President Joe Biden on Wednesday will roll out a sweeping, $1.8 trillion plan to invest in social welfare and family assistance programs aimed at redistributing the nation's wealth and lifting millions of Americans out of poverty.
The sprawling “American Families Plan,” laid out by senior administration officials on Tuesday night, would invest $200 billion in universal prekindergarten and more than $100 billion in free community college. It would extend the expanded child tax credit through 2025 and ensure that the benefit is more accessible to low-income families by making it permanently refundable. And it would set aside $225 billion to create the country’s first national paid family and medical leave program.
At the same time, Biden, who will present the plan to a joint session of Congress on Wednesday evening, is proposing a round of tax hikes on the wealthiest Americans as well as strict tax enforcement through increased funding for the IRS that the White House says will fully cover the cost of the plan over 15 years.
In combination with his American Jobs Plan, which the White House unveiled late last month, Biden is proposing roughly $4 trillion in investments over the next decade — plans that, if passed, would broadly expand the U.S. social safety net and transform the role of government in public life. Democrats have expressed optimism that if they’re able to pass such reforms, they could further solidify support with the coalition that got Biden elected.
Biden’s “plan is about cutting taxes for middle-class families, for child care, for health care … and he believes that we should do that in a fiscally responsible way, first and foremost, by making sure the wealthiest Americans actually pay the taxes they already owe,” a senior administration official said on a call with reporters. “There is broad support among the American people for this approach.”
Still, the proposal will trigger what will probably be months of heated debate in Congress, where Republican lawmakers are balking at the price tag and deriding Biden's plans as a Democratic “wish list” of programs that would vastly extend the reach of the federal government.
Senior administration officials reiterated before the rollout that Biden is “open to hearing” input on the structure of his plans and how to finance them. Indeed, a number of House and Senate Democrats want to see changes to the families plan, pushing for a permanent child tax benefit and a Medicare expansion. And the plan is sure to face hurdles in the Senate whether Democrats attempt to pass it with Republican support or through the budget reconciliation process, which would allow them to approve it with a simple majority.
But as with the jobs plan, the White House says these are investments that the country “can't afford not to make,” as one senior administration official said.
Asked on Tuesday night about a timeline for when they would like to see the package pass, a second official responded: “As soon as possible.”
Biden is proposing to pay for his plan over 15 years through a bevy of tax hikes targeting the wealthiest families, which would cover the costs in combination with revenue from the corporate tax hikes he unveiled alongside his jobs plan. Sticking to a campaign pledge, his plan would not raise taxes on individuals making less than $400,000 per year — instead raising the top marginal tax rate to 39.6 percent, where it stood before Republicans’ 2017 tax cuts. For all households making more than $1 million, the administration would tax capital gains as ordinary income at a rate of 39.6 percent, up from the current rate of almost 24 percent.
And the proposal would eliminate the so-called stepped-up basis at death, a provision sometimes known as the “Angel of Death” loophole because it can allow the wealthy to pass on assets to heirs tax-free.
Alongside tax hikes for the wealthy, Biden’s plan would provide direct relief to families, particularly those with lower incomes, through more generous tax credits. Biden is calling for making permanent the expansions of the child and dependent care tax credit and the earned income tax credit for childless workers, both of which were enacted earlier this year under the American Rescue Plan.
The proposal also calls for reforming the country's unemployment programs by adjusting the length and amount of unemployment insurance benefits. Senate Democrats, led by Sen. Ron Wyden of Oregon, have proposed requiring all states to offer half a year of benefits at 75 percent of a worker's former pay and to cover part-time workers and those who quit their jobs with good cause.
Included in the education investments, the administration is proposing an $85 billion boost to Pell Grants, helping low-income undergraduate students seeking two- or four-year degrees. The funding would help close racial equity gaps, the White House said in a fact sheet, noting that roughly 60 percent of Black students, half of Native American or Alaska Native students, nearly half of Latino and over one-third of Native Hawaiian or Pacific Islander students depend on Pell Grants to pay for college.
The plan also calls for $9 billion to train, support and diversify American teachers and would offer two years of free community college to all Americans, including DREAMers, according to the fact sheet.
And in addition to universal preschool, the plan would invest another $225 billion in the broader child care sector in part to raise wages for workers and make programs more affordable. The lowest income families would receive free child care, a senior administration official said.
Biden is also seeking a permanent extension of temporary subsidies for private Affordable Care Act plans approved in the stimulus law in March. A senior administration official said the premium reductions for people who buy health insurance on their own was “one of the most impactful investments we can make” to reduce cost and expand access.
But notably absent is an expansion of Medicare and Medicaid and a plan to tackle high drug prices. Democrats in Congress and allied advocacy groups have lobbied the White House for weeks to include more of their health care priorities. Instead, the subsidy extension is the most industry-friendly of Democrats’ health goals as it consists of federal funding of private insurance plans.
Senior administration officials told reporters that Biden “remains fully committed” to drug price negotiation and will say as much in Wednesday night’s speech. But they gave no explanation for excluding it, no timeline for when they would push for it, or how it would pass in Congress separately from the infrastructure package.
“By reducing prescription drug prices, we can provide relief to millions of Americans,” the official said. “But you're also generating revenue that can be applied to both expanding coverage to those places in the country that have coverage gaps still, but also expanding the benefits of Medicare.”
Frustrated with the White House, Democrats on Capitol Hill say they plan to forge ahead without Biden on allowing Medicare to negotiate prices. House Democrats led by Speaker Nancy Pelosi have already reintroduced their comprehensive drug price negotiation bill and plan to hold a hearing on it next week. Senate Budget Chair Bernie Sanders says he’ll soon follow suit.
“First of all, Congress determines legislation,” he told POLITICO when asked about Biden leaving the measures out of his plan. “And I’m going to do everything I can to make sure that we lower prescription drug costs in America for everybody and that we negotiate prescription drug prices for Medicare and that we use those savings to expand Medicare to include dental, hearing aids and eyeglasses. That’s what I’m fighting for.”
Another area where congressional Democrats are likely to push further than Biden’s own proposal is on the expanded child tax credit. It was extended for one year under the president's rescue plan, and the families plan would continue that extension through 2025.
But Democrats on Capitol Hill have been pushing for years to make it permanent, and calls have grown louder this year amid new research from Columbia University estimating doing so would cut the child poverty rate by more than half. House Ways and Means Democrats, led by Chair Richard Neal, laid out a robust caregiving proposal on Tuesday that would take that step.
Democratic lawmakers had been raising concerns over the child subsidy before Biden unveiled his plan amid reporting that the president would not heed their calls to make it permanent — and some had made clear they would be willing to assert their role over legislation by going further than his proposal.
“The Congress has a role to play in this,” House Majority Whip Jim Clyburn said in an interview last week. “If he is laying something out there that we think ought to be permanent, then we should make it permanent.”
Alice Miranda Ollstein, Eleanor Mueller and Burgess Everett contributed to this report.
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