Posted on 05/03/2021 5:32:38 AM PDT by Kaslin
Biden's American Family Plan would dole out free college, free child care, free meals, and more. But does the math add up? Nope.
President Biden released the provisions of his American Family Plan last week, and just like with his American Jobs Plan, the details are scant and the price tag is high.
Even given the limited details, the plans ought to give everyone pause — and by “everyone” I don’t just mean conservatives who oppose massive welfare state expansions, but also those who agree with the objective of an increase in the social insurance system in America. There are some serious flaws worth looking at, even with the few details we have of the plan.
Biden splits out his childcare proposals into two pieces, “free preschool” and “affordable childcare.” The proposal claims families will be able to “choose the settings that work best for them,” but the proposal is very specific about what this program will look like, with teachers with “job-embedded coaching, professional development, and wages that reflect the importance of their work.”
What’s more, the proposal states that “All employees in participating pre-K programs and Head Start will earn at least $15 per hour, and those with comparable qualifications will receive compensation commensurate with that of kindergarten teachers.” This means only some preschool programs will be eligible, rather than providing working parents real choice for their child care.
Biden’s “affordable child care” promises “low and middle-income families [will] pay no more than 7 percent of their income on high-quality child care, saving the average family $14,800 per year on child care expenses.” The plan doesn’t specify whether families that earn more will be included at a lower benefit level or not.
It promises more family choice, be it child care centers or family child care providers, or Early Head Start, but similar proposals generally use the phrase “high quality” to exclude family child care centers, to require a college education, and, in practice, despite the phrase “developmentally appropriate,” to create a very academic curriculum focused on early reading and math.
Unlike childcare subsidies in other Western countries, there is no benefit for stay-at-home parents, and certainly no option for families for whom a nanny or nanny-share is the most appropriate choice.
In addition to this promise of a 7 percent maximum, the plan also proposes a boost in the tax credit for child care expenses, with a 50 percent reimbursement, up to $4,000 for one child or $8,000 for two or more children, for families earning up to $125,000, and a phase-out afterward.
The proposal promises socialized community college for three or even four years, for “first-time students and workers wanting to reskill.” There is no information on how they would differentiate between deserving and undeserving students or whether any community college class, whether for career training or personal enjoyment, would be free to the consumer.
The proposal also spends money in other ways, including $62 billion in grants for “completion and retention activities,” and two years of unspecified “subsidized tuition” for students from families earning less than $125,000, at Historically Black Colleges and Universities, Minority Institutions, and Tribal Colleges and Universities.
Biden’s proposal is not just a “maternity leave” or even a “parental leave” proposal. Here are all the circumstances in which workers would qualify for leave under his plan:
Under these circumstances, a worker would be eligible for 12 weeks of paid leave, with two-thirds of pay covered up to $4,000 per month, or 80 percent of pay for “the lowest wage workers.” Workers would also get three days of bereavement leave per year.
The proposal is estimated to cost $225 billion “over a decade,” but here’s the catch: the program would not provide its full benefit until year 10, meaning that it engages in a deceptive bait-and-switch, substantially understating its costs so as to appear to be “fully funded” over 10 years based on the proposal’s tax increases.
The proposal would expand summer Electronic Benefit Transfer (EBT) to “all eligible children nationwide.” The benefit would give families a voucher equivalent to the amount that schools spend, per student — as if families were purchasing prepared meals rather than cooking at home, and disregarding the fact that families in need are already receiving SNAP benefits meant to cover their food needs.
The proposal would also expand the number of schools eligible for fully free school meals, meaning that even middle-class families, if their school has a 25 percent SNAP participation rate, will be getting free meals during the year and food vouchers during the summer.
Biden’s proposal would keep the “American Rescue Plan” child benefit boosts (from $2,000 to $3,000 per year) up to 2025, then make the “tax credit” fully refundable permanently. So far, so good. While there are open questions about whether these benefits are successful in supporting families without decreasing recipients’ willingness to work, there are a significant number of right-of-center folk on board with the principle of child benefits.
But, again, the spending boost lasts only until 2025, while the revenue forecasted to fund it is a 10-year projection. What’s more, when benefits are paid out on a monthly basis and on a “fully refundable” basis, they are not “tax relief.” They are child benefits, plain and simple.
Depending on the particulars, unemployment insurance reform might be entirely reasonable.
The proposal related to health-care subsidies, however, is more complex. It would extend benefits that had been temporarily put in place in the American Rescue Plan, which itself a mixed bag.
One key problem with the Obamacare subsidies was a “cliff” at 400 percent of the poverty level; earn a dollar more and large sums of health insurance subsidy are lost. This proposal would permanently end that cliff with a gradual phase-out.
However, the Biden proposal would make several substantial boosts in benefits permanent. It would reduce the premium required, as a percent of income, fairly substantially. For example, from 6.52 percent of income to 2 percent of income for a person with 200 percent of poverty-level income, and it would change the “benchmark” plan that subsidies are based on, from a “bronze” to a “silver” plan.
Biden’s proposal claims to fund this plan through tax increases on “high-income Americans.” Part of this would be funded through increased IRS enforcement to prevent the wealthy from cheating on their taxes, but the majority would be funded through tax hikes: increasing the highest marginal tax rate to 39.6 percent, applying this same rate to capital gains for households with over $1 million in income, and ending the “step-up” adjustment that saves heirs from paying capital gains at the time of inheritance, above $1 million.
The Committee for a Responsible Federal Budget estimates these tax hikes would generate $800 billion in new revenue over 10 years. For the revenue from increased IRS enforcement, they have no independent forecast and rely only on the Biden administration’s claim that it will generate $700 billion net of the cost of increasing enforcement.
Even if one is on board with substantial expansions in government provision of benefits, there are two big red flags to these proposals.
First, they play fast and loose with the spending. The new taxes are funded in a level manner over the next 10 years, but the benefits phase in. The Washington Post reports there are even more programs, and requirements of federal and state cost-sharing that would throw a monkey wrench into the whole proposal.
“States participating in the pre-K program would be expected to cover 10 percent of the costs at first, increasing their share to 50 percent. For community college education, the federal share ultimately would be 75 percent of the cost,” the Post reports.
C. Nicole Mason, the president and chief executive at the Institute for Women’s Policy Research, told the Post that to ensure 12 weeks of paid leave for all new parents, “the Biden administration would have to set aside more than double” the $225 billion Biden has budgeted. “The full cost of the plan from 2024 to 2033 is $460 billion, according to IWPR’s simulation model.” True social insurance programs do not rely on deficit spending, or on budget trickery.
Second, none of these programs are true “social insurance” programs. Social insurance programs operate by means of broad-based taxes and under the premise that if we all collectively benefit, we should all collectively fund the benefit. Even for benefits that are funded by general revenues rather than FICA-like taxes or “social charges,” true social insurance programs do not promise “something for nothing.”
None of the Western European social welfare democracies that progressives would have us emulate fund their government spending by taxes targeted at the rich. Their highest tax rate’s income level is far lower than in the United States, let alone in the version of U.S. tax rates that progressives would like to see.
Lastly, according to the CRFB’s projections, even the tax-the-rich hikes aren’t enough to fund these promises, producing a $300 billion deficit even after taking into account those hikes. Considering that Biden still has a considerable number of promises due for yet more “American Spending Plan” proposals, if they can’t even get the spending right despite their tax hikes, this is bad news indeed.
“fund this plan through tax increases on ‘high-income Americans’”
High-income Americans in many places are called dentists and medical doctors. They will stop accepting new patients and Uncle Sam will after a few years have to cut deals with the ADA and AMA on special income tax cutouts for medical licensed professionals.
Why do people keep electing dishonest slimeballs like biden who make million$ for themselves,and let our government go bankrupt? Yes I know biden was not “elected”...don’t get me started.
If they managed their own money the same way they do ours, they would all be sleeping in cardboard boxes somewhere in wackifornia.
As it is with all of the Commies schemes.
What do they care, they'll just fire up the printing presses.
I can hear the brrrrrrr from across the country...and feel it every time I buy something like gas or groceries.
Look up cowbird...
What will happen is the government's definition of "high-income Americans" will be lowered and lowered until it hits teachers, nurses cops, firefighters, first responders and others in that tier, all the way down to Walmart and fast food workers - until anyone with a job will be considered "high income Americans."
WHO on earth actually believes this is ethical or even workable?? There are people sitting out hard time in US prisons for attempting less!
There will always be a percentage of people who are driven to success and excellence, but the biggest harm these progressive ideas do is allow those who are accepting of a lazy and mediocre life to become the majority. The government is trying to promote an agenda that essentially tells people not to dream of financial independence, and if you do achieve that, you are an enemy of the people.
“States participating in the pre-K program would be expected to cover 10 percent of the costs...”
Um, that sounds familiar. Yup, Biden’s pre-K scheme is much like Obama’s PPACA Medicaid scheme.
California effectively pays nothing for PPACA Medicaid expansion since California’s 10% PPACA Medicaid expansion share is paid for by ~10% state income tax on doctors’ PPACA Medicaid expansion income.
Such state cost-sharing means the associated federal government program mainly benefits blue states with income taxes, with devout Democratic loyalists in higher tax states like Nancy Pelosi’s California and Chuck Schumer’s New York State generally having to pay nearly nothing.
Florida and Texas won’t snatch 10% of doctor’s PPACA Medicaid expansion income to pay what would be its 10% required share. Low-income Floridians and Texans have been left behind by Obama’s and Pelosi’s PPACA.
Such structuring also means that state participation in a federal program becomes a state level campaign issue that Democrats can use against Republicans.
“increasing the highest marginal tax rate to 39.6 percent, applying this same rate to capital gains for households with over $1 million in income”
The rich will simply set up online banks and borrow on their shares at say 1% a year instead of paying 39.6% tax to the feds (and ~10% more to ‘rat-run states for a total of nearly 50%).
If Jeff Bezos had merely borrowed on the shares he sold in past years, he would be a richer man today.
No they won't. The .5% will just employ more loopholes and/or relocate to a country with a more favorable tax situation.
“’American Rescue Plan’ child benefit boosts (from $2,000 to $3,000 per year) up to 2025, then make the ‘tax credit’ fully refundable permanently. So far, so good.”
Good? I don’t think so.
Standard welfare programs don’t pay for BMWs, auto insurance or high-speed internet.
Pop out two young ones and $6,000/year becomes available.
What about food, clothing and medical care for the young ones? SNAP, thrift stores (or church-based handout programs) and Hillary’s free to $20/month Kidscare are well-known to the rugrat makers of America.
“Why do people keep electing dishonest slimeballs like biden who make million$ for themselves,and let our government go bankrupt?”
We didn’t elect him.
“Why do people keep electing dishonest slimeballs like biden”
Section 8 housing vouchers
SNAP [food stamp] benefits
Medicaid
PPACA subsides of up to 98% of premiums
Obamaphones
$1,400 checks
refundable tax credits
farm debt write-offs (plus 25% bonus)
mere promises of $10,000/$50,000 student debt write-offs
“two years of unspecified ‘subsidized tuition’ for students from families earning less than $125,000, at Historically Black Colleges and Universities, Minority Institutions, and Tribal Colleges and Universities.”
Does that sound racist to you?
I object to the debt on behalf of my children and grandchildren.
just woke up from a long nap. did bernie win?
“biden”
There was a guy by that name who said before the election of November 2020 he had a plan to cover the remaining uninsured Americans for $75 billion/year.
Maybe one of the guy’s dogs ate the plan, or he forgot about it, or lied.
Social insurance programs operate by means of broad-based taxes and under the premise that if we all collectively benefit, we should all collectively fund the benefit. Even for benefits that are funded by general revenues rather than FICA-like taxes or “social charges,” true social insurance programs do not promise “something for nothing.”
The Dems should be honest with the folks instead of promising they would be taken care of by the rich. The Rich have resources to legally avoid paying. (Evasion is illegal)
To call it by its right name: advanced socialism. A major step on the road to communism.
The public becomes addicted to the benefits and always votes to keep the benefits-guaranteeing the reelection of the democrats.
With the benefits come massive seizures of income from the producers. It will soon reach the point where the producers decide to give up and go to one of the very few free market places left on the planet.
Expect massive inflation and misery. (Not for the ruling elite and those on welfare. For YOU, the producer!)
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