Who Benefits from Biden’s American Families Plan? Three Things to Know, and Why They Matter
In his remarks to Congress on April 28, 2021, President Biden unveiled The American Families Plan, which is intended to stabilize families as the nation recovers from Covid-19. Governmental support for American families is long overdue, with the US ranking last in developed countries for family-friendly policies on virtually every indicator. As a family policy activist and the founder of Economic Equity for Moms, I was incredibly excited for the unveiling of Biden’s American Families Plan. At first take, it was obvious to me that the American Families Plan is a much-needed step forward for working parents. However, as I dug into the plan, I learned that Biden’s plan privileges the two-income family model while neglecting families who prefer a parent who is working part time or at home with children.
Read on for my three biggest takeaways from Biden’s American Families Plan and why they matter.
The American Families Plan Provides a Monthly Child Allowance from Now Until December 2021
Passed as part of the American Rescue Plan, the expanded child tax credit ensures that nearly every American family will receive a monthly child allowance—in fact, most families have already seen their first payment as of July 15, 2021. If the American Families Plan is passed, this expanded child tax credit will continue until 2025 and be made permanently fully refundable.
Highlights of this new child tax credit:
- Families will receive $300 per month for each child age 5 and younger and $250 per month for each child ages 6 through 17.
- The first half of the 2021 tax credit will be paid monthly from July 2021 to December 2021. The rest will be paid out when the family files their 2021 taxes next year.
- Those who filed taxes in 2019 or 2020 will receive this money automatically with no further action needed. Families will receive these payments from the IRS the same way they received their most recent tax refund—through direct deposit or the mail.
- The tax credit will start to phase out at an AGI of $75,000 for individual filers; $112,500 for head of household filers; and $150,000 for joint filers (you can find more info here).
- You can enroll to receive the monthly payments and adjust your banking information at the IRS’s Child Tax Credit Update Portal here.
Why it Matters
This expanded child tax credit is a big deal for several reasons. First (and most importantly), it values the work that parents put into raising children and doesn’t discriminate based on work status. Second, it mirrors the child benefit available in the EU and elsewhere, forming a significant financial safety net for parents while helping to alleviate child poverty in the US. And third, the structure of these tax credits trusts and empowers parents. These funds are totally flexible, meaning families can use them for anything from child care expenses to homeschooling supplies. The fact that the IRS distributes these funds on a monthly basis rather than in one big chunk with a tax refund also makes them much more usable for parents; families can count on that money in their monthly budget, rather than being tempted to spend it on non-child-related expenses when they get their refund in April. Ultimately, these extra funds will oil the gears of the economy and empower parents to make the choices that are best for them and their families.
The American Families Plan Funds Family Leave—for the First Time Ever
As part of Biden’s American Families Plan, the federal government will fund 12 weeks of paid family and medical leave. At present, the United States is the only developed country that offers zero weeks of paid maternity leave, designating it as the least family-friendly nation among its peers. It is critical for the federal government to fund parental leave, especially as less than 20% of private sector employees have access to paid family leave through their employers, and one in four mothers return to the workforce within two weeks of giving birth. Providing paid family leave increases women’s participation in the workforce, supports low-income employees who rarely have access to paid leave, and, most importantly, allows time for mothers to heal and parents to bond with their children in the early weeks of their children’s lives.
However, Biden’s proposed funding of paid leave masks deeper issues of how we structure leave in America, and it ultimately falls short of what families—especially families with young children—need. Biden’s plan builds on the Family Medical Leave Act (FMLA), a barebones act passed in 1993 that provides general family medical leave (such as caring for an ailing spouse or taking time off for a serious illness) but offers minimal protections for new parents. At present, FMLA only covers those who
- Work for an employer who has at least 50 employees
- Have worked at least a year for the same employer
- Have worked at least 1,250 hours within the last year (or at least 24 hours per week)
These requirements are restrictive and mean that up to 40% of employees don’t qualify for FMLA leave at all. Additionally, FMLA leave does not set aside protected time for prenatal care, birth, and postnatal care. Because the 12 weeks of FMLA leave is intended to cover every part of childbirth, we often see women in the US working up until the day they give birth (a practice that can lead to premature birth and other complications). Even worse, if a woman has pre-birth complications, any time she takes off of work before her baby comes will eat into the time she has with her baby after birth. This 12 weeks of leave also covers less than half of the 6 months that the American Academy of Pediatrics recommends a child should be exclusively breastfed, meaning that many mothers are forced into uncomfortable pumping situations at the office or must switch to expensive formula options. Ultimately, FMLA leave is just not flexible enough or long enough to help mothers and new babies adjust to the tumultuous changes that come with birth, and Biden’s plan does not address this gap.
Why it Matters
The only element that the American Families Plan changes about this whole arrangement is that the 12 weeks of FMLA leave would be paid. And while providing paid leave will allow many parents to spend more time with their babies than they otherwise could have, it does not offer that leave to nearly enough families, nor does it change the fact that for new mothers and their babies, 12 weeks is simply not enough. Instead of funding 12 weeks of general family medical leave, the US should construct a flexible leave policy specifically for parents that allows mothers to take time off before birth and is at least 6 months long. The benefits of longer leave are expansive and need to be codified in national policy to provide access to low-income workers. Though Biden’s American Families Plan would take a big step forward in providing paid leave, this paid leave is built on the shaky foundation of FMLA, which doesn’t give adequate support to new parents.
The American Families Plan Funds Child Care and Universal Preschool
Biden’s American Families Plan aims to invest heavily in early childhood education, including providing $200 billion dollars to offer free Pre-K for all three- and four-year-olds and $225 billion to fund child care more broadly. This plan would likely pay significant economic dividends, as every $1 invested in early childhood care has been shown to return $7.30 to the economy. His plan will include tax breaks for families paying for child care and cap child care payments at 7% of a family’s yearly income for all families that make 1.5 times their state’s median income or less. These investments would provide a much-needed safety net to millions of parents, many of whom presently say that paying for day care amounts to paying a second mortgage.
Why it Matters
Of all parts of Biden’s American Families Plan, his proposed investment in child care has stirred the most controversy, particularly from voices raising concern that a universal day care program might disadvantage children over the long term. The plan’s supporters argue that child care is a necessary investment for parents—mothers especially—who are most likely to take career breaks and sacrifice earnings to be more available for their children. The counterargument runs that while child care is necessary to allow parents to work, it is not always the best option for children. Skeptics doubt our government’s ability to create and maintain a high-quality system that would span the nation; similar attempts to create a province-wide program in Quebec, for example, infamously led to significant negative behavioral outcomes for many children who participated. Further, there is a lack of research on extensive day care use for infants and toddlers (ages 0 to 2), and the research we do have on this age group warns of academic and mental health consequences corresponding with extensive hours in day care.
There are strong feelings on every side of this issue. However, the American Families Plan falls short by supporting only the parents who choose to pay for child care, while continuing to overlook families who wish to provide care themselves. The American Families Plan could have included more creative solutions to address early-life child care issues, like funding career on-ramps for stay-at-home moms, legislating against anti-parent bias in the workplace, or providing incentives for employers to provide meaningful part-time work opportunities. Such compromise solutions would meet the plan’s goal of encouraging more mothers to enter the workforce while not privileging either child care arrangement.
An Unsettling Undercurrent: Neglecting Parents Who Prefer Family-Based Care
By both investing heavily in child care and providing tax breaks for families using these services, Biden’s American Families Plan incentivizes a model of both parents working (likely full time) while outsourcing daytime care for their children. Susan Rice, head of Biden’s Domestic Policy Council, explicitly said, “We want parents to be in the workforce, especially mothers.” This model encourages economic growth in the short term by increasing mothers’ labor force participation, but it ignores the preferences of many American families. For example, a full 62% of Hispanic families prefer to have family members caring for their children, while just 14% of Hispanic families prefer center-based care. By providing tax incentives and funding for the two-income, full-time child care model of family life, the American Families Plan leaves out the majority of families who would prefer to have a parent working part-time or not at all.
The most obvious way that Biden’s plan incentivizes the two-earner model is by providing significant tax breaks for families to use toward child care expenses, on top of the expanded child tax credit and cap on day care expenses already present in the plan. Biden’s plan expands a child care tax break (called the CDCTC) to cover up to $4,000 of child care expenses for one child and up to $8,000 for two, a significant increase over the child care tax credit available previously (see this video for a full explanation). While day care costs can be exorbitant and families paying them deserve help, politicians from Mitt Romney to Elizabeth Warren have argued for expanding cash payments to families rather than targeting day care expenses. Targeting day care expenses throws gas on the mommy wars, specifically favoring parents who choose center-based care and doing nothing for families who prefer family-based care.
My Big Takeaways
Having been sidelined at work for not wanting to jump back in full-time when my baby was three months old, I came to Biden’s American Families Plan hoping for solutions that would help parents better combine work and family. And don’t get me wrong, the plan does offer many perks that will reduce financial pressure on families: a generous child tax credit administered monthly, funded leave for new parents to give them time to bond with their new baby, and opportunities for more affordable preschool and child care options.
However, for mothers like me who want to have a greater role in caring for their children, much in this plan ultimately rang hollow. I had hoped for policies that acknowledged the economic centrality of unpaid care work and allowed families greater flexibility to attend to family responsibilities. But instead of the flexible policies I was hoping for, I found policies that maintain or even worsen the status quo by incentivizing two-income family models and making the opportunity cost that much higher for families who want a parent at home. Ultimately Biden’s American Families Plan provides significant benefits to two-income households but does little to provide solutions for families who want to spend more time with their children.
Editing credential to Bethany Bartholemew and Benjamin Dearden.