President Biden’s American Families Plan Spends $2.5 Trillion and Raises $1.3 Trillion

President BidenCredit: The White House
The American Families Plan would increase federal debt by 4.6% and decrease GDP by 0.4% in 2050

PHILADELPHIA, PA — President Biden, at the end of April,  released the second phase of his administration’s infrastructure plan, the American Families Plan (AFP). The AFP is a $1.8 trillion proposal focusing on federal investment in childcare, education, and healthcare.

The proposal includes new taxes on high-income households and provisions to expand the IRS’s power and resources to enforce taxation. The Penn Wharton Budget Model (PWBM) at the Wharton School of the University of Pennsylvania has released a report analyzing the budgetary and economic effects of the plan’s changes to the tax code and $1.8 trillion in public investment.

PWBM estimates that:

  • President Biden’s AFP would spend $2.5 trillion over the 10-year budget window (2022-2031), about $700 billion more than the White House’s estimate.
  • The AFP would raise $1.3 trillion in new tax revenue over the same period, including almost $480 billion in additional revenue from enhanced IRS tax collection enforcement.
  • By 2050, we estimate that the AFP would increase government debt by almost 5 percent and decrease GDP by 0.4 percent, as the effects from larger debt on the economy outweigh the productivity gains associated with the new spending programs.

For more information, read the full report: President Biden’s American Families Plan: Budgetary and Macroeconomic Effects.

For analyses of President Biden’s other recent proposals, read PWBM’s previous reports: Revenue Effects of President Biden’s Capital Gains Tax IncreasePresident Biden’s $2.7 Trillion American Jobs Plan: Budgetary and Macroeconomic Effects

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