Biden Unveils American Families Plan, Which Would Establish Paid Leave Program

Part of the Series

The Struggle for Caregiving Equity

The Biden administration released details of its plan to help millions of families across the country through a $1.8 trillion spending bill that would expand child care, make some college education tuition-free, and establish a first-of-its-kind federal paid leave program, among other items.

The proposal, dubbed the American Families Plan by the White House, is expected to be talked about and promoted to a great extent by President Joe Biden on Wednesday evening, when he gives his first speech in office before a joint session of Congress. Much of the plan will make permanent certain aspects of the legislation that was passed into law earlier this year under the pandemic economic relief act also known as the American Rescue Plan, while other parts of Biden’s proposal will be entirely new.

The plan, for example, would extend family tax credits that were put into place by the economic relief package that passed in March, which expanded the Child Tax Credit for families from $2,000 per child to $3,600 for families with children under the age of 6 and $3,000 for families with kids from 6 to 17.

Under the American Rescue Plan passed earlier this year, the Child Tax Credit takes the form of monthly payments of $250 to $300 per child for qualifying families. The American Families Plan that’s now being promoted by the administration would make the expanded tax credit permanent, and would continue the practice of sending monthly payments to families, rather than giving families a credit at tax time.

The expanded credit, the administration wrote in a document outlining the broad plan, “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.”

The administration’s proposal would also seek to make child care free for many households, and offer it at a reduced price for many more.

“Families will pay only a portion of their income based on a sliding scale,” the White House said. “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.”

Biden’s plan would also seek to invest more in paying child care workers themselves a livable wage. According to the White House, child care workers “are among the most underpaid workers in the country and nearly half receive public income support programs.” The typical child care worker earned around $12.24 per hour last year, the White House explained, but under the proposals in the American Families Plan, investments in child care would increase the wages of those caregivers to a minimum of $15 per hour.

The proposal also includes a $109 billion plan to make two years of community college free for any person wishing to attend one. If implemented, it would affect about 5.5 million students who would no longer have to pay tuition or fees to get a two-year degree. The plan would be paid for jointly, with the federal government providing 75 percent of the costs and state governments agreeing to pay the remaining 25 percent.

Biden’s plan would also fund two years of tuition for students enrolled in four-year universities that serve marginalized communities, such as historically Black colleges and universities, and would aim to increase the Pell Grant award by up to $1,400 to families with lower incomes. Pell Grants would also be made available to Dreamers, individuals who were brought to the U.S. by their parents as children and have lived here ever since.

If implemented, the American Families Plan would also establish paid leave for American workers who are sick, who are starting families, and for other reasons. The economic relief package passed earlier this year gave tax credits to companies that voluntarily instituted paid leave for their employees, but the new federal proposal by Biden would make paid leave available to every worker in the country.

The administration notes that the pandemic was incredibly costly, forcing many workers, particularly women, to stay home. “The United States is one of the only countries in the world that doesn’t guarantee paid leave,” the White House document states. “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.”

The plan offered by the president would, within 10 years, establish a program that guarantees 12 weeks of paid leave for workers. It would provide workers with a minimum of two-thirds of their average weekly income (for low-income workers, it would be 80 percent of their weekly wages) up to $4,000 per month. It would also ensure that workers would be eligible for paid leave “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.”

There are a number of other provisions that also appear in the proposal, including making Pandemic-EBT summer programs — established to ensure children who benefited from free school lunch programs wouldn’t go hungry during the summer months — a permanent fixture, as well as making more generous subsidies in the Affordable Care Act last beyond the pandemic.

The administration also laid out how it plans to pay for the $1.8 trillion bill, mainly through tax increases on wealthy Americans.

The proposal would increase taxes on top income earners, from 37 percent to 39.6 percent, while also increasing the taxes on capital gains, which currently sit at 20 percent, to 39.6 percent as well. Taking both actions to fund the bill falls in line with Biden’s campaign promise to ensure that taxes on typical workers’ pay and income from capital gains are equal, while also ensuring that no American family earning under $400,000 per year would see their taxes increased.