Biden announced his “American Families Plan” a $1.8 trillion proposal that would drastically expand spending on government services and welfare. The administration insists this plan is critical to helping the American public cope with the lingering economic effects of the pandemic lockdowns.
The plan would include national paid family and medical leave, universal access to pre-K programs for young children, free community college, and subsidized child care.
Biden’s plan includes:
- $225 billion for child care spending,
- $225 billion for a national family and medical leave program,
- $200 billion for universal pre-K schooling, and
- $109 billion for two free years of community college, as well as additional subsidies for Americans to purchase health insurance.
- An additional $800 billion would cover targeted tax credits for the middle class, which includes a tax credit of $3,600 per child.
- The paid family leave program would give workers up to $4000 in partial employment assistance for three months to be with their newborn child, to recover from an illness, to care for loved ones, and in case of other emergencies.
Free pre-kindergarten care would also be available for all three to four-year-olds, regardless of their families’ incomes. The White House claims that this program would benefit 5 million children and save the average family $13,000 in childcare.
The Biden administration has already announced tax hikes designed to pay for the soon-to-be-announced plan. Proposed tax hikes, including a near 40% tax rate on top income and investment earners, are estimated–by the administration with its own political and economic biases–to raise about $1.5 trillion.
“The president’s tax agenda will not only reverse the biggest 2017 tax law giveaways but reform the tax code so that the wealthy have to play by the same rules as everyone else,” the White House stated.
Biden also reportedly intends to give $80 billion more to the IRS to finance campaigns aimed at uncovering tax evasion and illicit transfer of wealth to overseas tax havens.
“I’m not trying to punish anybody. But damn it, maybe it’s because I come from a middle-class neighborhood, I’m sick and tired of ordinary people being fleeced,” Biden said last week.
The proposed increases in spending and the accompanying tax increases are shaking investor confidence. However, the Federal Reserve is accomodating enough so the plan might not have an immediate effect on the market. But we will be paying for it further down the line, through higher taxes AND higher prices.