Cutting your Spending.” Credit: TaxCredits.net

On April 28th, President Joe Biden released his bill for investment in childcare and education, labeled the American Families Plan. As Jim Tankersley and Dana Goldstein detail in the New York Times, “The package includes financing for universal prekindergarten, a federal paid leave program, efforts to make child care more affordable, free community college for all, aid for students at colleges that historically serve nonwhite communities, expanded subsidies under the Affordable Care Act and an extension of new federal efforts to fight poverty.”

A brief rundown, drawing on a chart from Alicia Parlapiano of the New York Times, is below:

Tax Credits (10-year estimates)
Childcare and EITC expansion:$600 billion
Affordable Care Act added tax credits:$200 billion
Total tax expenditures$800 billion
  
Direct expenditures (10‑year estimates) 
Paid family and medical leave (12 weeks)$225 billion
Childcare$225 billion
Free universal preschool$200 billion
Two years of free community college$109 billion
Pell Grants (higher ed)$82 billion
Other education$117 billion
Nutrition programs$45 billion
Total direct expenditures$1,003 billion

 All told, the bill proposes about $1 trillion in new direct federal spending ($100 billion a year) and $800 billion in tax credits ($80 billion a year). Of that $1.8 trillion, $1.5 trillion would be covered by tax increases on people earning $400,000 a year or more through a mix of higher income tax rates (restoring the 39.6 percent rate that prevailed during Barack Obama’s presidency), a capital gains tax rate equal to the tax rate on income for millionaires, capping the capital gains tax exclusion at death at $1 million, and an increased enforcement budget for the Internal Revenue Service to boost compliance of wealthy Americans with existing tax laws.

To get a sense of scale, in Fiscal Year 2019 (the most recent pre-pandemic year), the federal government spent $4.448 trillion. Due to the pandemic, federal spending in Fiscal Year 2020 reached a record $6.55 trillion.

Comparatively speaking, the “Family Plan” expenditures are modest. Adding $100 billion a year in direct spending amounts to a 2.2 percent increase above fiscal year 2019 spending. Even if you add the $2.3 trillion in proposed boosted infrastructure expenditure, the combined added federal outlay works out to a 7.4 percent spending increase. That’s a significant amount, but not quite as grand as incessant media use of “the t-word” (trillion) might lead one to believe.

That said, this is not to discount the significance of the provisions. In the original Biden relief bill, there was a provision for 14 weeks paid leave, but the measure got stripped from the final bill. This bill offers 12 weeks paid leave. The allocations for childcare and education expansion—both pre-kindergarten and collegiate—are also significant expansions of social policy supports.

For Otis Rolley, senior vice president at the Rockefeller Foundation, who directs the foundation’s equity and economic opportunity initiative, most significant are the bill’s tax-credit provisions, which boost the after-tax income of low-income Americans. The big-ticket item (at a cost of roughly