Putting Your Families Front and Center
The American Families Plan proposes wide-reaching protections to increase educational outcomes, provide subsidies to households caring for the young and/or sick, and make permanent tax credits that serve working families. What could your families achieve with a more fortified social safety net?
Hello, Talking About Money Community, how are you?
Today I want to discuss something that impacts every one of your clients, no matter their background or their circumstances: federal social policy. Have you ever stopped to consider this? Federal social policy is something that operates in the background, much like your computer’s operating system. And much like your computer, when policy is running well you glide through life with few interruptions. But also like your computer, when policy is all mucked up it can bring your productivity to a grinding halt – am I right?
No matter where your clients live or what types of lives they lead, federal social policy impacts them in ways great or small. If you ever read an article like the one in the Guardian called Why do Americans die earlier than Europeans?, the answer more times than not is federal social policy (and if TL;DR you did not click on this link, the answers as to why Americans die earlier than Europeans are: a) drug addiction, b) obesity, and c) lack of health insurance – all factors that can be influenced by federal social policy).
Barely 100 days into his administration, President Biden released his American Families Plan to create polices that enable American families to break into the middle class, and stay there once they’ve gotten there. It’s components are meant to help households like the ones you serve in your financial education, counseling, and coaching programs (and heck, these policy recommendation might even help your own).
Don’t want to click on that link either? It’s okay, I’ve got you covered. Keep reading for highlights of this bill:
American Families Plan and Education
The Biden plan will offer an additional four years of free education to American’s children and young people, including high-quality preschool for 3- and 4-year old’s, and two years of free community college to high school graduates. The maximum Pell Grant would rise to $1,400, and extra financial aid for college students studying to become teachers would be made available too.
How would an investment in education of this sort help your clients? I have seen young moms take lower-paying jobs (or stay out of the work force entirely) in order to maintain the flexibility necessary to work around haphazard childcare arrangements. Full-time childcare for 3- and 4-year old’s, especially when housed in the local public elementary school, could give parents the stability they need to pursue income-generating and wealth-building employment, and peace of mind that comes with knowing that their children are in classrooms learning from high-trained professionals.
What about the effects of free community college on your clients, what impact would that have? We must remember that “free” tuition does not solve all problems for community college students, who might also have responsibilities such as a job, childcare, or other family members that fight for attention with their college classes. But what could an associate’s degree do for your clients’ earning potential? Some attractive associate degree options lead to jobs such as computer programmer, radiation therapist, dental hygienist, registered nurse, and web developer.
American Families Plan and Subsidies
The American Families Plan will offset the cost of childcare, will provide paid time off for families with caregiving and medical obligations, and will bolster nutrition assistance in public schools. Childcare expense would be capped at 7% of a household’s annual pay for most families. Workers who take leave to care for a child or sick family member would receive at least two-thirds of their weekly wages. And public school free lunch programs would expand to summers, a time when childhood nutrition tends to take a nosedive.
Much like parents who could benefit from high-quality preschool for 3- and 4-year old’s, your clients might benefit from affordable high-quality childcare for their youngest children. This has the same perks to that of preschool, but at an even younger age, and at a time when childcare costs are their most expensive.
What caught my eye in the American Families Plan was the inclusion of paid leave for caregiving and medical concerns. The United States ranks low among industrialized countries in the paid time off rankings, and this would help households like the ones you serve, who might see a wage earner drop out of the labor force entirely because their job did not offer any paid time off.
Finally, free school lunch during the summer! If the pandemic taught us anything, it was that effective systems could be erected to get food to young people in need.
American Families Plan and Tax Cuts
As you may have gleaned through watching government intervention through the pandemic, an effective and efficient way to get help to working families is through the tax system (especially for those who had in the set up direct deposit with the IRS). In this bill Biden is recommending increases in such things as:
Child Tax Credit
Child and Dependent Care Credit
Earned Income Tax Credit
Health insurance tax credits
These changes would increase the Child Tax Credit and make it permanently completely refundable, permanently extend the Child and Dependent Care Credit, permanently extend EITC to childless workers, and expand ACA health insurance subsidies.
While it has taken me a while to come around to believing that the tax code can indeed address the needs of hardworking households, this combination of these four proposals certainly can make a dent. This proposal increases the Child Tax Credit to $3,600 for kids under 6 and increases it to $3,000 for kids 6-17. And it’s refundable, meaning that even if a household does not have a tax liability, they still get the tax credit! The Child and Dependent Care Credit would be increased to $4,000 per year. Finally, increasing health insurance tax credits could save households hundreds of dollars per year in their monthly insurance premiums.
While it is still early days for the American Families Plan, you can act now to show your support of other bills that support your clients (and maybe even you)! Head on over to the Prosperity Now Action Center and tell your elected officials that you support ideas such as American Opportunity Accounts (“baby bonds”) for children born in the United States.
