Biden’s Next “Big F***ing Deal”

How the American Families Plan will overhaul child care and revitalize the economy.

Photo by **Rose Dudley** from **Pexels**

Let’s face it: America’s child care system is shit.

Scratch that.

It would be shit if it existed as a system.

But right now, it’s almost nonexistent.

If you have a kid that needs to be taken care of while you climb the corporate ladder, then you basically have two options.

The privately operated, for-profit “learning” centers trying to maximize cash flow.
The at-home, just-licensed, minimally-inspected daycare that’s in a stranger’s basement, who you’re hoping doesn’t have a criminal background.

Somewhere in there are good daycares, with trusting, well-trained employees and an owner who actually cares about the well-being of your little Johnny, but they are the rare exception.

The lack of quality child care options that we can afford isn’t just an “issue”, it’s a national embarrassment.

Right about now, you might be thinking that I’m writing this because I’ve got two young kids and I’m just pissed because I don’t get any money to help with child care.

You’re partly right, but I’m not really mad about my own situation.

At least not now.

Where I’m Coming From

You see, my wife and I make good enough incomes that we can afford a mortgage ($1,640) that’s only slightly above our monthly childcare costs ($1,420).

However, that wasn’t the case 10 years ago when my daughter was born.

We were both fresh out of college (my bachelors, her masters), our jobs had zero support for new moms, ACA hadn’t been passed, and my wife almost got fired for not coming back early.

This isn’t to mention that our daughter was a preemie and spent all but 1 week of Amelia’s FMLA time in the NICU.

On the other hand, we’re now 10 years into our careers, ACA has become law, and we have more money and more supportive jobs, so we got to spend weeks and months with our newborn son.

What does this have to do with the American Families Plan, you might ask?

I’m getting there.

Just How Bad Is Support for Parents in the US?

It’s really bad. We’re the “richest country on Earth”, but we rank horribly for family spending. Here is some info from a recent Vox article.

The US is the only country in the OECD without guaranteed maternity leave.
12 weeks of unpaid time is available via FMLA, but most families can’t afford to take it.
Paid sick time is not guaranteed; something that almost 200 other countries offer.
Even if you have paid sick time, oftentimes you can’t use it for family members, which hamstrings working parents.

With a much higher proportion of parenting responsibility falling on women, is it any wonder that so many of them left the workforce to care for their families during the pandemic recession?

To put it bluntly, you can’t have it all. Good jobs (defined as full-time and having benefits) are completely incompatible with having a family without some type of help. That help most often comes in the form of daycare.

Work and family are both full-time pursuits. If the problem is framed as a choice between them, the battle is lost, since family will usually win.

Telecommuting and “workplace flexibility” are important but do not make up for a lack of time and space to think and work.

Even if you find a daycare that is in your area and you can afford, that doesn’t always mean it is a good daycare.

Excellent day cares are available, of course, if you have the money to pay for them and the luck to secure a spot. But the overall quality is wildly uneven and barely monitored, and at the lower end, it’s Dickensian.

It’s estimated that only 10% of all daycare facilities would be considered “high-quality”.

To help remedy this disaster, the Biden administration has introduced the American Families Plan.

What’s in the American Families Plan?

This plan would be just as impactful as the Affordable Care Act, which then-Vice President Biden claimed was a “big fucking deal” on a hot mic.

There’s a lot to unpack in this plan, but here’s a quick rundown of the items associated with child care.

No-Cost or Low-Cost Child Care

The premier aspect of the plan is that the government will cover the cost of child care for families who earn below a certain threshold.

Families defined as “low-income”, a definition that will be announced soon, will have 100% of child care expenses covered.
Families who make up to 1.5 times their state median income will have cap put on child care expenses of 7% of their annual income.

This is a gigantic benefit, as child care expenses can run up to 25% or more of overall income.

Free Universal Preschool

The next part of this plan is free universal preschool. While this isn’t making the as big of a splash as the cap on child care expenses, it might actually have a bigger impact.

Earlier in the article, I mentioned that my wife and I spend $1,420/month on child care. $1,220 of that is for daycare for our 1-year-old, which will continue until he is 5 and start kindergarten.

If he was able to attend two years of preschool for free, that would save us $1,220/month x 12 months = $14,640/year, and that’s without accounting for inflation.

Paid Family and Medical Leave

This basically expands the definition as to what is allowed under the current FMLA law, but also makes it paid time off, with a minimum pay rate of 2/3 of your current salary.

Can you image the having 12 glorious weeks with your new baby and not having to worry about not have any income?

Plus, this is not just maternity leave; it’s parental leave, which is bigger than many people think. Allowing the non-birthing spouse to be home during those first few months is beyond helpful.

Higher Tax Credits, For Longer

There are a couple of big ticket items here.

The Child Tax Credit will be extended through 2025.

This credit is the one that has parents receiving checks in the mail every month as a “prepayment” of the tax credit.

$3,000 for each kid 6–17. $3,600 for each kid 5 or younger.

The new Child and Dependent Care Tax Credit will be permanent.

This is the credit that was made law in the American Rescue Plan for one year that covers 50% of your annual child care expenses.

$4,000/year per kid, up to $8,000/year.

Will it Work?

In a word: absolutely.

Societal Effects

There has been a good volume of research performed on the benefits of funding daycare for employees, with two primary outcomes.

The employees have better outcomes, which benefits the company and society has a whole.
The children have better educational, and thus lifelong, outcomes.

Fantastic.

Financial Effects

Anytime the government present a new program, the first question is always, “Can we pay for it?”

In a word: easily.

Not only does parental support and early childhood education via subsidized daycare benefit immediate economy, it’s also the gift that keeps on giving…for decades.

James Heckman, the Nobel-winning economist, has calculated that, in the best early childhood programs, every dollar that society invests yields between $7 and $12 in benefits.

When children grow up to become productive members of the workforce, they feed more money into the economy and pay more taxes.

They also cost the state less — for trips to the E.R., special education, incarceration, unemployment benefits, and other expenses that have been linked to inadequate nurturing in the earliest years of life.

Even the Federal Reserve has gotten into the discussion.

In a July 2012 speech, Fed Chairman Ben Bernanke made the case that significant investment in early childhood would deliver even broader gains to the U.S. economy.

“Notably, a portion of these economic returns accrues to the children themselves and their families,” he said, “but studies show that the rest of society enjoys the majority of the benefits.”

Not a bad deal at all.

The Takeaway

Solving the child care…

…not issue…

…massive fucking debacle is a way not only to continue the upward economic trend as we slog our way out of the COVID nightmare, but also to guarantee decades of financial, economic, mental, physical, and downright overdue ethical and moral support to America’s neglected families.

The American Families Plan has not even been submitted for consideration by Congress yet, but if you are even remotely interested in seeing this plan become law, then you need to follow the news and hound your duly elected representatives when it is up for a vote.

Most Recent Stories

Don’t miss my next article! Click here to get notified when I publish new material.

If you love the articles published in Money. Daily., then become a member of the Medium community and get full access to our full archives.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.