[Budget of the United States Government]
[V. Preparing For the 21st Century]
[2. Supporting Working Families]
[From the U.S. Government Publishing Office, www.gpo.gov]
2. SUPPORTING WORKING FAMILIES
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My friends, for centuries, over two now, the American Dream has represented
a compact that those who work hard and play by the rules should be able to
build better lives for themselves and for their children. In this time,
and even more into the future, child care that is too expensive, unsafe or
Unavailable will be a very stubborn obstacle to realizing that dream. So let
us commit ourselves to clearing the obstacle, to helping parents fulfill their
most sacred duty, to keeping the American Dream alive for them and most
important, for their children. President Clinton
October 1997
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The President has worked hard to improve the lives of working
families, financially and otherwise.
The new Child Credit, coupled with a major expansion of the Earned
Income Tax Credit (EITC) in 1993, provides significant tax relief for
working families that are trying to raise their children and make ends
meet. The Child Credit will help 26 million families a year, while the
EITC expansion is already helping 15 million. Together, the Child Credit
and the EITC will provide nearly $250 billion in tax relief from 1999 to
2003. In addition, the minimum wage increase that the President
successfully sought gives a big financial boost to full-time, full-year
minimum wage workers, raising the pay of each by $1,800 a year.
Other new policies enable parents to meet their families' health needs
without risking their jobs, to change jobs without risking their health
insurance, and to find health insurance for their children when they
could not otherwise afford it. The Family and Medical Leave Act allows
workers to take up to 12 weeks of unpaid leave to care for a newborn or
adopted child, or to attend to their own health needs or those of a
seriously ill family member. The Health Insurance Portability and
Accountability Act protects an estimated 25 million Americans a year,
allowing them to switch jobs without losing their health insurance. The
self-employed and those with pre-existing conditions also will have an
easier time finding and keeping their health insurance. The new
Children's Health Insurance Program (CHIP), enacted as part of the 1997
Balanced Budget Act (BBA), will enable millions of low-income working
families to more easily find health insurance for their children.
Nevertheless, one major area remains in which working families need
more help--child care. For one thing, parents need more help when it
comes to purchasing child care. For another, when they go to work, they
should know that their children are in safe, healthy environments. By
helping parents manage the twin demands of work and family, the
President's Child Care Initiative, with its array of new benefits, is
the logical next part of his agenda for working families.
In addition, the President proposes to address the problems faced by a
particular group of working families--legal immigrants. The budget would
restore Food Stamps to 730,000 legal immigrants, and let States provide
health insurance under Medicaid and CHIP to the children of legal
immigrants. As the President said at the time, the provisions of the
1996 welfare reform law that stripped legal immigrants of basic safety
net protections were not only harsh and unnecessary, they also had
nothing to do with the fundamental goal of welfare reform--to move
people from welfare to work while protecting children.
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Expanding Child Care
In 27 million families, both parents work or a single parent works.
But, many of them who want safe, quality child care cannot find it or
cannot afford it. As part of welfare reform, the Administration worked
with Congress to increase spending on major child care programs by $4
billion over six years. With important new initiatives to make safe,
quality child care more available and more affordable, the budget
proposes $5.3 billion in tax incentives and $16.1 billion in new
spending authority over five years--$2.7 billion in total assistance in
1999 alone (see Table 2-1).
The Child Care Initiative is designed to address the most important
needs of working families: more affordable child care for middle- and
low-income families; more safe sites for children after school and
before parents come home; much greater enforcement of minimum health and
safety standards for child care providers; better-trained child care
providers; new help for families to use the latest research findings on
early childhood development; and a strong research program on which to
build for still better services.
More Affordable Child Care: The President proposes to make child care
more affordable by expanding the Child and Dependent Care Tax Credit for
middle-income families with child care costs, providing tax credits with
which businesses can expand their child care resources, and increasing
funds with which the Child Care and Development Block Grant can help
more poor and near-poor children.
Child and Dependent Care Tax Credit: The Child and Dependent Care Tax
Credit helps about six million families cover their child care costs
each year. The budget proposes to expand the credit so that it offers
more help for three million families with incomes below $59,000,
providing nearly $5 billion in aid over the next five years.
Tax Credits for Private Employers: To make child care services more
widely available, the budget proposes $500 million in tax credits over
five years for private employers that expand or operate child care
facilities, train child care workers, contract with a child care
facility to provide child care services to employees, or provide child
care resource and referral services to employees.
Child Care and Development Block Grant: Federal child care funding has
risen by nearly 70 percent under this Administration, providing child
care services for over a million
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Table 2-1. $21 BILLION OVER FIVE YEARS IN NEW RESOURCES FOR CHILD CARE
(In millions of dollars)
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Estimate
--------------------------------------------- Total
1999 2000 2001 2002 2003 1999-2003
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Spending:
Discretionary Budget Authority:
21st Century Community Learning Centers Increase...... 160 160 160 160 160 800
Provider Scholarship Fund............................. 50 50 50 50 50 250
Standards Enforcement................................. 100 100 100 100 100 500
Research.............................................. 30 30 30 30 30 150
Apprenticeship........................................ 5 5 5 ....... ....... 15
Head Start Increase................................... 305 642 827 1,020 1,020 3,814
State Support Systems................................. 5 5 5 5 5 25
Mandatory Budget Authority:
Early Learning Fund.................................. 600 600 600 600 600 3,000
Receipts from Tobacco Legislation:
Child Care and Development Fund Supplement........... 1,155 1,280 1,400 1,600 2,065 7,500
Tax Expenditures:
Expansion of Child and Dependent Care Tax Credit...... 256 1,192 1,078 1,125 1,163 4,814
Tax Credits for Private Employers..................... 38 77 108 124 131 478
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Total............................................... 2,704 4,141 4,363 4,814 5,324 21,346
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children from low-income working families or whose parents are moving
from welfare to work. The budget would increase funds for the Child Care
and Development Block Grant by $1.2 billion in new authority, to a total
of $4.3 billion in 1999, and by $7.5 billion over the next five years,
enabling the program to provide child care subsidies for 600,000 more
poor and near-poor children in 1999. These new funds, combined with the
child care funds provided in welfare reform, will enable the program to
serve another million children over five years.
New Emphasis on Early Learning: The budget provides funds for various
activities to improve the safety and well-being of young children,
including a new Early Learning Fund that grew out of the White House
Conference on Early Childhood Development and Learning and the highly
successful Head Start program.
Early Learning Fund: The Early Learning Fund responds to the new
scientific research presented at the White House Conference on Early
Child Development and Learning in April 1997, indicating that a child's
experiences in the first three years of life profoundly affect his or
her brain development. The budget proposes $3 billion in spending
authority over five years for the Fund, which would provide grants to
communities for activities that improve early childhood education and
the quality and safety of child care for children under five years old.
For example, the money could go for parent education in child
development, for helping child care providers become accredited, for
home visits, and for reducing child-to-staff ratios in child care, as
well as for innovative efforts to meet the developmental needs of
children.
Head Start: Head Start, among the President's highest priorities,
supports working families by helping parents get involved in their
children's lives and providing services to the entire family. Since
1993, the President has worked with Congress to increase annual Head
Start funding by 57 percent. In 1998, Head Start will serve 830,000 low-
income
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children, including up to 40,000 children under age three in the Early
Head Start component that the President launched in 1995. The budget
proposes to add 20,000 to 26,000 regular Head Start slots and 10,000
Early Head Start slots in 1999, making further progress toward the
President's goal of enrolling a million children in Head Start by 2002.
The budget also would expand Head Start funding by $3.8 billion over
five years, providing $4.7 billion in 1999 and doubling the number of
slots in Early Head Start by 2002 (see Chart 2-1).
School-Age Care: The President worked with Congress to expand 21st
Century Community Learning Centers, enabling 400 schools in 1998 to open
their doors before the school day begins or keep them open after the
school day ends. The budget proposes a further expansion, and a
requirement for matching funds, so that about 4,000 school-community
partnerships across the country can implement before- and after-school
programs. Instead of returning to empty houses, or playing on unsafe
streets, up to 500,000 more children would be able to participate in
safe, drug-free programs that combine learning, enrichment, and
recreational activities. The budget proposes $800 million in new funds
over five years, for a total of $1 billion.
Safety and Quality: The budget proposes to increase funds to help
States enforce child care quality standards, and the President calls
again for Congress to pass legislation to improve the safety of children
by making it easier for States to conduct background checks on child
care workers.
Standards Enforcement: Research and experience in the military child
care program show that diligent enforcement of standards dramatically
improves quality. The budget proposes $500 million over five years to
help States enforce State and local child care health, safety, and
quality standards. States would be able to help license and accredit
child care providers and centers, increase unannounced inspections of
child care centers and family day care homes, and develop local report
cards that rank child care providers.
National Crime Prevention and Privacy Compact: The President has sent
important legislation to Congress to improve the quality of child care
and protect children's safety. This legislation--the National Crime
Prevention and Privacy Compact--would make background checks on child
care providers more efficient and accurate by eliminating State barriers
to sharing criminal histories for non-criminal purposes.
More and Better Training for Child Care Staff: The budget proposes
$250 million over five years for a new Child Care Provider Scholarship
Fund, which the President announced at the White House Conference on
Child Care. Along with State and local matching funds, the Scholarship
Fund would provide over $300 million in scholarships over the next five
years for up to 250,000 child care providers--improving the quality of
child care for over half a million children. This proposal would boost
the pay of providers who receive training and reduce the problem of high
turnover by requiring that they stay in the field for at least a year.
In addition, the budget would expand an apprenticeship program to
finance the training of child care providers.
The Fund builds on the President's historic achievements over the last
five years to promote lifelong learning, which include securing the
largest increase in Pell Grant college scholarships in over 20 years,
creating Hope and Lifetime Learning Tax Credits, expanding College Work-
Study, creating the Direct Lending program that lets students repay
their loans as a share of their income, and launching AmeriCorps to
enable young people to earn money for college while serving their
country. Every individual who needs financial support for postsecondary
education can get it through these programs.
Families of Children with Disabilities: The budget proposes $5 million
to help the families of children with disabilities. This new program
would provide grants for States to expand and modify their State-wide
support systems to help these families address such problems as
inadequate child care options, missed job training and job
opportunities, the loss of medical assistance, and teen pregnancy.
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Research on Childhood Development and Child Care: Research on child
care, and its dissemination, is critical for policy makers to make
decisions about child care and for parents to know where to find quality
child care and what to look for. The budget proposes $150 million over
five years for a new Research and Evaluation Fund, which would provide
consumer education, parent hotlines, and research activities to expand
our knowledge of good policies and practices, including the types of
child care settings, parent activities, and provider training that most
benefit the early development of children. This fund would also support
a National Center on Child Care Statistics as well as demonstration
projects to test approaches to help new parents who choose to stay home
with their newborns or newly adopted children.
Restoring Equity in Benefits for Legal Immigrants
The President believes that legal immigrants should have the same
opportunity, and bear the same responsibility, as other members of
society. Upon signing the 1996 welfare law, he pledged to work toward
reversing the harsh, unnecessary cuts in benefits to legal immigrants
that had nothing to do with the goal of moving people from welfare to
work. As part of last year's BBA, the President worked with Congress to
restore Medicaid and Supplemental Security Income (SSI) to hundreds of
thousands of disabled and elderly legal immigrants.
Due to the 1996 law, however, many legal immigrants still cannot get
Food Stamps and access to health care, including such vulnerable groups
as families with children, people with disabilities, the elderly, and
refugees and asylees. The budget provides $2.7 billion over five years
to restore Food Stamps to vulnerable groups and to let States provide
health care to the children of legal immigrants.
Food Stamps: For legal immigrant families with children, the budget
would restore benefits without regard to when they entered the United
States. For the elderly or people with disabilities, the budget would
restore benefits to those who entered before Congress enacted the
benefit cuts--similar to how the President and Congress restored
Medicaid and SSI to legal immigrants last year. For refugees and
asylees, the budget would lengthen their exemption to the Food Stamp ban
from five to seven years. The Nation admits refugees and asylees for
humanitarian reasons, and many may need more time to naturalize than the
law allows. The budget also would exempt from the ban Hmong refugees
from Laos who immigrated to the United States after the Vietnam conflict
and certain Native Americans living along the Canadian and Mexican
borders.
Health Care: The budget would let States provide health coverage to
legal immigrant children under Medicaid and CHIP. Currently, States can
provide health coverage to immigrant children who entered the country
before the welfare law was enacted. But, immigrant children who entered
after the law was enacted cannot get benefits for five years. Under this
proposal, States could provide health coverage to those children through
Medicaid or through their current CHIP allotment.
Continuing Support for Working Families
The Child Care Initiative and the proposals to restore benefits to
legal immigrants build on a strong base of support for working families,
which the President has worked with Congress to achieve over the past
five years. That support includes a broad array of tax incentives to
encourage and support work as well as legislation to, among other
things, enable workers to care for a newborn and fulfill other family
responsibilities; raise the minimum wage; enable workers to retain their
health insurance; and provide health insurance to up to five million
uninsured children. (For the broader discussion of the health care
expansions, see Chapter 3, ``Strengthening Health Care.'')
Support Through the Tax System: Over the last five years, the
Administration has worked with Congress to expand the number and size of
tax incentives to encourage work and support working families (see Table
2-2).
EITC: As an important part of moving people from welfare to
work, the Federal Government can help ensure that those who
work can support their children. The EITC, a tax credit that
Congress created over 20 years ago, helps to meet this goal
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by supplementing the earnings of working families. In his 1993
economic program, the President proposed, and Congress
enacted, legislation to substantially expand the credit,
helping 15 million low-income working families. The EITC will
provide $150 billion of tax benefits over the next five years.
Child Credit: The Child Credit, which the President proposed
and Congress enacted as part of the 1997 Taxpayer Relief Act,
helps working parents raise their children by providing $500
per child for all children under age 17. The credit, which
will provide $98 billion in tax benefits over the next five
years, will help 26 million families with over 40 million
children.
Exclusion of Employer Contributions for Child Care Expenses:
The law lets parents exclude up to $5,000 of employer-provided
child care expenses from their taxable income and Social
Security earnings. The exclusion will provide over $5 billion
in benefits over five years.
Tax Incentives for Work: The budget proposes to extend through
April 30, 2000 the Welfare-to-Work Tax Credit, which the
President and Congress created as part of the Taxpayer Relief
Act of 1997. It focuses on those who most need help--long-term
welfare recipients--by letting employers claim a tax credit on
the first $10,000 a year of wages that they pay, for up to two
years, for workers they hire who were long-term welfare
recipients. The credit is 35 percent on the first year's
wages, rising to 50 percent on the second year's wages. In
addition, the budget would extend through April 30, 2000 the
Work Opportunity Tax Credit, which provides a credit of 40
percent on the first $6,000 of wages paid to members of eight
more target groups.
Better Benefits in the Workplace: The President has led successful
efforts to ensure a living wage for all American workers while expanding
their ability to care for their families and protect their health care
benefits.
Family and Medical Leave: In early 1993, the President
proposed, and Congress enacted, the Family and Medical Leave
Act, which allows workers to take up to 12 weeks of unpaid
leave to care for a new-
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Table 2-2. $270 BILLION OVER FIVE YEARS IN SUPPORT FOR FAMILIES WITH CHILDREN \1\
(In millions of dollars)
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Estimate
1997 ------------------------------------------------------ Total
Actual 1998 1999 2000 2001 2002 2003 1999-2003
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Tax Expenditures
Existing Law:
Earned Income Tax Credit \2\........ 27,218 27,867 28,481 29,184 29,984 30,810 31,673 150,132
Child Tax Credit \3\............... ....... 3,592 19,714 19,926 19,679 19,471 19,170 97,960
Child and Dependent Care Tax Credit 2,515 2,510 2,510 2,505 2,500 2,500 2,495 12,510
Exclusion of Employer Contributions
for Child Care Expenses \3\........ 860 910 950 995 1,040 1,085 1,135 5,205
Proposed Legislation:
Expand Child and Dependent Care Tax
Credit............................. ....... ....... 256 1,192 1,078 1,125 1,163 4,814
Eliminate Household Maintenance Test
for Dependent Care Tax Credit...... ....... ....... 10 67 71 74 78 300
Administrative Improvements and
Simplification \4\................. ....... ....... -118 -177 -181 -185 -189 -850
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Total............................. 30,593 34,879 51,803 53,692 54,171 54,880 55,525 270,071
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\1\ Does not include interaction effects between provisions.
\2\ Includes effects on individual income taxes only.
\3\ Includes tax expenditures and effect on outlays.
\4\ Includes simplification of EITC foster child definition, clarification of the tiebreaker rule under the
EITC, and clarification and expansion of math-error procedures.
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born or adopted child, attend to their own serious health needs, or
care for a seriously ill parent, child, or spouse--making it less
likely that employees will have to choose between work and family.
Minimum Wage: By 1996, the value of the minimum wage had
neared a 40-year low. That year, however, the President worked
with Congress to raise the minimum wage from $4.25 to $5.15 an
hour in two steps, over two years. The first step, a 50-cent
increase, took effect in October 1996; the second, a 40-cent
increase, took effect 11 months later, on September 1, 1997.
The 90-cent raise means $1,800 a year in higher earnings for
full-time, full-year minimum wage workers. Millions of other
low-wage workers making somewhat more than the new minimum
also will benefit if employers raise their paychecks in step
with the minimum wage increase--as they have done in the past.
Health Insurance Portability and Accountability Act: Working
with Congress, the President in 1996 pushed through landmark
legislation, known as HIPAA, which provides important health
insurance protections for an estimated 25 million Americans
who move from one job to another each year, as well as those
who are self-employed or who have pre-existing medical
conditions. HIPAA reformed the private insurance market to
ensure that workers have portable health benefits and insurers
are less able to deny coverage due to pre-existing conditions.
Combined with the Taxpayer Relief Act, HIPAA also made it
easier and cheaper for self-employed persons to get health
insurance.