What’s in Biden’s $1.8 Trillion Family Aid Plan

By Yuval Rosenberg

What’s in Biden’s $1.8 Trillion American
Families Plan

The Biden administration on Wednesday unveiled its proposal to
provide a historic increase in federal assistance to households,
with significant new spending on child care, health care, paid
leave and education.

Biden’s “American Families Plan” includes $1 trillion in
spending over 10 years and $800 billion in tax credits, paid for in
large part by a $1.5 trillion tax increase on the nation’s
wealthiest households.

Here are some of the major components of the proposal, along
with tax increases intended to cover much of the cost.

Child care: Biden wants to spend $225 billion over 10
years to reduce the cost of child care, with low- and middle-income
families required to pay no more than 7% of their incomes on care.
The White House says the average family would save about $14,800
per year under the plan.

Pre-K: The plan calls for free pre-school for all three-
and four-year-olds, with all teachers earning a minimum of $15 an
hour, at a cost of $200 billion over 10 years. The White House says
the average family would save about $13,000 per year.

Free and reduced-cost college: All students would qualify
for two years of free community college, at a cost of $109 billion
over 10 years. The plan would also increase Pell grants by $80
billion for students at four-year colleges and spend $62 billion to
help disadvantaged students stay in school. 

Nutrition: The plan would spend $45 billion to improve
and expand federally funded school nutrition programs, an effort
that would include extending free school meals through the
summer.

Paid leave: The plan would create a national paid family
and medical leave program, at a cost of $225 billion over 10 years.
Workers would eventually be eligible for 12 weeks of paid time off
in a variety of circumstances, including birth, death and illness,
with pay set at two-thirds of average wages, up to $4,000 per
month. Low-income workers would receive a higher wage replacement
rate of 80%.

Health care: Households that buy their own health
insurance through the federal marketplaces would receive $200
billion in additional tax credits over 10 years to help reduce the
cost, with an average savings of $50 per month for 9 million
people.

Low-income tax credits: Biden wants to make permanent the
low-income tax credit for childless workers, at a cost of $125
billion over 10 years.

Child care tax credit: The proposal calls for making
permanent the enhanced child tax credit, at a cost of $450 billion
over 10 years. Passed as part of the latest pandemic relief
package, the enhanced credit provides more assistance to more
families, and pays it out as a benefit on a monthly basis.

IRS enforcement: The IRS would get an additional $8
billion per year for 10 years, which the White House says would
produce at least $780 billion in new revenue through stricter
enforcement of the tax code and new reporting requirements.

Tax hikes: The top income tax rate would rise to 39.6%,
up from the current 37%, and households earning more than $1
million a year would face higher taxes on capital gains, with the
top rate set at 43.4%, more than twice its current level. The
carried interest loophole, which allows private equity investors to
treat some types of income as capital gains, would be eliminated,
as would a real estate tax break popular with wealthy investors.
And the proposal calls for eliminating the “step-up in basis” on
inheritances, which allows wealthy families to pass along assets
untaxed at death.

What’s not in the bill: The Biden proposal makes no
mention of eliminating the cap on the state and local tax
deduction, a sensitive topic for some blue state Democrats. It also
leaves the estate tax at current levels, despite Biden’s pledge to
increase it. And it does not include and expansion of Medicare and
changes other Democrats had sought to lower prescription drug
prices.

What comes next: Biden is expected to outline his
proposal in his address to Congress Wednesday night and may invite
Congressional leaders from both parties to the White House next
week to discuss the plan. But the proposal, which would mark a
significant expansion of the government’s involvement in Americans’
lives if enacted, won’t be easy to pass, in whole or in part.

“The package could face even more challenges than the
American Jobs Plan, Mr. Biden’s physical infrastructure proposal,
did in Congress,” Jim Tankersley and Dana Goldstein of The New York
Times
say. “The president has said repeatedly that he
hopes to move his agenda with bipartisan support. But ...
Republicans have expressed much less interest in additional
spending for education, child care and paid leave than they have
for building roads and bridges. They have also chafed at the tax
increases Mr. Biden has proposed, including the ones that will help
pay for his latest package.”

Quote of the Day

“It’s a lot of money, a lot of money. That makes you very
uncomfortable.”

– Sen. Joe Manchin (D-WV), on the cost
Biden’s American Families Plan, as quoted by
Bloomberg News. Manchin’s vote would be key if
Democrats look to pass the legislation through the Senate along a

party-line vote.

U.S. Drug Prices Two to Four Times Higher Than in Other Rich
Countries: GAO

A new government analysis commissioned by Sen. Bernie Sanders
(I-VT) finds that the United States pays more than two to four
times as much for certain prescription drugs as other wealthy
countries.

The report
from the Government Accountability Office looked at prices for 20
brand-name drugs in the U.S., Australia, Canada and France. It
found that the net retail prices paid by U.S. consumers and
insurers in 2020 — that is, prices after confidential rebates and
other price concessions — were 2.82 times higher than gross prices
in Canada, 4.25 times higher than gross prices in Australia and
4.36 times higher than gross prices in France.

The prices for the other countries were based on those listed on
public formularies and did not reflect potential discounts. “As a
result,” the report notes, “the actual differences between U.S.
prices and those of the other countries were likely larger than GAO
estimates.”

The report also notes that the United States is the only one of
the four countries in the analysis “that does not have an
overarching national pricing strategy for prescription drugs,
although some of its publicly funded coverage, such as Medicaid and
the Department of Veterans Affairs’ (VA) Veterans Health
Administration (VHA), use pricing strategies.”

Sanders said in a statement that the report confirmed that the
U.S. needs to act now to lower drug prices. “This important GAO
study confirms what we all already know: the pharmaceutical
industry is ripping off the American people,” Sanders said. “The
time is long overdue for the United States to do what every major
country on earth does: negotiate with the pharmaceutical companies
to lower the outrageous price of prescription drugs. I would urge
the President to put this proposal in the American Families Plan
and use the savings to expand and improve Medicare for older
Americans.”

But while Sanders, Democrats and activists have pressured
President Biden to include drug-pricing measures in the American
Families Plan being rolled out today, the White House decided to

leave out such proposals, including having the
federal government directly negotiate prices, lowering the Medicare
eligibility age and capping drug costs for seniors.

Chart of the Day: Federal Medicaid Spending
Rose by Nearly 20% in One Year

A new
report from the Kaiser Family Foundation finds
that federal Medicaid spending grew dramatically in the year since
the onset of the coronavirus pandemic, reflecting increased
enrollment and federal matching funds for state spending on the
health care program.

“In the one year since the onset of the pandemic, federal
Medicaid outlays totaled $500.8 billion and grew by 19.5%, compared
to 6.3% growth in the one year before the pandemic,” the report
says.

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