their child care expenses when they file taxes for 2021, compared with a maximum of $1,200 previously.
In 2020, the CDCTC provides a tax credit typically capped at $600 for one child, for families with at least $3,000 in eligible expenses, and capped at $1,200 for two children or more for families with at least $6,000 in child care expenses.
Under the American Rescue Plan’s expansion of the CDCTC, all families with incomes below $125,000 will save up to half the cost of their eligible child care expenses, getting back up to $4,000 for one child and $8,000 for two or more children, when they file taxes for 2021. And, families making between $125,000 and $438,000 can receive a partial credit.
And for the first time, the CDCTC will be fully refundable, making the credit fairer by allowing low-income working families to receive the full value of the credit towards their eligible child care expenses regardless of how much they owe on their 2021 taxes.
In the coming weeks, the administration will release:
Guidance to states, tribes, and territories, while also providing technical assistance like webinars and peer-to-peer learning opportunities, to support states, tribes, and territories as they make historic investments in saving and rebuilding their child care systems, provide high-quality care to children, and get families back to work.
Frequently Asked Questions on the Child and Dependent Care Tax Credit to equip parents with the information they need to claim the credit next year.
Help from the American Rescue Plan is coming to states, territories, and tribes. The $39 billion will be provided through two funds: (1) $24 billion in child care stabilization funding for child care providers to reopen or stay open, provide safe and healthy learning environments, keep workers on payroll, and provide mental health supports for educators and children, and (2) $15 billion in more flexible funding for states to make child care more affordable for more families, increase access to high-quality care for families receiving subsidies, increase compensation for early childhood workers, and meet other care needs in their states. A breakdown by state, tribe and territory is below.
The vigorous contest of Democrats seeking the 2020 presidential nomination has produced excellent policy proposals to address major issues. Senator Bernie Sanders is releasing what he says is “the most comprehensive and expansive early childhood policy ever proposed by a candidate running for president,” except that he does not attach a price tag nor say how it will be paid for. Separately, in a “60 Minutes” interview, he said the undetermined amount would be paid for from a wealth tax (Senator Elizabeth Warren has said the same thing, except she attaches dollar figures to her proposal.) This is from the Sanders campaign:
Sen. Bernie Sanders released the most comprehensive and expansive early childhood policy ever proposed by a candidate running for president, including guaranteeing free, high-quality child care for all children from infancy and pre-k starting at age three.
“Childcare must be guaranteed for every child regardless of their parents’ income, just like K-12 education. We know that the first four years of a child’s life are the most important years of human development, so it is unconscionable that in the wealthiest country in the world, we do not properly invest in early childhood education.” Sanders said. “As president, we will guarantee free, universal childcare and pre-kindergarten to every child in America to help level the playing field, create new and good jobs, and enable parents more easily balance the demands of work and home.”
Today in America, our child care and pre-kindergarten system is failing our children, our parents, and our child care and early education workers. Not only is our child care infrastructure and access to high-quality care and early learning lacking throughout the country, child care is unaffordable in every single state in America.
The average family in America today spends nearly $10,000 a year on child care. For low-income families, the burden is even higher: a full 35 percent of these families’ income goes toward child care. According to a survey conducted last year, over half of mothers worked less hours to save on child care costs, and a quarter of moms left the workforce entirely due to care for their children.
Our dysfunctional system also punishes the people who take care of, nurture, and educate our youngest children. Child care workers, on average, make just $11 an hour despite the skyrocketing costs of child care and early education. Even though they take on the most important job in America – caring for our children – child care workers, 96 percent of whom are women and are disproportionately women of color, are paid starvation wages.
In the richest country in the history of the world, we have a moral responsibility as a nation to guarantee high-quality care and education for every single child, regardless of background or family income. We owe it to our children, parents, and child care workers to do much better.
As President, Bernie will:
Guarantee every child in America free full-day, full-week, high-quality child care from infancy through age three, regardless of income.
Provide child care at least 10 hours a day and ensure programs operate at times to serve parents who work non-traditional hours.
Guarantee every child access to a full-day, full-week pre-kindergarten education, regardless of income, starting at age 3.
Ensure students with disabilities receive the support they need and are included with their peers from an early age.
Double funding for the Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Program, which supports home visiting services from nurses, mental health professionals, social workers, and other support professionals for families with young children who live in low-income and at-risk communities.
Pass Bernie’s Universal School Meals Act that he introduced with Rep. Ilhan Omar to provide year-round, free universal school meals — breakfast, lunch, dinner, and snacks — to every child in child care and pre-k.
Construct, renovate, or rehabilitate the child care facilities and pre-schools we need throughout the country.
Enact Bernie’s Thurgood Marshall Plan for Public Education to make transformative investments in our public education system to ensure the developmental gains made by implementing universal child care and pre-k are built upon when children start their K-12 education and:
More than double the number of early childhood educators in this country from over 1.3 million to more than 2.6 million.
Guarantee everyone working in the field of early education a living wage, ensure all are compensated commensurate with their experience and training, and ensure all lead teachers are paid no less than similarly qualified kindergarten teachers.
Require anyone providing direct service to young children have at least child a Child Development Associates (CDA) credential, all assistant teachers have at least an Associate’s Degree in early childhood education or child development, and all lead preschool teachers have a Bachelor’s Degree in early childhood education or child development.
Guarantee support for existing and new early care and learning professionals to get the education required to care for and teach young children, within a reasonable phase-in period, and ensure that these professionals reflect the cultural, linguistic, racial and ethnic diversity of the communities they serve.
Ensure that all early childhood educators have access to ongoing high-quality professional development that includes coaching and mentoring.
Provide early childhood workers with strong protections for unionizing, sector-wide collective bargaining, workers’ rights, workplace safety, and fair scheduling, regardless of immigration status, and that they have the information and tools they need to act on these rights and protections through the passage of the Domestic Workers Bill of Rights Act introduced by Rep. Pramilla Jayapal and enacting Bernie’s Workplace Democracy plan.
New York State, the birthplace of women’s rights, is pushing for a second round of legislation to address persistent and institutional gender inequity. The state legislature needs to hear from advocates before the April 1 budget deadline.
It is laudable that these initiatives – in categories of Health, Safety, Workplace, Girls, and Family being forcefully advanced by Governor Cuomo – came after months of information gathering, listening tours, and the formation of regional Women’s Councils, coordinated by the governor’s Director of Women’s Affairs, Kelli Owens. Just having such a position is notable.
As Lieutenant Governor Kathy Hochul, a singular champion of women’s rights in New York State, said in her remarks that opened the Council on Women and Girls Regional Forum at Long Island University on March 1, “The genesis for the Council of Women and Girls came because of Washington – on the day the president said ‘We don’t need to be concerned’ and abolished the [Obama-era] Commission on Women and Girls, our governor, as in so many cases [climate action, environmental protection, gun control], stepped up to fill void created by Washington.”
Trump has moved aggressively to roll back gains women have made: restoring being a woman as a “pre-condition” for medical insurance, overturning the mandate that insurance companies provide contraception without co-pays, attacking Title X funding for health clinics including Planned Parenthood, advocating for legislation to curtail access to abortion.
Unless Congress takes action, the Violence Against Women Act will run out of funding in September.This landmark piece of legislation is a life-saver. Since its original passage, domestic violence cases are down by more than 65% nationally. If Congress’ “action” on reauthorizing CHIP is an indication, the Republican-controlled Congress will likely let this lapse as well, even as they cut billions of dollars for programs that directly affect women and families.
New York State – which Cuomo never fails to point out has been a progressive leader for the nation, a status he has worked to reclaim – has made some important gains during his administration, including aggressively pushing for economic development opportunities for Minority & Women-owned Enterprises, for wider access to pre-K programs, gun control, access to health care and guarantee for women’s reproductive rights.
In this second round of legislation and policies – notably several of which need to be adopted by the State Legislature before the April 1 deadline for adopting the budget – he is going after sexual harassment, pay equity, domestic violence, expanding access to child care, educational opportunities, job training and business investment.
New York has been celebrating the centennial of Women’s Suffrage since 1917, the year the state on its own gave women the right to vote, three years before the nation adopted the 19th Amendment.
But despite New York’s progressive policies, New York women still earn less than men for the same work: white women 89c, African American 66c, Hispanic women 54 c in New York, “and we’re the good state, where people are better off. Does that not tell you we have a long way to go?” Hochul said.
“We are convening forums around the state, to drill down why this is happening – part is institutional, cultural, part is that women don’t have childcare but want to continue on a career track, have talent, brilliance, but are primarily responsible for making sure kids are okay and there is not enough child care.” Also parental leave, not just for a newborn or adoption, but when a child or parent gets sick.
“You should be proud your state recognizes this challenge – we now have the most generous paid family leave policy – to relieve the stress of possibly losing a job when you are home with a new baby.”
“It’s about economic empowerment: getting more girls into STEM education and careers. It’s about safety and security – domestic violence” – something that has been crystallized in the Trump White House, notably with the tolerance of a credibly accused wife-beater as Trump’s secretary.
Health initiatives: passing Comprehensive Contraceptive Coverage Act codifying access to contraception; codifying Roe v. Wade into state law and constitution to insure health care professionals can provide these crucial services without fear of criminal penalty; mandating insurance coverage and insuring access to IVF and fertility services; combat maternal depression and establish a maternal mortality review board (NY ranks 30th in maternal mortality); add experts in women’s health and health disparities to the State Board of Medicine.
Safety: pass the Equal Rights Amendment to add sex as a protected class; remove firearms from domestic abusers; combat sextortion and revenge porn; extend storage timeline for forensic rape kits at hospitals (from 30 days to at least five years, or when the victim turns 19); advance legislation to amend the Human Rights Law to protect all public school students from discrimination.
Workplace: combat sexual harassment in the workplace; call on NYS Common Retirement Fund to invest in companies with women and minority leadership; reauthorize the State’s Minority and Women-owned Business Enterprise Program; close the gender wage gap; support women returning to or advancing in the workforce with job training and placement services; invest $20 million in Women-Owned Businesses; encourage more use of flexible work schedules.
Girls: expand access to computer science and engineering (STEM); launch “If You Can See It You Can Be It,” a day for girls to see what is possible; create K-12 learning module on healthy relationships; legislation requiring school districts to provide free menstrual products, in restrooms, for girls in grades 6 through 12.
Family: invest $25 million to expand pre-K and after-school programs; increase state funding by $7 million to provide working families with affordable child care; continue enhanced Child Care Tax Credit for working families; establish a new Child Care Availability Task Force.
“All these areas converge,” Colleen Merlo, Executive Director, Long Island Against Domestic Violence, said. “Gender equality cannot be achieved unless we address all these buckets….We see that women lose time at work because of domestic violence, so if we don’t create safety at home, they are losing time at work, so are not advancing, not getting equal pay or promotion – all are interconnected with safety.”
It’s also about making it easier to vote, adding early voting (which NYS doesn’t yet have), so women who work and care for children aren’t shut out of casting a ballot – part of Cuomo’s “Democracy Agenda.”
“The torch has now been passed to us,” Hochul stated. “Our job is not just to pass it along, but to make sure it glows even brighter, so we look back 100 years from now, and can say, yes, we made a difference in lives in a profound way, that we spoke up for people without voices.”
What to do? First: contact state representatives to urge them to vote on the budget and legislation bolstering the Women’s Agenda. Planned Parenthood of Nassau County, among others, is mounting a lobbying day in Albany on March 13, to join Cecile Richards, President of the Planned Parenthood Action Fund, and more than 1,000 activists from across New York State, to advocate for pro-reproductive health legislation.
Call and write representatives, yes. March, yes, Protest, yes. Spread the word with social media, yes. Vote, absolutely.
