Biden’s Federalization of Child Care Will Be Costly

“You can’t handle the truth!” Colonel Nathan R. Jessup roared in A Few Good Men.

President Biden and the Democrats in Congress apparently think the same way in explaining the costs of their Build Back Better budget proposals. Supposedly, the cost of the House Democrats’ budget reconciliation bill is $1.75 Trillion.

But this is a fiction based on smoke and mirrors.

On Thursday, the Penn Wharton Budget Model reported that if all the provisions of the bill (except green energy tax cuts) are made permanent, new spending would increase by $3.98 trillion, more than double what President Biden’s White House said.

On Friday, Nov. 5, the House passed a $1 Trillion infrastructure bill, but put the social policy bill on hold because a half-dozen Democrats withheld their votes until a nonpartisan analysis by the Congressional Budget Office (CBO) could tally its price tag, which could be delayed until at least mid-November. In other words, even the Democrats don’t know what their social policy bill would policy

One area that stands out in terms of unknown real costs is projected spending on child care. 

Child Care Services Association — Ensuring affordable, asccessible,  high-quality child care

On Friday, Nov. 5, the House passed a $1 Trillion infrastructure bill, but put the social policy bill on hold because a half-dozen Democrats withheld their votes until a nonpartisan analysis could tally its price tag, which could be delayed until at least mid-November. In other words, even the Democrats don’t know what their social policy bill would cost.

The childcare part of the package attempts to spur more workers to join the childcare workforce and raise providers’ wages by spending around $100 billion over the first three years.

The bill would guarantee that families making up to 250 percent of a state’s median income would not have to pay more than 7 percent of their annual income on child care.

“How can we compete in the world if millions of American parents, especially moms, can’t be part of the workforce because they can’t afford the cost of childcare or eldercare,” Biden said in October. 

All well and good, but what’s going to be the actual cost to the federal government if the Democrats’ bill passes and gets signed by the President? The House will be out on recess next week, returning the week of Nov. 13. If there is a CBO score by then, it’s possible that the House could move immediately to a final vote on the bill.

First of all, the program would supposedly come to an end in six years, but that’s just part of the Democrats’ budget trickery. The assumption that spending on the child care program will cease in six years reduces its overall cost during the 10-year budget window that Congress uses to determine whether a bill will add to the federal deficit. But Democrats are counting on parents becoming so fond of the government largesse that Congress will extend the program.

President Biden has said the child care subsidies would save the average family $14,800 per year on child care expenses. In other words, the federal government would pick up $14,800 in childcare costs now paid by the average American family. 

,Using Oregon as a test case, median family income in 2020 was $76,554. On that basis, no Oregon family making less than $191,385 would pay more than 7% of their income on child care. Families earning more than $191,385 would, however, likely pay more once all the government’s mandates kicked in. Higher wages for childcare workers, for example, would likely be passed on to parents by child care providers.

Under the House bill, all the teachers and staff participating in the child care workforce, would have to be paid at least $15 an hour. Many child care workers are now so low paid that more than 15 percent are below the poverty line in 41 states, according to a Sept. 2021 report from the U.S. Department of the Treasury. Similarly, nearly half of child care workers use public assistance, such as the Children’s Health Insurance Program (CHIP), Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF).

According to ZipRecruiter, as of Oct 30, 2021, the average annual pay for a child care worker in Oregon was $18,969 a year or approximately $9.12 an hour. 

Under the Democrats’ bill, child care staff with the qualifications of kindergarten teachers would have to be compensated as such, according to The White House. Kindergarten teachers Oregon must have finished a degree program that includes a teacher education component. Teaching kindergarten also requires passing several exams before earning a license. According to ZipRecruiter, as of Oct 30, 2021, the average annual pay for a kindergarten teacher in Oregon was $33,785 a year or $16.24 an hour.

The U.S. Bureau of Labor Statistics says there are 494,360 child care workers in the United States. Oregon has about 13,000 of those. 

According to the White House, child care providers will also “receive funding to cover the true cost of quality early childhood care and education–including a developmentally appropriate curriculum, small class sizes, and culturally and linguistically responsive environments that are inclusive of children with disabilities.”

Under the House bill, the federal government would also pay for child care workers to receive job-embedded coaching and professional development to help child care workers grow their skills during their careers.

The federal government would have to pony up a lot of new money to pay for all this. Not only that, but the states would have to step up, too. States would not be required to match any funds for the first three years, giving them time to ramp up their programs while funded entirely by the federal government. After three years, states would have to provide a 10% match to the federal funds. Where’s that money going to come from?

In addition, President Biden has said he would “ensure families have access to the quality care their children need by working in partnership with states to ensure providers meet rigorous quality standards. These standards will include a developmentally appropriate curriculum, small class sizes, and support positive interactions between educators and children that promote children’s socio-emotional development.”

To say that the Democrats want to federalize child care would be an understatement.

Although the goal of affordable child care seems worthwhile, I can’t help but think this particular proposal is going to have major unintended consequences if it becomes law.

For example, it is likely the proposal will lead to higher childcare costs overall, particularly for those not under the subsidy umbrella. As the Acton Institute has written, “There is little reason to expect that large increases in government subsidies toward childcare would lead to declining overall costs. All prices are relative prices. Increasing the demand for childcare services through subsidies while directing that demand to more formal, regulated, and already stressed institutions is a recipe for…cost explosions.”

Jonathan Bydlak of the R Street Institute makes the same point. “The idea of using subsidies to essentially engineer some sort of outcome is not exactly a great idea,” he says. “Any time you end up subsidizing something that represents a market manipulation. There’s always a potential, as we’ve seen in areas like education, for example, where… education costs are almost certainly higher as a result of the ways in which we subsidize that system.”

Many have argued that years of government subsidies for college have raised the spending power of the average person for higher education, but not necessarily to their benefit. Colleges and universities, those people say, have taken note of families’ increased spending power and raised their tuitions accordingly, resulting in the sky-high tuition rates that exist today.

At one point recently, President Biden said his Build Back Better plan would cost nothing because rich people and corporations would pay the bill. “The fact of the matter is, my Build Back Better Agenda costs $0,” Biden said.

If you believed that, or if you think the Democrats’ proposed child care program is only going to cost $100 billion over its first three years, you’re smoking some pretty potent weed.

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