Biden set to announce $200 billion for universal pre-K in sweeping new proposal

President Joe Biden is set to announce $200 billion in education funding as part of his sweeping spending package he will unveil prior to his prime-time address to a joint session of Congress, according to a White House official.

The proposal will direct the funds toward universal pre-school for all three- and four-year-olds through a national partnership with states, the official said. The White House estimates it will benefit 5 million children and save the average family $13,000 when the plan is fully implemented.

The proposal marks a key plank of Biden’s roughly $1.8 trillion American Families Plan, the second prong of his sweeping $4 trillion in spending on physical infrastructure, research and development, home care, child care, paid family and medical leave and extensions of key anti-poverty tax credits.

While the initial, $2.25 trillion infrastructure proposal — the American Jobs Plan — was centered on boosting employment and US innovation, the second proposal is designed to zero-in on shortcomings administration officials believe are faced by children and families.

In full, the two proposals mark a potentially transformative shift in the federal government’s role in the US economy, with Biden’s top economic officials repeatedly pointing to fragilities exacerbated by the pandemic as a driving force for their proposals. The package will include a particular focus on reconnecting women, who have been especially hard hit by the pandemic, to the workforce, officials say.

Biden’s second proposal — one filled with central Democratic policy priorities — has been the subject of fierce behind-the-scenes lobbying over the last several days, as lawmakers and outside groups alike have pressed to have their priorities included.

Republicans, who are in early talks with the administration over an infrastructure plan, are likely to oppose Biden’s new proposal on several fronts, most notably on the tax increases he will propose to finance the plan.

Biden’s pre-K proposal will include funding for two years, as will a separate plan to fund free community college, according to multiple sources. Biden will also call for more funding for historically Black colleges and universities and other specialty educational institutions, the sources said.

The White House held a series of briefings with key senators over the last 24 hours to lay out details of the proposal, sources told CNN, which along with the education elements will include funding for paid leave of up to 12 weeks and create a standard where families earning 1.5 times the median income of their state would not pay more than 7% of their income on child care.

As CNN has reported, Biden will also propose extending the expanded child tax credit, currently set to expire after a year, for an additional five years. But he will also propose making permanent the refundability of the credit, expanding its reach to the poorest households even after the expanded version of the credit expires.

He will also call on lawmakers to make expanded Affordable Care Act subsidies permanent.

Biden will propose paying for the proposal through a series of tax increases on wealthy individuals, including an increase in the top rate and a move to nearly double the capital gains rate for those earning $1 million or more. He will propose eliminating the so-called stepped up basis for wealthy individuals when they die, before they pass along wealth to heirs. The existing structure allows heirs to use the market value of assets at the time of inheritance, rather than purchase price, as the basis for capital gains when those assets are sold.

Biden will also propose $80 billion over the course of the next decade for the Internal Revenue Service to crack down on tax evasion by the wealthy and corporations, people briefed on the plan said.

One element that won’t be included, according to people briefed on the plan, is an expansion of the estate tax. The exclusion of an estate tax hike was first reported by Bloomberg News.

The increases are designed to avoid any tax hikes on low-income and middle class Americans — a Biden campaign pledge.

Biden is, however, making clear that his preference is to have the entirety of his two proposals paid for. His infrastructure and jobs plan was financed through increases in corporate taxes.

And the White House is signaling it’s ready and willing to have the looming fight with Republicans over the proposed tax increases on the wealthy and corporations.

Anita Dunn, a senior adviser to Biden, circulated a memo Tuesday outlining a myriad of polls that show the relative popularity of increasing taxes on wealthy individuals and corporations — the key financing mechanisms for Biden’s new proposal, as well as his initial $2.25 trillion infrastructure and jobs package.

“The President believes that we need to restore basic fairness to the tax code, and in the process generate revenues to invest in our competitiveness, children, and economy,” Dunn wrote in the memo obtained by CNN. “And, the American people agree.”

The memo underscored just how willing Biden administration officials are to stick by the increases in the weeks ahead, as nascent negotiations with Republicans start to evolve.

Dunn called the tax system “broken,” and noted that with Biden’s proposals “he’s going to take steps — steps which are supported by the American public — to address this unfairness in the tax code.”

The focus on education in the plans is designed invest hundreds of billions of dollars address what White House officials see as both acute near term problems, as well as longer term issues that develop due to potential shortcomings in the system.

Administration officials have for months pointed to studies that show high quality pre-school programs not only contribute significantly the development of students, but also increase labor force participation among parents.

Biden’s pre-K proposal, a key promise during his presidential campaign, will be constructed to prioritize high-need areas, and will carry the pledge that it will ensure publicly funded pre-school will include lower student-to-teacher ratios and “developmentally appropriate curriculum,” according to the official.

The proposal will include investments to incentivize individuals who seek to become teachers and early-childhood educators, leveraging a separate proposal to fund tuition free community college, as well as teacher scholarships. It includes a pledge that all employees participating in pre-K programs and head start will earn at least $15 an hour, the official said.

This story has been updated with additional reporting Tuesday.