Biden proposes big boost for low-income workers and families - Affordable Housing Online

Biden proposes big boost for low-income workers and families

By on May 19th, 2021

Tagged As: Affordable Housing News, Editorials

Photo by Alex Alexi on flickr.com

President Biden proposed a new $1.8 trillion investment plan last month that will help low-income families with accessible education, direct household support, and tax cuts.

The American Families Plan follows up on the $2 trillion American Jobs Plan, which proposed massive infrastructure and affordable housing investments. Although there are no affordable housing funds in the American Families Plan, it has many resources that will help low-income renters and their families

Important Proposals:

– Universal preschool for 3 and 4 year old children.
– Any student to attend two years of community college for free.
– Two years of free tuition at schools that serve minority and underserved populations.
– Addressing teacher shortages and strengthen the pipeline for teachers of color.
– Free child care for families with the lowest incomes.
– Expanding school meal programs that target the highest need areas.
– Expanding program for free meals to all eligible children during summer.
– Tax cuts for low-income renters, workers, and families with children.

Education Investments

President Biden’s plan invests in educational opportunities from preschool through college. The education measures will also target minority and other students who have traditionally had fewer opportunities.

Biden is proposing $200 billion for universal preschool. This will allow all 3-4 year old children to attend preschool and get a head start on learning. It will benefit 5 million children. Families will also save an average of $13,000 on daycare costs.

The American Families Plan also proposes $109 billion so that any student can attend two years of community college for free. $62 billion would also be available to help with student retention and completion at community colleges. This will help more students finish their studies and graduate.

Pell grants already help many low-income students attend college. Unlike student loans, Pell grants do not need to be repaid. President Biden is proposing increasing Pell grant awards. This will give low-income students approximately $1,400 in additional assistance. DREAMERs would also be able to use Pell grants. DREAMERs are people who came to the U.S. as children of undocumented immigrants.

The American Families Plan will also provide two years of free tuition at schools that serve minority and underserved populations. Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and Minority Serving Institutions (MSIs) will also receive funding to expand programs in high demand fields.

Biden’s proposal also provides funding to address teacher shortages and strengthen the pipeline for teachers of color. It will double scholarships for future teachers from $4,000 to $8,000 per year. The plan also includes funding for teachers to secure in-demand credentials and ongoing training.

Direct Support for Children and Families

President Biden is proposing $225 billion to make child care more affordable for working parents. Families with the lowest incomes would have free child care. Families with incomes up to 1.5 times the state median income would receive assistance on a sliding scale. The goal is for households to pay no more than 7% of their income for child care.

The plan also invests in the quality of care and support for staff. Early childhood workers have low pay, and few have benefits. This leads to high turnover, and that affects the quality of care. The American Families Plan would ensure that early childhood staff have a $15 minimum wage. Additional job training and professional development resources will also be provided.

The American Families Plan will expand the Summer EBT program to all eligible children nationwide. This demonstration currently assists low-income families with children receiving free meals during the school year. It provides an EBT card during summer so that children who rely on the schools for meals can keep up their nutrition.

President Biden also proposes to expand school meal programs that target the highest need areas. Funding from the American Families Plan will allow more schools in distressed areas to provide free meals to all students. This proposal will provide school meals to an additional 9.3 million children.

Benefits for Low-Income Workers

President Biden is proposing to fundamentally change how the unemployment insurance system works. The pandemic showed flaws in the current system. Unemployed people often had to wait weeks for benefits to arrive. In many cases, the benefits they would have received from state programs would have been too low, or not lasted long enough.

The American Families Plan proposes automatically adjusting the length and amount of benefits depending on economic conditions. Instead of waiting months for Congress to act in the next economic crisis, benefits would be adjusted automatically to help struggling workers and their families.

The plan will also create a national paid family and medical leave program. It will be phased in.By year 10 of the program, workers would be guaranteed 12 weeks of paid family or medical leave.

Family and medical leave can be used to care for a new child, help a seriously ill family member, or recover from a serious injury or illness oneself. This will especially help women maintain their participation in the workforce. This is very important as the country climbs out of the pandemic, which saw millions of women pushed out of the workforce.

People leaving jails and prisons often have a hard time finding work and housing. Having food assistance can help ease the transition back into work and community. However, formerly incarcerated individuals are not eligible for assistance through the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps). States can make an exception to this restriction, but only a few have. The American Families plan will allow people leaving prison to qualify for SNAP.

Tax Cuts for Families and Workers

President Biden is proposing several tax cuts that will benefit low-income renters, workers, and families with children. Some of these are extensions of tax cuts that were included in the American Rescue Plan.

The American Families Plan will lower healthcare costs for low-income renters. It will expand American Care Act premium tax credits. These expanded credits mean that low-income households will pay less for health insurance. It will also make insurance affordable enough so that more low-income households can afford coverage.

The Child Tax Credit has been largely increased for this year. Families with children under age 6 receive a tax credit of $3,600 per child, and $3,000 per child ages 6-17. The American Families Plan will extend the increased credit through 2025 and make it fully refundable. The refund can also be paid out monthly to help with bills throughout the year.

The American Rescue Plan increased tax credits to help families with child care needs. The American Families Plan proposes making the increase in the Child and Dependent Care Tax Credit permanent. The credit will cover up to half the cost of care for children under age 13. Families can receive up to $4,000 credit for one child, and up to $8,000 for two or more children. Families making less than $125,000 can claim the credit.

Many childless workers will qualify for the Earned Income Tax Credit this year because eligibility was expanded under the American Rescue Plan. The EITC has helped keep millions of low-income households afloat. The American Families Plan will make this expansion of the EITC permanent.

The White House. Photo by whitehouse.gov

How Will the President Pay for This?

President Biden has said that no one making under $400,000 a year will pay more in taxes for the American Families Plan. Instead, the president will focus tax increases on the wealthiest 1% of Americans.

The American Families Plan proposes raising the top tax rate on the wealthiest Americans. Wealthy households would have a tax rate of 39.6%, the same as during the Bush and Obama administrations. This is an increase over the current rate of 37% set in the Trump tax cuts of 2017.

The plan also proposes ending capital income tax breaks and other loopholes that benefit the wealthy. Capital income is gained from stocks and other investments. The tax cuts of 2017 meant that many wealthy people could pay less in taxes than working families.

The American Families Plan is now in the hands of Congress. Congressional staff will be writing up the legislative language. Some items are bound to change as they are debated in committees. President Biden has shown that he is willing to go big to help low-income and working families emerge stronger from the coronavirus crisis. Public pressure on Congress will be needed for low-income renters to benefit from this vision.

Published by

Chris Holden

Chris Holden, Affordable Housing Online's Senior Housing Analyst, has been in the affordable housing field for 25 years. Originally from Keene, New Hampshire, he has worked as a researcher, policy analyst, lender, trainer and real estate developer. He also taught political science at Keene State College. He is focused on making housing policies more accessible for low-income renters.