President Biden wants to spend $224 billion to reduce how much lower- and middle-income families pay for child care and make it free for the poorest parents.
The plan, part of his $1.8 trillion “American Families Plan,” which vastly extends the welfare state, would save most families about $14,800 a year on child care, according to the White House.
In making the case for the spending, Mr. Biden told a joint session of Congress this week that it would take the load off parents struggling to balance the demands of work and child care.
“The American Jobs Plan will help millions of people get back to their jobs and their careers,” Mr. Biden said in outlining the plan, which is the second phase of his infrastructure package. The spending in the families plan is in addition to a $2.3 trillion jobs plan he released last month.
“Two million women have dropped out of the workforce during this pandemic, too often because they couldn’t get the care they need for their family, their children,” said Mr. Biden, citing an estimate by the left-leaning National Women’s Law Center.
To pay for his infrastructure proposals, Mr. Biden wants to raise taxes that he said would force the wealthy and corporations to start paying their “fair share.”
His plan would raise the top individual income tax rate from 37% to 39.6%, essentially double the capital gains tax rate for households earning more than $1 million per year and increase the corporate tax rate from 21% to 28% to fund his vast legislative agenda.
Despite making child care a big-ticket item in his plan, congressional Democrats want Mr. Biden to expand benefits further.
Child care is the biggest expense for families with two children in all parts of the country, surpassing the cost of housing, food and health care, according to a survey by Child Care Aware of America, an advocacy group.
A study by the Center on Budget and Policy Priorities, a liberal think tank in Washington, found that families living in poverty spend 30% of their income on child care. Those making slightly more, up to $53,000 for a family of four, have 18% of their income taken up by the cost of child care.
The federal government already subsidizes child care for low-income families, but a Center on Budget and Policy Priorities study says only 1 out of 15 people who qualify receive help because the program is underfunded.
Mr. Biden’s plan to spend $224 billion over a decade would dramatically increase the subsidies. It would make up the difference so that parents making less than 1½ times the median income in their state would not have to pay more than 7% of their income on child care.
The median income in states ranged widely in 2018 from $44,097 in West Virginia to $83,242 in Maryland.
“The most hard-pressed working families won’t have to spend a dime,” the president said.
The White House did not respond to requests for details on who would receive free child care.
Mr. Biden also wants to use federal dollars to subsidize the wages of child care workers, who, according to one study, are paid less than 98% of other workers.
Republican lawmakers say they support child care but oppose the massive tax increases proposed to pay for Mr. Biden’s plan.
They also balk at Mr. Biden’s move to lump spending on far-flung social programs into an infrastructure package.
“There is a lot of support in the Republican caucus for helping with child care,” Sen. Charles E. Grassley, Iowa Republican, said Thursday. “But I think it should be handled through the regular appropriations process as opposed to something dealing with infrastructure.”
Sen. Mitt Romney, Utah Republican, questioned why the federal government would be getting involved in families’ child care decisions.
“I would rather give the money that we’re currently providing to families, give it to them in a monthly check, and allow them to decide how to spend their money to help their child,” he told reporters at the Capitol. “Building a national child care enterprise of some kind, run by the federal government, is not my idea of the best way to give families the options that they would like to have.”
Senate Republicans have proposed a much narrower $568 billion plan that they say is more fiscally responsible and focuses on real infrastructure, including $299 billion for upgrading roads and bridges, $61 billion for public transit systems and $44 billion for airport upgrades.
Sen. Elizabeth Warren, Massachusetts Democrat, this week proposed spending $700 billion over a decade to provide enough subsidies so that no parent would have to spend more than 7% of their income on child care. Under her proposal, all families making less than twice the federal poverty limit would have free child care, a clearer standard than what Mr. Biden is proposing.
“I am delighted that the Biden administration is treating child care as critical infrastructure,” Ms. Warren said, but she added that the administration needs to go further and lower child care costs for all parents.
“If we want mamas to be able to go to work, then we need to have child care, universal child care, available to every family in America,” she said.
Mr. Biden’s plan more closely mirrors a proposal last week by the Democratic chairmen of the House and Senate labor committees. Their $600 billion, 10-year plan also would limit the amount that lower-income people pay for child care to 7% of their pay.
Rep. Robert C. Scott, Virginia Democrat and chairman of the House Education and Labor Committee, praised Mr. Biden’s “robust” proposal but called it a “down payment.”
Mr. Biden’s plan would have taxpayers make up the difference so that child care workers would make at least $15 an hour, a boost from the $12.24 they made on average in 2020. The workers also could receive greater subsidies so that they would make the same salaries as kindergarten teachers in their area if they have the same credentials.
“Working in early care and education isn’t just ‘a low wage job,’” said Caitlin McLean, author of the study by the Center for the Study of Child Care Employment at the University of California, Berkeley. “It’s one of the worst-paid jobs in America. We ranked every occupation in the United States by average pay, and only 2% of all the occupations in the U.S. earn less than child care workers.”