May 14, 2021
House Ways and Means Chairman Richard Neal’s (D-MA) Building an Economy for Families Act has emerged as a competitor to the FAMILY Act in establishing paid leave for workers. The Neal bill, however, has a larger scope—vaguely promising “guaranteed child care” and permanently extending the American Rescue Plan’s child and dependent care tax credits.
This comprehensive approach has proven attractive to some Democratic lawmakers, many of whom see historically low birthrates, longstanding workplace inequities, and the impact of women dropping out of the workforce due to COVID-19 as evidence for the need for reform.
“Our failure to recognize basic caregiving obligations in the U.S. has driven millions of women out of the workforce since last March, with a majority of those being women of color,” Neal said in a hearing last month. He called the lack of universal paid leave and limited access to child care “unacceptable.”
Child care funding: The bill would increase funding for the Child Care Entitlement to States program to $10 billion for FY2022 and index the funds to grow with inflation and child population. It would also establish a refundable payroll tax credit for child care providers and allocate $15 billion toward the physical infrastructure of child care facilities. Finally, it would create a “Child Care Information Network” for parents and caregivers. It is not clear how the bill would actually “guarantee” child care for parents nor does it impose any new requirements on employers along those lines.
The measure would permanently extend the American Rescue Plan’s expansions of:
Previously, we discussed the paid leave provisions of Chairman Neal’s bill and questions concerning funding the ambitious universal paid leave benefits. Under the legislation, benefits and administrative costs would be paid out of general revenue. In other words, the bill would rely on potential increased corporate taxes, but would itself not impose any new taxes on employers.
Outlook: Like Chairman Neal's proposal, President Biden’s American Families Plan takes a broader approach, promising that low- and middle-income families will spend no more than seven percent of their income on childcare. Both the Neal proposal and the President's paid leave proposal under the American Families Plan will likely attempt to avoid a filibuster by relying on budget reconciliation to pass, which would require the support of all 50 members of the Democratic caucus in the Senate. Whether that is feasible remains to be seen.