How the American Families Plan Can Curb Corporate Power and Create Structural Change
May 20, 2021
By Suzanne Kahn
President Biden’s proposed American Families Plan (AFP) aims to restructure the economy with historic investments in essential institutions—including universal pre-kindergarten, free community college, and a stabilized unemployment insurance system. To ensure that the AFP succeeds in creating structural, equitable change, policymakers must pay careful attention to the way each of these long-overdue policies is structured and ask themselves these questions:
- Is a new program or policy visible in a way that helps build faith in government, democratic accountability, and a constituency that will make the policy more durable?
- Will the program and its funds be governed in a democratic, transparent, and anti-racist way?
- Is the program designed to reduce concentrated corporate power and guard against corporate entities siphoning new government funds from intended recipients?
- Conversely, is the program or policy built to enhance workers’ and consumers’ power?
Programs that can answer yes to these questions will help build a more equitable, democratic, and inclusive country. Programs that fail to do so will, generally, fail to disrupt the root causes of the problems the policies are intended to address. They may briefly expand access to badly needed resources, but that access will not be meaningful or durable if corporations and the very wealthy continue to hold outsize power in politics and in markets.
The proposals in the AFP, while all welcome, are mixed in their attentiveness to structure.
By and large, the Biden administration is seeking to create visible programs that demonstrate the value of government and create constituencies that will defend them over the long term. What the policies lack are sufficient limitations on corporate extraction and designs to curb corporate power.
The AFP Is Strong on Policy Visibility
The Child Tax Credit policies in the AFP are some of the best examples of a thoughtfully structured proposal. The American Rescue Plan (ARP), passed in March, substantially expanded the Child Tax Credit, made it fully refundable, and, crucially, made the credit a recurring payment instead of one received yearly. This dramatically increases its visibility, which should help foster a constituency to fight for its permanence. In the meantime, the AFP proposes to extend the expansions through 2025. Across the ARP and AFP, the design of the Child Tax Credit should lead to a durable, visible program that reaches the vast majority of American parents.
The AFP proposes many other well-structured policies, including four extra years of free public education—two for pre-K and two for community college. These programs would be universal, not means-tested, dramatically increasing their visibility and chances of durability. Importantly, the pre-K proposal would also raise the wages of pre-K workers, who are disproportionately women of color.
Likewise, the AFP proposes to reform the unemployment insurance system and create a system of automatic stabilizers, which would expand the length and amount of UI benefits in response to economic conditions—a durable shift that would build faith in government instead of undermining it.
But the AFP Doesn’t Do Enough to Constrain Corporate Power
When it comes to curbing corporate extraction, AFP policies come up short.
For example, the AFP proposes a substantial expansion to Pell Grants but says nothing about how the institutions the Pell Grants pay should cut their costs. As the Biden administration itself notes, “Over the last 50 years, the value of Pell Grants has plummeted. The maximum grant went from covering nearly 80 percent of the cost of a four-year college degree to under 30 percent—leading millions of low-income students to take out debt to finance their education.” Unfortunately, simply expanding Pell Grants will not address the root cause of this problem. Without taking action to limit the cost of higher education going forward, a one-time expansion of the Pell Grant will do little to keep colleges and universities from raising tuition and devaluing the Pell Grant again—a process that disproportionately harms Black and brown students. Indeed, the expanded Pell Grants could even actively encourage bad-actor institutions to raise tuition since students will have access to more funds.
That kind of extractive behavior could also occur in the childcare industry. The massive investment in childcare proposed in the AFP is an important and necessary step to address the twin crises of childcare affordability and low-paying childcare jobs. The investment, however, should come with guardrails to ensure the money goes to the families and workers it is intended to serve. Per a new AFP policy, low- and middle-income families would have to pay no more than 7 percent of their income toward childcare. Pairing this investment with democratic governance structures and service requirements can keep bad corporate actors from ultimately undermining the creation of a democratically accountable system controlled by families and workers.
The AFP’s proposed extension of health-care premium subsidies raises similar concerns. While the relief these subsidies would offer families is substantial and important, without guardrails on the policy, insurance companies could continue to raise the cost of care for the government.
The proposals in the AFP could transform families’ relationship to the economy, increase equity, and restore faith in government. But to ensure success, policymakers must be more attentive to transforming powerful corporations’ relationship to the economy as well. Without checks on corporations’ ability to extract benefits from these new policies, their power in the economy and politics will continue to grow, undermining attempts to create democratically accountable programs and a more equitable society.
For more Roosevelt analysis of the American Jobs Plan and American Families Plan, click here.