by Michael Hiltzik
EDITOR’S NOTE: This column is continued from “People talk about the cost of that big federal bill …,” published yesterday, Oct. 18.
Child care and families
The Build Back Better Act would significantly expand government assistance to families with children.
The act would make the Child Tax Credit, a feature of the COVID relief act, permanent. That credit comes to $3,000 per child ($3,600 for children ages 5 and younger), for households with income of up to $150,000 for a couple or $112,500 for single parents. That’s most families.
When it went into effect, the credit was seen as a massive step toward reducing child poverty today and increasing mobility out of poverty in the future, as Christopher Pulliam and Richard V. Reeves of the Brookings Institution observed. The credit was the largest component of the COVID act provisions that was projected to cut child poverty nearly in half, to 7.5% from 13.6%, according to an analysis by Columbia University.
The new act would also provide a child-care subsidy for lower-income families — those with 100% of median incomes in their states next year, rising to 130% in fiscal 2024. Individual states would have to sign on to the program and commit to meeting federal standards, which include Head Start program performance standards set by the Department of Health and Human Services.
The act would also guarantee 12 weeks of paid family and medical leave per year, starting in mid-2023, for families welcoming a new child by birth, adoption or foster care, or caring for a seriously ill or injured family member.
As outlined by the Kaiser Family Foundation, the provision would provide benefits on a sliding scale ranging from 85% of wages for earnings up to $15,080 annually, down to 5% of earnings between about $100,000 and $250,000.
This proposal would end America’s status as the only developed country without a national standard of paid family or medical leave.
Some advocates see the family leave provision as a major boon for voters across the income and political spectrum, with special appeal for the Democratic Party base.
“Paid leave could be Democrats’ Social Security for the 21st century: a highly visible program that … responds directly to work and care challenges that disproportionately confront Democratic voters yet are universal to working families,” as Vicki Shabo of New America and Jacob Hacker of Yale described it.
Education
The act would dramatically improve access to both preschool and higher education. It would allocate $200 billion for universal preschool for 3- and 4-year-olds, regardless of family income. The White House estimates the program would cover 5 million children and save the average family $13,000 once it’s fully implemented, with states picking up part of the cost.
The act would also aim to reduce the tuition cost of two-year community colleges to zero. The federal government would cover about 75% of the average tuition cost in each state when the program is fully implemented, with states picking up the rest.
The maximum Pell Grant, the federal government’s principal subsidy program for low-income college and university students, would be increased by about $1,500 a year to nearly $8,000 from the current maximum of $6,495. That would restore some, but not all, of the decline in the relative value of the grants over the last half-century, from covering more than 75% of the cost of four years at a public university to less than 30%.
Taxes
Since the major concern of the fiscal hand-wringers in Capitol Hill is how to pay for all this, the answer is straightforward. Mostly by raising taxes on the rich.
The act would raise the maximum income tax rate to 39.6% from 37% on single filers with incomes over $400,000 and couples earning more than $450,000 and add a 3% surcharge on incomes over $5 million.
It would raise the top capital gains tax rate to 25% from the current 20%, effective for taxpayers in the same brackets as the income tax. It would accelerate a reduction in the exemption for the estate tax to $6.02 million from the current $11.7 million so it takes effect in 2022 instead of 2026.
Those increases wouldn’t pay for the whole package, but they would be a start — about $1 trillion in revenue increases over 10 years, the Tax Foundation calculates. Would they be unpopular? Except perhaps among the 1%, not on your life. The just-released American Family Survey found that among respondents asked how to pay for the child tax credit, 49% favored raising taxes on the wealthy. Only 19% mentioned cutting programs to cover the cost.
The survey also pointed to another conclusion: Federal assistance during the pandemic was terrifically successful.
During 2020 and 2021, about 25% of respondents who had previously been working full time said they were temporarily laid off or lost their jobs permanently, but the share of Americans who experienced an economic crisis in that period actually fell — to 40% from 54% among low-income respondents, and to 25% from 40% in middle-income households.
The only explanation could be the assistance programs funded by Washington.
That’s something that House Speaker Nancy Pelosi must keep in mind as she tries to steer Build Back Better through negotiation with her Democratic colleagues. The public sees real value for money in investments in education, health care, childcare and family assistance. Those who grouse about the cost are being as shortsighted as their rich patrons.
Pelosi should stand firm instead of looking for provisions to cut. Here, as in all things, the Democratic majority should remember who they’re working for.
Michael Hiltzik is a columnist for the Los Angeles Times.
