Biden will unveil $1.8 trillion spending plan to extend cash payments for parents, set up universal pre-K and free community college

  • Biden is unveiling $1.8 trillion in new economic programs for families on Wednesday.
  • The plan extend cash payments for parents and set up universal Pre-K — paid for with tax hikes on the wealthy.
  • Biden’s spending plans would rank among the largest in US history.
  • See more stories on Insider’s business page.

President Joe Biden will unveil a $1.8 trillion economic aid plan during his address to a joint session of Congress on Wednesday, seeking to devote massive new federal spending on families through new initiatives in childcare, education, and healthcare.

The proposal is designed as the second part of a massive infrastructure package to overhaul the American economy, following the release of a $2.3 trillion plan last month concentrated on repairing roads and bridges, domestic manufacturing, and in-home elder care. It’s offset with tax increases on rich Americans.

Taken together, they would rank among the largest spending programs in the nation’s history, totaling nearly $4 trillion. A senior administration official called them “once-in-a-generation investments in our nation’s future.”

“The American Families Plan invests in our children and our families, helping families cover the expenses that so many struggle with now, lowering health insurance premiums, cutting child poverty and producing a larger, more productive and healthier workforce in the years ahead,” the official told reporters on a Tuesday phone call.

The plan is patterned with an emphasis on recasting the role of government to slash inequality and shore up the middle class in an eight-year spending program consisting of:

  • $225 billion in childcare funding.
  • $225 billion for paid family and medical leave.
  • $200 billion for free universal Pre-K.
  • $200 billion to permanently extend Obamacare insurance subsidies.
  • $109 billion for two years of free community college.
  • $45 billion in nutrition-related spending.

The plan also attempts to make permanent some elements of Biden’s $1.9 trillion stimulus law — mainly, the expanded tax credits for families as well as subsidies to purchase health insurance in marketplaces under the Affordable Care Act.

The lowest-earning families will be able to tap into the child tax credit through monthly payments, but the bigger benefit level expires in 2025. At that point, it would fall to $1,000 without additional action in Congress.

The White House seeks to work with lawmakers to overhaul unemployment insurance and tie benefits to economic conditions, though the plan does not offer specifics. Sens. Ron Wyden and Michael Bennet recently unveiled a bill to permanently boost jobless benefits.

Administration officials are also envisioning 12 weeks of a national paid family and medical program with two-thirds wage replacement for most workers, a measure endorsed on Tuesday by Rep. Richard Neal, a powerful House Democrat.

But the Biden measure would be set up over a decade. Advocates are likely to pressure the president to accelerate the timeline since the US lacks a national leave program in stark contrast to other developed nations. The pandemic forced two million women out of the labor force as it devastated the economy, shuttering schools and pushing many of them to pick up the majority of childcare duties at home.

“This is a tremendous recognition of the centrality that paid leave plays in people’s lives and the gaps we have,” Vicki Shabo, a paid-leave expert at the think-tank New America, told Insider. “The country has invested almost nothing in paid leave up to this point.”

The Biden administration says it wants to fully pay for the programs with a series of tax hikes on the wealthiest Americans. Chief among them is strengthening the IRS’s ability to crack down on tax avoidance and ramp up the agency’s staffing levels. The White House projects raising $700 billion over ten years from the agency.

That step would be combined with raising the top marginal income tax rate to 39.6% from 37% and hitting investors earning above $1 million with a new tax on capital gains among others. The White House wants to avoid growing the national debt, which rose sharply as Congress signed off on $5 trillion in emergency COVID-19 relief spending in the last year.

Biden’s latest plan is unlikely to garner significant, if any, support from Republicans. The GOP quickly lined up against the first infrastructure plan from the White House, assailing it as a costly package that went far beyond only roads and bridges. However, the president’s spending plans are garnering strong majority support in public polling.

The American Family Plan’s path ahead in Congress remains unclear, and some Democrats say the infrastructure push could be split into two. That move may attract Republican votes on provisions popular in both parties, such as expanding broadband access.

At least some or the entire $4 trillion plan could be muscled through Congress under reconciliation, a procedural tactic allowing some budgetary bills to clear the Senate with a simple majority vote.

A group of Senate Republicans recently unveiled a $568 billion infrastructure plan largely directed at fixing roads and bridges last week. On Tuesday, Sen. Bill Cassidy of Louisiana announced he would soon unveil another bipartisan proposal that matched half of Biden’s spending.

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