The White House released details on Wednesday of its plan to pour $1.8 trillion into programs to aid students, extend tax credits, pay for personal leave for everyone and set in place a program to automatically adjust and implement unemployment insurance payments as economic situations warrant.
The announcement came in advance of President Joe Biden’s speech before Congress on Wednesday night.
In addition to help for students, teachers and the unemployed, the White House says Biden will also announce a proposal for health insurance subsidies and tax cuts for low- and middle-income workers.
Biden’s proposal, called the American Families Plan, comes after the $2.3 trillion infrastructure package Biden introduced last month.
The American Jobs Plan focuses on infrastructure including roads and bridges, and the transition to clean energy.
According to the White House, the American Families Plan would introduce $1 trillion in new spending and $800 billion in tax credits. It will be paid for by increasing taxes on high-wage earners, the administration said.
The Americans Jobs Plan would be financed by tax hikes on major corporations raising the corporate rate from 21% to 28%, imposing a 15% minimum tax on the largest American companies and doubling the minimum tax on foreign income earned by American companies.
Republicans have yet to respond to Wednesday morning’s announcement of the details of the package. However, top GOP legislators have expressed opposition to Biden’s proposed tax hikes to pay for the plan.
In an interview with Bloomberg TV last week, Sen. Pat Toomey, R-Pennsylvania, said that Biden’s proposed tax hikes present a “looming threat” to a robust economic recovery. Toomey is a ranking member of the Senate Banking Committee.
Other Republicans have criticized Biden’s plan to spend trillions of dollars on the American Families Plan and an infrastructure plan that would cost $2.3 trillion.
Senate Minority Leader Mitch McConnell, R-Kentucky, said on Tuesday, “President Biden ran as a moderate, but I’m hard-pressed to think of anything at all that he’s done so far that would indicate some degree of moderation.”
McConnell has vowed to oppose both of Biden’s spending plans, “every step of the way.”
Senate Republicans put forth their own $568 billion infrastructure plan last week. The plan, about one quarter of the size of Biden’s plan, proposes paying for fixing roads and bridges with user fees and unused COVID-19 relief funding.
Highlights from the American Families Plan Biden intends to introduce Wednesday include:
- Universal prekindergarten: The plan calls for $200 billion to make prekindergarten free for all three- and four-year-olds in the country.
- A federal paid leave program: The plan calls for $225 billion to provide paid family and medical leave for up to 12 weeks and include the assistance to those with a new child, to care for a disabled loved one, to recover from illness, to deal with a partner’s military deployment and other issues.
- Up to $4,000 per month would be available in paid leave, according to the plan. A minimum of two-thirds of a person’s average weekly wages would be paid with up to 80% of wages paid for the lowest wage workers.
- Child care: The proposed plan has low- and middle-class families paying no more than 7% of their income on child care for youngsters up to 5 years of age.
- Free community college: The plan calls for $109 billion to allow for two years of community college free to anyone. According to the proposal, the federal government would pay for 75% of the average tuition cost in each state, with the state paying the rest.
- Aid for students at Historically Black Colleges and Universities (HBCU): The plan calls for a $39 billion program that offers two years of subsidized tuition for students who are enrolled in four-year HBCU or other minority-serving institutions. The student’s family must earn less than $125,000 a year to qualify.
- Increasing Pell Grants: The plan would increase Pell Grants, grants to low-income college students, by $1,400.
- Teacher training: Around $9 billion would be set aside to train teachers, diversify the teaching workforce and address the problem of teacher shortages.
- Tax credits extended: The plan would extend the Affordable Care Act premiums tax credits indefinitely and make the child tax credit permanently available to the lowest-income families. The expanded earned income tax credit for childless workers would become permanent. The credit was expanded during the COVID-19 pandemic.
- Meal programs: Biden is asking for $45 billion for meal programs for children and low-income families.
- Unemployment insurance: The plan also calls for unemployment insurance reform and an adjustment to “the length and amount of UI benefits unemployed workers receive depending on economic conditions.”
How will it be paid for?
The proposal will be paid for by a series of tax hikes on wealthy Americans. The top income tax rate would go from 37% to 39.6%, erasing a Tax overhaul proposed by President Donald Trump and passed by a GOP-controlled Senate in 2017.
Corporate tax rates would be increased, along with a near doubling in the capital gains tax rate for households making over $1 million.
Republican leaders have said they are unwilling to undo the 2017 tax law, their signature achievement of the Trump presidency, to pay for what they view as big spending by Democrats, the Associated Press reported.
The plan, or some form of it, would have to pass both the House and the Senate then be signed by Biden for it to become law.