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April 28, 2021

The American Families Plan

Lots of great and critical stuff in it, and huge hurdles to any of it
actually happening

 

The American Families Plan includes critical support for children and
families. (Press Association via AP Images)

The Chief

**** Before I get into the details of the $1.8 trillion
American Families Plan, which Joe Biden will announce tonight to a joint
session of Congress (if you don't want to sit through a speech you can
read the fact sheet
),
I want to toot our own horn. Last October, with the assistance of Caring
Across Generations, we produced a comprehensive study of family care
, both the challenges and the ways to
fix it. We identified this as a critical missing piece of the safety
net, creating hazardous situations for both families and care workers.

It was not a guarantee at that point that Biden would focus on the care
economy; we were making the case that it was urgent policy
and
good politics
,
and that it fit into his overall desire to tackle crises like economic
inequality and racial equity
. We
even did a piece laying out why investments in care work were critical
infrastructure
.

If you're looking for umbrage and outrage and coverage of tweets, you
might have to go somewhere else. But if you want coverage that six
months later becomes the basis of the top policy priority of the White
House, read the Prospect. And especially read our Family Care series
.

**Read all of our First 100 reports here**

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**** Now, let's talk about this American Families Plan. The
short version is that I've never in my political lifetime been more
optimistic about the stated priorities of the upper echelons of the
government, and I've never been more pessimistic about the prospects
of actually getting them into law.

So here's what's in the American Families Plan, based on the fact
sheet

and a conversation with senior administration officials from last night:

Education: the plan touts "four more free years of college," getting to
that by making universal, free pre-kindergarten

for ages 3 and 4, and two years of free community college for those who
want it (that explicitly includes DREAMers). Both of these are
structured as federal/state partnerships; with community colleges, the
feds provide a 75 percent share and expects the states to pony up the
other 25 percent. These investments total about $309 billion.

There's also $80 billion more for Pell Grants, which would expand the
maximum award by $1,400, an increase of 20 percent. There's $62
billion for increasing completion and retention rates at community
colleges and institutions serving disadvantages students. There's $46
billion for HBCUs and minority-serving institutions to expand or create
programs. And there's $9 billion to train and equip K-12 teachers,
including doubling scholarships for future teachers and helping them
earn credentials in things like special and bilingual education.

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Child care: The main piece of this is a $225 billion program routed
through the existing Child Care Development Block Grant, to make child
care affordable and worth providing. Low- and middle-income families,
defined as those making 150 percent of the median state income or less,
would pay no more than 7 percent of income on child care. This could be
devoted to family providers, child care centers, or Early Head Start
programs. Pay would increase for providers to at least $15/hour (the
current industry average is $12.24), with paid investments in smaller
class sizes, training, and better programs.

Paid leave: Workers would get up to $4,000 a month (with a max 80
percent wage replacement rate) to leave for a pregnancy, medical
emergency, to care for a loved one, deal with military deployment of a
spouse, or grieve after a death in the family. It ramps up but it's up
to 12 weeks at full strength. It's a $225 billion program.

Nutrition: The summer meals program, which we profiled in 2019
, would
be extended to all eligible children, an expansion of 9.3 million. Since
so many of these children get primary nutrition through schools during
the school year, it makes sense to help them in the summer months as
well. School-year nutrition programs would also expand by lowering the
threshold for eligibility and investing in getting every eligible school
on the program. There will be a $1 billion demonstration project
supporting schools with healthy options. Formerly incarcerated
individuals would (I think) be newly eligible for nutrition assistance.
Overall, $45 billion here.

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Tax credits: After some wrangling, the plan permanently extends the ACA
exchange subsidies to make insurance coverage affordable ($200 billion).
It extends the increased and advanced child tax credit but only for to
2025. There are permanent increases to the Child and Dependent Care Tax
Credit (which seems duplicative of the child care investments) and the
Earned Income Tax Credit for childless workers.

Things not in the plan but weirdly in the fact sheet: The fact sheet
says Biden wants to "work with Congress" to automatically adjust
unemployment insurance to make it more generous and lengthier in hard
economic times. It says he "has a plan" to lower prescription drug
prices

and plow the savings into lowering the Medicare age and improving its
benefits. But none of that is actually in the proposal.

The whole thing is offset

with revenue from four main sources: increasing the top marginal tax
rate back to 39.6 percent, taxing capital gains as ordinary income for
earners over $1 million, eliminating "step up in basis," which we also
wrote about in 2019
,
to force taxation of capital gains after death (this kind of takes the
place of rolling back Trump's changes to the estate tax, which was
left out of this package
),
and an $80 billion investment

in tax enforcement expected to yield $700 billion. The most important
part of that last one is that it forces banks to report information on
account flows
,
making it much harder to hide income. Also, with all the hand-wringing
about the other tax law changes, it's hard to make an argument against
enforcing the laws on the books.

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That's Great. Won't Happen.

There are two parallel universes in effect right now. The first rightly
praises this and the American Jobs Plan's needed investments in the
core priorities of our country: helping people find a place to live,
move around, learn, and get assistance with their family needs on a
sustainable planet. And it praises the bid to make America a more equal
place, by rewarding work as much as wealth and taxing capital income.
These priorities are all crucial and necessary and it's great to see
leadership on them.

The parallel universe is the one that recognizes where this is all
likely going. There's a guy named Joe Manchin who isn't interested
in investing $4 trillion in these programs, despite earlier claims to
the contrary. As passage depends on his assent, I can't see there
being any passage.

Manchin is in consultation with Republicans
,
whose first offer on the American Jobs Plan portion of this package only
contained less than $200 billion

in new spending. More important, the White House is quietly meeting with
GOP officials

on a compromise plan, with top Biden aide Steve Ricchetti leading the
talks.

In theory you could see a two-step process, with a thinned-out
infrastructure plan passing with bipartisan support, and then something
focused on health care, child care and climate investments via budget
reconciliation. But if Manchin and friends insist this has to all be
"paid for," and Republicans reject all tax increases (along with plenty
of Democrats
), I
don't see where that leaves us. The Democratic demand to benefit
high-income residents of high-tax states by repealing the cap

on the state and local tax deduction is also a hurdle.

So I know the uber-rich are afraid

of losing them their gold
,
but from my vantage point it's more likely than not, maybe 60/40, that
this all falls down, as nobody can agree on taxes or what investments to
salvage. The tax enforcement angle could be a salvation here, but
expecting Republicans to fund the IRS is remote. Maybe in the end you
get a reconciliation bill at about the tax enforcement number of $700
billion. It's good to make these agenda items priorities so they're
on the top shelf of the Democratic agenda for the future, but that
doesn't make them law.

This fight will take months, so stay tuned.  

What Day of Biden's Presidency Is It?

Day 99.

David Dayen's Reddit AMA
Join David on Reddit for an ask-me-anything session, beginning at 1 pm.
eastern on Thursday, April 29.
CLICK HERE TO FOR THE DETAILS

We Can't Do This Without You

Today I Learned

* A look inside Bidenworld

and how the people he's been with for decades are really gatekeepers
around the president. (Politico)

* Minimum wage hike announced yesterday will affect around 390,000
employees

of federal contractors. (Economic Policy Institute)

* A critic of Trump-era immigration policies has been nominated to lead
ICE
.
(Wall Street Journal)

* New limitations on arrests at ICE courthouses
,
though until they're eliminated the climate of fear will persist.
(Buzzfeed)

* The U.S. may still be helping Saudi Arabia

in the Yemen war. (Vox)

* Biden seen as more moderate than Obama

though his agenda is for sure more liberal. Gee I wonder why? (NBC News)

* U.S. Postal Service planning to consolidate

18 postal facilities to start. (American Postal Workers Union)

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