Topline
President Biden’s American Families Plan will cost $2.5 trillion over ten years, researchers at the Penn Wharton Budget Model estimate—that’s $700 billion more than the administration’s $1.8 trillion spending estimate.
U.S. President Joe Biden delivers remarks on the COVID-19 response and the vaccination program … [+]
Key Facts
New taxes on high earning individuals would raise $1.3 trillion over the next decade to pay for some of that spending, the researchers found.
Included in that $1.3 trillion would be nearly $480 billion in revenue that would stem from enhanced enforcement at the Internal Revenue Service as part of Biden’s plan to crack down on tax evasion.
But the plan also includes $1 trillion in tax credits, according to the researchers, which means the tax changes would produce just $275 billion in new net revenue.
Key Background
Biden’s American Families Plan—the follow-up to his infrastructure-oriented American Jobs Plan—is focused on expanding benefits for education, childcare and workers. It includes $511 billion in federal spending for education (including free pre-K and two free years of community college), $225 billion for child care, $225 billion for paid family and medical leave and $45 billion for nutrition programs. To finance it, the administration has proposed a series of tax hikes on the wealthy including increasing the top ordinary income tax rate from 37% to 39.6% and taxing capital gains and dividends (now taxed at a top rate of 20%) at the higher ordinary income rate for households making more than $1 million.
Big Numbers
$5.2 trillion. That’s how much the American Families Plan and the American Jobs Plan—the two prongs of Biden’s larger Build Back Better plan—would spend altogether, according to the Penn Wharton Budget Model’s analysis of each (the jobs plan would spend $2.7 trillion). According to White House estimates, the two plans would invest about $3.8 trillion over a decade. According to Moody’s Analytics, the spending would amount to $4.5 trillion. The American Jobs Plan would be financed with corporate tax increases.
Chief Critic
Regardless of the specifics of the price tag, the plans are not likely to find much support among Republicans—many of whom oppose additional government spending at the levels Biden is proposing, as well as any tax hikes on the rich or corporations to pay for increased spending. “I think I can pretty safely say none of my Republican colleagues are going to support a $4.1 trillion infrastructure package, only part of which is for infrastructure,” Senate Minority Leader Mitch McConnell (R-Ky.) said this week, according to MarketWatch.
Further Reading
Five Budget-Busting—Or Tax-Raising—Progressive Priorities Biden Left Out Of His American Families Plan (Forbes)
Here Are The Biggest Winners And Losers In Biden’s Individual Tax Plan (Forbes)
Biden Will Unveil $1.8 Trillion American Families Plan Today—Here’s What’s In It (Forbes)
Biden Reportedly Wants Another $80 Billion For The IRS To Crack Down On Tax Evasion And Fund His American Families Plan (Forbes)
