How Biden, Democrats’ stimulus plans would support parents, families

  • Parents are set to be some of the biggest winners in Biden’s fiscal stimulus proposal.
  • Democrats are trying to expand the scope of relief for families through 4 key proposals.
  • These are: a child-tax-credit, “baby bonds,” child-care assistance, and school aid.
  • Visit the Business section of Insider for more stories.

Democrats are pushing forward with plans to pass President Joe Biden’s fiscal stimulus proposal. Parents are set to be among the biggest beneficiaries.

The president laid out a $1.9 trillion relief package last month meant to accelerate the US economy’s rebound from the coronavirus recession. The legislation’s most talked-about elements include $1,400 direct payments and an expansion to federal unemployment benefits, but the package could really help every American family, too.

The CARES Act, passed last March, helped parents with direct payments for each child but Democrats are now looking to expand the ways stimulus can alleviate families’ economic pressures.

Biden has indicated he aims to pass the measure with bipartisan support, but congressional Democrats have taken several steps to pass the stimulus plan through budget reconciliation, a process that allows the Senate to pass bills by a simple majority.

Should all 50 Senate Democrats line up in support of the package, Vice President Kamala Harris would cast the tie-breaking vote and approve the measure without any Republican backing.

Here’s how Biden and Congressional Democrats plan to support parents through the coronavirus recession, from an expanded child tax credit to fresh aid for child care providers. 

You can jump to a section or group through the table of contents here, or you can scroll through.

Congressional Democrats proposed the American Family Act on Monday as a critical part of Biden’s rescue package. 

The child-tax-credit program would provide $3,600 over 2021 to families with children 5 and under and distribute $3,000 to those with kids between 6 and 17. That’s up to $300 in monthly cash benefits for American families.

The initiative would be set up as a one-year emergency federal program, with the IRS doling out monthly benefits beginning July 1 to ease childcare costs and assist families who lost income during the pandemic. However, some experts have deemed the timeline ambitious considering tax season and the pandemic. 

Nina Olson,  former head of the Office of the Taxpayer Advocate, noted that IRS spent years building a framework for Obamacare’s premium tax credit.

“It is fine to authorize the payments, but there needs to be at least 18 months lead time, and even that is a stretch,” Olson told Politico. “Otherwise you just get something that is tacked on to mid-20th century technology that is completely inflexible.”

One of the legislation’s sponsors, House Appropriations Committee leader Rep. Rosa DeLauro of Connecticut, insists the monthly rollout is better. “Nobody pays their bills once a year — you pay your bills each month,” she said at a virtual news briefing on the plan. “The design makes more sense and helps families make ends meet through difficult months.”

The payments would start phasing out for individuals earning $75,000 and for couples making $150,000, although this could change in the coming weeks, as committees are still drafting legislation. The plan would be refundable, which means lower-income families could see higher tax refunds.

The plan could potentially cut the child poverty rate in half, researchers at Columbia University projected. The Biden administration has indicated support, and Democrats said they’d likely press for a permanent extension later this year.

Democrats last week unveiled a plan to create $1,000 savings accounts for every American child, becoming accessible when they turn 18. The measure, backed by Sen. Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachusetts, would then add up to $2,000 to each child’s account every year.

Introducing this so-called baby bond as a birthright would combat racial and economic injustice and set future Americans up for brighter futures, Pressley said.

“Our bill will provide every child an opportunity to pursue higher education, purchase a home, and build wealth for generations to come,” she said in a statement.

The interest-accruing accounts would be managed by the Treasury Department. Holders can only tap the account once they reach 18 years of age, and even then, funds are to be used for a specific set of purchases, according to a 2018 press release unveiling the proposal. Some such purposes include buying a home, paying for higher education, or opening a business, taking some pressure off of parents who would previously have to shoulder those costs.

The measure isn’t included in Biden’s proposal, but it has garnered support from influential party members including Senate Majority Leader Chuck Schumer and Senate Budget Committee Chair Bernie Sanders.

Booker indicated the program’s $60 billion-a-year price tag can be easily offset by lifting estate taxes and eliminating tax breaks for the wealthy. The growing income gap has been exacerbated by some federal policies, but he said that baby bonds can start to “level the playing field.”

In an attempt to support a school system strained by the pandemic, the administration is pushing for $130 billion to reopen and rebuild K-12 schools

These funds would be allocated toward making schools a safe space as the pandemic continues to rage on, according to the proposal on Biden’s website. Uses include: reduced class sizes, modified spaces for social distancing, improved ventilation, provisions for personal protective equipment, and increased transportation to provide for social distancing on buses. Some of the funds would also be allocated toward support for students’ academic, social, and emotional needs through things like extended learning time and counselors.

The aid is intended to close the digital divide that has led to a deepened socioeconomic gap. Some will go to the COVID-19 Educational Equity Challenge Grant, for underserved communities and schools. 

Public education, including community colleges and historically Black colleges, is set to get $45 billion, and $5 billion will go to governors for use in educational programs for both K-12 and higher ed students significantly impacted by Covid.

“The COVID-19 pandemic created unprecedented challenges for K-12 schools and institutions of higher education, and the students and parents they serve,” Biden said in a statement in January when he first pitched the plan. “School closures have disproportionately impacted the learning of Black and Hispanic students, as well as students with disabilities and English language learners.”

Child care will get a $40 billion chunk of the package, with $25 billion earmarked for an emergency stabilization fund for care providers. About four in 10 providers expect to shut their doors permanently if the government doesn’t offer support, Insider reported in July, citing data from National Association for the Education of Young Children

“No one can go back to work in other industries if their children aren’t in safe, healthy settings,” Ami Gadhia, the chief of policy, research, and programs at Child Care Aware, said.

Another $15 billion investment is set to expand child-care assistance to millions of families and parents who experienced job interruption due to the pandemic. The fresh relief aims to help the disproportionate number of women forced to exit the workforce and serve as family caregivers.

The plan also seeks to provide a tax credit for as much as half of parents’ spending on child care for children aged under 13. The credit can reach up to $4,000 for one child or $8,000 for two children, according to the proposal. The full 50% reimbursement starts to phase out for families making more than $125,000 a year.

Outside the child-care realm, Democrats are pushing to invest $3 billion in the Special Supplemental Nutrition Program for Women, Infants, and Children. The program, more commonly known as WIC, has seen increased use as more Americans have gone hungry through the pandemic.

The new funding will be spread out over several years and “ensure that low-income families have access to high-quality nutritious food and nutrition education,” the administration said.

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