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How Biden, Democrats’ stimulus plans would support parents, families

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  • Parents are set to be some of the biggest winners in Biden’s fiscal stimulus proposal.
  • Democrats are trying to expand relief for families through four key proposals.
  • They are a child tax credit, “baby bonds,” school aid, and childcare assistance. Biden wants to make the first one permanent.
  • Visit the Business section of Insider for more stories.

Democrats are pushing forward with President Joe Biden’s fiscal stimulus proposal, with Senate Democrats advancing the bill today. Parents are set to be among the biggest beneficiaries.

The president’s $1.9 trillion relief package is meant to accelerate the US economy’s rebound from the coronavirus

recession
. The legislation’s most-talked-about elements include $1,400 direct payments and an expansion of federal unemployment benefits, but the package could help American families, too.

The CARES Act, enacted last March, helped parents with direct payments for children, but Democrats are looking to further alleviate families’ economic pressures.

Biden has indicated he aims to pass the measure with bipartisan support, but congressional Democrats have taken steps to pass it through budget reconciliation, a process that allows the Senate to pass bills with a simple majority.

Should all 50 Senate Democrats line up in support of the package, Vice President Kamala Harris would cast the tie-breaking vote, approving the measure without any Republican backing.

Here’s how Biden and congressional Democrats plan to support parents through the coronavirus recession, from an expanded child tax credit to new aid for childcare providers.

You can jump to a section or group through the table of contents here, or you can scroll through.

Congressional Democrats proposed that the American Family Act form a critical part of Biden’s rescue package. Biden told House Democrats on Wednesday he supports making the temporary beefed-up child tax credit permanent, Insider’s Joseph Zeballos-Roig reported, the first time the president has indicated such support.

The child-tax-credit program would, over the course of 2021, provide families $3,600 per child 5 and under, and $3,000 per child between 6 and 17. That would be up to $300 in monthly cash benefits per child for American families.

The initiative would be set up as a one-year emergency federal program, with the IRS doling out monthly benefits beginning July 1 to ease childcare costs and assist families who lost income during the pandemic. Some experts have deemed the timeline ambitious, considering tax season and the pandemic.

Nina Olson, the former head of the Office of the Taxpayer Advocate, noted that the IRS spent years building a framework for Obamacare’s premium tax credit.

“It is fine to authorize the payments, but there needs to be at least 18 months’ lead time, and even that is a stretch,” Olson told Politico. “Otherwise you just get something that is tacked on to mid-20th-century technology that is completely inflexible.”

One of the legislation’s sponsors, Rep. Rosa DeLauro of Connecticut, the chair of the House Appropriations Committee, has insisted a monthly rollout is better. “Nobody pays their bills once a year — you pay your bills each month,” she said at a virtual news briefing on the plan. “The design makes more sense and helps families make ends meet through difficult months.”

The payments could start phasing out for individuals earning $75,000 and for couples making $150,000, though this could change in the coming weeks as committees draft the legislation. The credit would be refundable, meaning lower-income families could see higher tax refunds.

Researchers at Columbia University projected that the plan could cut the child poverty rate in half. The Biden administration has indicated support, and Democrats said they’d likely press for a permanent extension later this year.

Democrats also unveiled a plan to create $1,000 savings accounts for every American child that become accessible when they turn 18. The measure, backed by Sen. Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachusetts, would add up to $2,000 to each child’s account every year.

Pressley said that introducing this so-called baby bond as a birthright would combat racial and economic injustice and set Americans up for brighter futures.

“Our bill will provide every child an opportunity to pursue higher education, purchase a home, and build wealth for generations to come,” she said in a statement.

The interest-accruing accounts would be managed by the Treasury Department. Holders could tap the account once they reach 18, and the funds could be used for only specific kinds of purchases, a 2018 press release unveiling the proposal said. Some of those are buying a home, paying for higher education, or opening a business — taking some pressure off parents who might have had to shoulder those costs.

The measure isn’t included in Biden’s proposal, but it has garnered support from influential party members including Senate Majority Leader Chuck Schumer and Sen. Bernie Sanders, the chair of the Senate Budget Committee.

Booker has said the program’s $60 billion-a-year price tag could be easily offset by lifting estate taxes and eliminating tax breaks for the wealthy. While some federal policies have exacerbated the income gap, baby bonds could start to “level the playing field,” he said.

To support a school system strained by the pandemic, the administration is pushing for $130 billion to reopen and rebuild K-12 schools.

These funds are designed to help make schools a safe space during the pandemic, Biden’s website said. The proposal outlines reduced class sizes, modified spaces for social distancing, improved ventilation, provisions for personal protective equipment, and increased transportation to provide for social distancing on buses. Some of the funds would be allocated toward support for students’ academic, social, and emotional needs through things like extended learning time and counselors.

The aid is intended to close the digital divide that has deepened the socioeconomic gap. Some of the money would go to a COVID-19 Educational Equity Gap Challenge Grant for underserved communities and schools.

Public education, including community colleges and historically Black colleges, would get $45 billion, and $5 billion would go to governors to use for educational programs for both K-12 and higher-education students significantly affected by the pandemic.

“The COVID-19 pandemic created unprecedented challenges for K-12 schools and institutions of higher education, and the students and parents they serve,” Biden said in a statement in January when he first pitched the plan. “School closures have disproportionately impacted the learning of Black and Hispanic students, as well as students with disabilities and English language learners.”

Childcare would form a $40 billion chunk of the package, with $25 billion earmarked for an emergency stabilization fund for care providers.

A study from the National Association for the Education of Young Children in July found that about four in 10 providers said they expected to close permanently if the government didn’t offer support.

“No one can go back to work in other industries if their children aren’t in safe, healthy settings,” said Ami Gadhia, the chief of policy, research, and programs at Child Care Aware.

Another $15 billion investment would expand childcare assistance to millions of families and parents who experienced job interruption due to the pandemic. The relief aims to help the disproportionate number of women who were forced to exit the workforce and become family caregivers.

The plan also seeks to provide a tax credit for as much as half of parents’ spending on childcare for children under 13. The credit could reach up to $4,000 for one child or $8,000 for two children. The full 50% reimbursement would start to phase out for families making more than $125,000 a year.

Outside childcare, Democrats are pushing to invest $3 billion in the Special Supplemental Nutrition Program for Women, Infants, and Children. More people have used the program, commonly known as WIC, as more Americans have gone hungry through the pandemic.

The administration said the new funding would be spread out over several years and “ensure that low-income families have access to high-quality nutritious food and nutrition education.”

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