FACT SHEET: President Biden’s Budget Lowers Costs for Families and Gives the American People More Breathing Room
As our economy transitions from a historically strong recovery to stable and steady growth, the Biden-Harris Administration has remained laser-focused on continuing to lower costs for families and giving them more breathing room, without giving up the historic economic gains we’ve made. While more work remains—and there could be setbacks along the way—the United States faces the challenge of global inflation from a position of strength and there are clear signs that the Administration’s strategy is working. Annual inflation is lower than it was seven months ago. Gas prices are down $1.60 since their peak last summer. And unemployment remains at its lowest level in 54 years while take home pay has gone up.
At the same time, the strength of America’s jobs recovery—along with the Administration’s policies that are designed to support workers and families—has left families more economically secure than they were before the pandemic. Compared to pre-pandemic levels, households are now less likely to be delinquent on their credit card bills and mortgages, and more likely to have health insurance. A record-setting 16.3 million people signed up for Affordable Care Act coverage this year, and the national uninsured rate hit an all-time low last year. Families are facing fewer evictions and foreclosures than they were before the pandemic, and bankruptcy rates are lower as well. This economic security is giving families peace of mind and breathing room that they didn’t have before the pandemic.
Thanks to the President’s Inflation Reduction Act, the Administration is lowering costs for prescription drugs, health care, and energy for tens of millions of Americans—all while lowering the deficit by more than $200 billion over the next decade. And the Administration has taken a range of significant actions to give families more breathing room—eliminating junk fees that make it harder for families to make ends meet, unsnarling pandemic-driven supply chain bottlenecks that increased prices, promoting greater competition across the economy, and creating hundreds of thousands of manufacturing jobs that will help rebuild our country’s supply chains and further lower costs.
Meanwhile, Congressional Republicans have proposed actions that would raise costs for working- and middle-class families while showering benefits on the wealthy and big corporations. Some Congressional Republicans have proposed repealing the Inflation Reduction Act, which would worsen inflation, deliver billions in handouts to Big Pharma, and increase the deficit. And they have threatened to raise costs for seniors and families by threatening cuts to Medicare, Social Security, and other critical programs that the American people count on—all while proposing policies that would add $3 trillion to the debt over the next decade.
The President’s Budget takes a very different approach—building on the progress we’ve already made giving families more breathing room by proposing a package of policies to lower everyday costs for the American people, including for health insurance, prescription drugs, higher education, child care, utilities, and more.
LOWERS PRESCRIPTION DRUG AND HEALTH CARE COSTS
- Lowers Health Care Costs. The President believes that healthcare should be a right, not a privilege. With enrollment in affordable health coverage at an all-time high, the Budget builds on the remarkable success of the Affordable Care Act (ACA), by making permanent the average $800 per year premium cuts through expanded premium tax credits that the Inflation Reduction Act extended. It also provides Medicaid-like coverage to individuals in States that have not adopted Medicaid expansion under the ACA, paired with financial incentives to ensure States maintain their existing expansions.
- Reduces Prescription Drug Costs for All Americans. The Budget builds upon the Inflation Reduction Act to continue lowering the cost of prescription drugs. For Medicare, this includes further strengthening the newly established negotiation power by extending it to more drugs and bringing drugs into negotiation sooner after they launch. The Budget also proposes to limit Medicare Part D cost-sharing for high-value generic drugs used for certain chronic conditions like hypertension and high cholesterol to no more than $2. For Medicaid, the Budget includes proposals to ensure Medicaid and CHIP programs are prudent purchasers of prescription drugs, authorizing HHS to negotiate supplemental drug rebates on behalf of interested States in order to pool purchasing power. For the commercial market, the Budget includes proposals to curb inflation in prescription drug prices and cap the prices of insulin products at $35 for a monthly prescription.
CUTS THE COSTS OF QUALITY CHILD CARE AND EDUCATION
- Cuts Child Care Costs. When families can access affordable, high-quality child care and free, high-quality preschool, it helps children learn, gives families breathing room, and grows the economy. The President’s Budget includes a new proposal to enable States to increase child care options for more than 16 million young children and lowers costs so that parents can afford to send their children to high-quality child care. The Budget also provides $9 billion for the Child Care and Development Block Grant, an increase of nearly $1 billion, to expand access to quality, affordable child care for families across the Nation. In addition, the Budget expands a tax credit to encourage businesses to provide child care benefits to their employees.
- Expands Access to Free, High-Quality Preschool. Too many families across America cannot access high-quality, affordable child care—preventing parents from working and holding back our entire economy. The Budget also funds a Federal-State partnership that provides high-quality, universal, free preschool to support healthy child development and ensure children enter kindergarten ready to succeed. Through this partnership, the Budget would dramatically expand access to high-quality preschool, making it available to all of the approximately four million four-year-old children in the United States. In addition, the Budget helps young children enter kindergarten ready to learn by providing $13.1 billion for Head Start, an increase of $1.1 billion over the 2023 enacted level, including funding to boost wages for Head Start personnel to help address staff shortages and prevent classroom closures. Finally, the Budget includes $500 million for demonstration grants to create or expand free, high-quality preschool in school or community-based settings for children in high poverty areas.
ADDRESSES PRICE PRESSURES FOR OWNERS AND RENTERS
- Increases Affordable Housing Supply to Reduce Costs. To address the critical shortage of affordable housing in communities throughout the Nation, the Budget includes $59 billion in mandatory funding and tax incentives aimed at increasing the affordable housing supply. The Budget also includes $10 billion in mandatory funding to incentivize State, local, and regional jurisdictions to make progress in removing barriers to affordable housing developments, such as restrictive zoning. By expanding the supply of housing, the Budget would help curb cost growth across the broader housing market.
- Reduces Costs for New Homeowners and Expands Access to Homeownership. To make homeownership more affordable for first-time, minority, and other underserved borrowers, including first time borrowers and borrowers of color, the Federal Housing Administration (FHA) is reducing the annual mortgage insurance premiums new borrowers will pay by about one-third, saving the average FHA borrower approximately $800 in the first year of their mortgage loan and providing continued savings for the duration of the loan. The Budget also reflects a reduction in mortgage insurance fees for Native American borrowers in the Indian Housing Loan Guarantee Program, which will save borrowers over $500 on average in their first year. The Budget also includes $10 billion in mandatory funding for a new First-Generation Down Payment Assistance program to help address racial and ethnic homeownership and wealth gaps for underserved communities, as well as $100 million for a HOME down payment assistance pilot to expand homeownership opportunities for first-generation and/or low-wealth first-time homebuyers and $15 million to increase the availability of FHA small balance mortgages.
- Expands Access to Affordable Rent. The Housing Choice Voucher (HCV) program currently provides 2.3 million low-income families with rental assistance to obtain housing in the private market. The Budget provides $32.7 billion to maintain services for all currently assisted families and expand assistance to an additional 50,000 households, particularly those who are experiencing homelessness or fleeing, or attempting to flee, domestic violence or other forms of gender-based violence. The Budget further expands assistance to another 130,000 households with funding from HCV program reserves. To further ensure that more households have access to safe and affordable housing, the Budget includes mandatory funding to support two populations that are particularly vulnerable to homelessness—youth aging out of foster care and extremely low-income (ELI) veterans. The Budget provides $9 billion to establish a housing voucher program for all 20,000 youth aging out of foster care annually and $13 billion to incrementally expand rental assistance for 450,000 ELI veteran families, paving a path to guaranteed assistance for all who have served the Nation and are in need. In all, the Budget proposes to expand assistance to well over 200,000 additional households.
- Lowers Home Energy and Water Costs. The Budget provides $4.1 billion for the Low Income Home Energy Assistance Program (LIHEAP), building on the $13 billion provided in the Inflation Reduction Act to reduce energy bills for families, expand clean energy, transform rural power production, and create thousands of good-paying jobs for people across rural America. Since the Low Income Household Water Assistance Program (LIHWAP) expires at the end of 2023, the Budget proposes to expand LIHEAP funding and allow States the option to use a portion of their LIHEAP funds to provide water bill assistance to low-income households.
REDUCES THE COST OF COLLEGE
- Improves College Affordability. To help low- and middle-income students overcome financial barriers to postsecondary education, the Budget proposes to increase the discretionary maximum Pell Grant by $500, providing over 6.8 million students with money for college. This request builds on successful bipartisan efforts to increase the maximum Pell Grant award by $900 over the past two years, and lays out a path to double the award by 2029.
- Expands Free Community College. The Budget invests mandatory funding to expand free community college across the Nation. To lay the groundwork for this program, the Budget includes $500 million in a new discretionary grant program to provide two-years of free community college for students enrolled in high-quality programs that lead to a four-year degree or good paying jobs. In addition, the Budget provides mandatory funding for two years of subsidized tuition for students from families earning less than $125,000 enrolled in a four-year Historically Black College and University (HBCU), Tribal College and University (TCCU), or Minority-Serving Institution (MSI).
LOWERS COSTS ON EVERYDAY GOODS BY STRENGTHENING SUPPLY CHAINS
- Moves Goods More Quickly through the Nation’s Ports and Waterways. The Budget continues support for modernizing America’s port and waterway infrastructure initiated under the Bipartisan Infrastructure Law—helping further address cost pressures. The Budget includes $230 million for the Port Infrastructure Development Program to strengthen maritime freight capacity. In addition to keeping the Nation’s supply chain moving by improving efficiency, DOT would prioritize projects that also lower emissions—reducing environmental impact in and around the Nation’s ports.
- Builds and Protects a Fair and Resilient Food Supply Chain. The Budget supports ongoing actions to develop more diverse, robust, and resilient local and regional supply chains by targeting funding to increase the production capacity among smaller producers, including continuing overtime user fee relief for small and very small meat and poultry establishments as established in the American Rescue Plan. The Budget complements these targeted investments by strengthening market oversight through the Agricultural Marketing Service to support fair markets and competitive meat and poultry product prices for American families and increasing safeguards against invasive pests and zoonotic diseases through the Animal and Plant Health Inspection Service.
INCREASE FOOD SECURITY
- Provides Critical Nutrition Assistance. As called for in the National Strategy on Hunger, Nutrition and Health, the Budget provides over $15 billion to allow more States and schools to leverage participation in the Community Eligibility Program and provide healthy and free school meals to an additional 9 million children. The Budget also includes $6.3 billion to support the 6.5 million individuals expected to participate in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).