Biden to push tax reform plan in Congress speech to fund once-in-a-generation investments

Washington: US President Joe Biden plans to unveil a sweeping $1.8 trillion package for families and education in his first joint speech to Congress on Wednesday, as he stresses the need to invest to compete with China, the White House said.

Biden will argue that the new package – which together with an earlier infrastructure and jobs plan totals around $4 trillion, rivaling the annual federal budget – is a once-in-a-generation investment vital to America’s future.

The US president will also plead directly with lawmakers to pass legislation to curb police violence, senior administration officials say. Biden will highlight repeated police killings of Black citizens and years of entrenched racism, while also honoring the service of the vast majority of officers.

The plan includes $1 trillion in spending on education and child care over 10 years and $800 billion in tax credits aimed at middle and low income families, according to a White House fact sheet.

The spending plans “reinvest in the future of the American economy and American workers, and will help us out-compete China and other countries around the world,” it said.

Republican lawmakers have already rejected the $2 trillion-plus infrastructure plan as too large. The Democratic president is gambling that his spending plans, which are largely popular with American voters, can sway Republicans in Congress to cooperate with the White House.

To pay for the plans, Biden has proposed an overhaul of the US tax system. Wednesday’s “American Families Plan” is funded by raising the top marginal tax rate to 39.6 percent for the wealthiest Americans. It nearly doubles the tax on investment income – known as capital gains – for Americans who earn more than $1 million. The proposed infrastructure plan is funded by corporate tax.

News of the tax proposal briefly sank stock markets last week.

The Biden administration says the tax reform plan is designed to reward work, not wealth, and “reform the tax code so that the wealthy have to play by the same rules as everyone else.”

Biden will use his speech to signal openness to bipartisan compromise on policing, speaking positively about negotiations on a reform bill in Congress. Republican Senator Tim Scott of South Carolina is set to give his party’s rebuttal to Biden’s speech, with police reform expected to be among the topics.

In addition to police reform, Biden will discuss foreign affairs, how his administration has handled the coronavirus pandemic and the status of vaccinations.

One senior congressional aide said Biden is expected to “come out hard on China,” noting frequent calls to take a harder line against Beijing from both Republicans and Democrats.

In his decades in elected office, Biden attended dozens of his predecessors’ joint addresses to the US Congress. The scene he faces when he takes the podium at the House of Representatives during a pandemic will look very different.

Just 200 people, mostly lawmakers plus a handful of representatives of other branches of government and family members, will attend the masked, socially distanced speech.

That is a far cry from the 1,600 officials, friends and guests who typically gather for a presidential speech.

The nationally televised address, however, targets an audience far beyond the reduced-sized crowd on Capitol Hill. About 48 million people watched Biden predecessor Donald Trump’s first address to a joint session in 2017.

CHILDCARE SAVINGS
The American Families Plan and the infrastructure and jobs plan that the White House introduced this month could represent the most significant government transformation of the economy in decades.

The plan being unveiled on Wednesday includes $200 billion for free, universal preschool for three- and four-year olds and $109 billion for free community college regardless of income for two years, the White House said.

It proposes $225 billion in funding to help parents pay for child care and boost the pay of child care workers. Families would pay no more than 7% of their income on child care for children under 5, saving the average family $14,800 per year on child care expenses, senior White House officials say.

The investments will be fully paid over a period of 15 years, an administration official said.