Biden’s American Families Plan will pay for itself

On April 28, President Biden presented his American Families Plan to a joint session of Congress. Key features of the $1.8 trillion bill (spread over ten years) include: two years of pre-school for every 3- and 4-year-old child; two years of free community college for every admitted student; access to affordable childcare; extension of the child tax credits in the American Rescue Plan (passed in March) through 2025; and 12 weeks of paid family and medical leave for working men and women.

The predictions of Republican born-again deficit hawks that the plan will shrink the economy are wrong. The AFP is an investment in human capital which is far more likely to pay for itself. And all of its provisions are quite popular with American voters.

Just look at the numbers —

Child Tax Credits: Psychologists agree that a healthy diet, wellness visits to doctors, and intellectual stimulation in the first months and years of a child’s life are crucial to physical, emotional, and cognitive development. Nonetheless, public spending on childcare in the United States is well below the average for countries with advanced economies.

Access to high quality childcare: Infants benefit if primary care givers do not return to work until a year after birth. At age 2 and 3, the influence of daycare staff and peers contributes to better academic and behavioral outcomes. Access to high quality childcare also results in higher rates of female labor force participation (and economic gains associated with them). For these reasons, countries in Northern Europe have generous provisions of state-funded childcare. Mexico, a developing country, provides childcare for a minimum of 8 hours a day, five days a week, with good staff ratios, nutritious food, and an education program. The vast majority of Americans — 85 Percent (93 percent of Democrats, 83 percent of independents and 79 percent of Republicans) — support tax credits to help pay childcare expenses.

Paid Family Leave: The United States is the only advanced economy without a legally mandated paid maternity or paternity leave policy. Currently only 19 percent of American workers receive paid family leave through their employers. In 2019, 32 million workers did not have a single paid sick day; four out of five workers had no paid family leave. The Family First Coronavirus Response Act provided up to two weeks for emergency COVID-19 related sick leave and ten weeks for emergency childcare, but loopholes and exemptions excluded 68-106 million workers. By contrast, the average duration of government-funded parental leave in other advanced economies is 55 weeks. Paid leave decreases job turnover and expensive searches and has a minimal negative impact on employers. About 75 percent of Americans (83 percent of Democrats, 71 percent of independents, and 70 percent of Republicans) want the federal government to mandate paid family and medical leave.

Two years of pre-school: According to the United States Department of Education, pre-school promotes better physical, emotional, social, and cognitive outcomes, and boosts educational attainment and earnings. A 2005 study of pre-schools in California found that attendance for one year generated $700 in net present value per child, a return of $2.62 for every $1 invested (10 percent annually over a 60-year horizon). These figures did not include intangible savings such as improved health. Children from economically disadvantaged families were much more likely to complete high school, had less need of special education, fewer episodes of child abuse, neglect, and involvement in the juvenile justice system. About 70 percent of Americans (87 percent of Democrats, 70 percent of independents, and 53 percent of Republicans) favor using federal funds to expand pre-K enrollment.

Tuition-free community college: the cost of tuition and foregone earnings for community college graduates are more than made up for by greater earnings. Graduates are less likely to use Medicaid, welfare, and unemployment benefits and far more likely to pay much more in taxes. In 2014, taxpayers received $6.80 for every dollar they contributed to community colleges. If Biden’s plan is adopted, enrollment in higher education would rise by about 26 percent, with 83 percent of the increase coming from individuals who would not otherwise have enrolled. Completed degrees would grow by 22 percent. Biden’s plan (including increases in Pell Grants and free tuition at 4-year public colleges and universities for in-state residents from households earning up to $125,000 a year) would provide three-quarters as much economic stimulus as the Trump tax cuts at much less cost, with the benefits much more broadly distributed.

President Biden is right: The American Families Plan is a once-in-a-generation investment in ourselves that will pay dividends for decades.

Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University. He is the co-author (with Stuart Blumin) of “Rude Republic: Americans and Their Politics in the Nineteenth Century.”