Biden Wants to Cut the Average Family's Childcare Costs by $14,800

by Christy Bieber | Updated July 25, 2021 - First published on April 29, 2021

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Young children having fun at daycare playing with instruments.

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Soon, you may not have to budget as much for daycare.

The cost of childcare is often one of the biggest financial shocks that new parents face.

Quality daycare is extremely expensive in the United States. It forces many people to either give up work to stay at home and take care of their children or to drain their bank accounts paying for childcare.

Soon, this could change if President Joe Biden has his way. The president has proposed new legislation called the American Families Plan, which could lead to affordable childcare for families across the country.

Here's how it would work.

The American Families Plan provides much-needed support for childcare

The American Families Plan that President Biden has proposed would cap the amount of money that families are required to pay for childcare. This would be achieved by establishing a sliding scale structure in which your income would determine how much you'd be required to pay.

Specifically, low-income working families could pay as little as $0 for childcare, while families with incomes up to 1.5 times the median in their state would pay a maximum of 7% of their household income.

The American Families Plan also provides money for childcare providers to help them offer high-quality early childhood education. And it gives families who take advantage of subsidized care a choice of many different options, including inclusive public schools, Early Head Start programs, family child care providers, and private child care centers.

The Biden administration would allocate as much as $225 billion to offer financial support for childcare providers and for families in need of assistance to cover costs of care.

The White House estimates this could save the average American family $14,800 per year on childcare and could enable around a million more parents to enter the labor force.

Will this childcare plan come to fruition?

For families struggling to cope with childcare expenses, the President's proposal likely comes as welcome news. But just because the Biden administration has laid out a plan to provide subsidized care doesn't necessarily mean it will happen any time soon.

Democrats are eager to use their unified control of Congress and the White House to pass bold legislation like the American Families Plan. But they have only the narrowest of majorities in Congress. As a result, they can't afford to lose more than a few votes in the House of Representatives. And things are especially tricky in the Senate, where Republicans can filibuster bills, which would mean 60 votes would be necessary to avoid stopping the legislation in its tracks.

Republicans are almost assuredly going to filibuster any attempt to pass the American Families Plan. And while there's a possibility Democrats could use a procedural maneuver called reconciliation to pass a bill with 51 votes, some of the more conservative Senators on the left have expressed reservations about this approach. Unless all 50 Senators who vote with the Democrats are on board, passing legislation through reconciliation is a dead end.

As a result, there's no guarantee that you'll see childcare costs reduced any time soon. If you're struggling to pay for the costs of care for your kids, consider exploring all of your options. Other childcare resources might include partnering with other families in a babysitter share, staggering your work schedule with a spouse or partner, or determining if you qualify for existing government help.

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