Do you like the rising costs of health care and higher education even as government subsidies go up? Then you’ll love President Biden’s new national childcare plan.
Mr Biden would like to subsidize childcare so that the families pay “on a sliding scale”. For the “hardest-hit working families,” the White House said, the cost would be “fully covered,” with payments coming from a $ 225 billion pot that Mr Biden is asking Congress to fill. For the middle class: “Families who earn 1.5 times their national average income do not pay more than 7 percent of their income.”
The first problem is that this is a new suburban entitlement, not helping the needy. There is no legislative language yet, but the White House talking points suggest that any qualified family would automatically receive the grant.
The median household income in California, multiplied by 1.5, is $ 121,000. For New York it’s roughly $ 108,000. And before anyone pokes fun at the cost of living on the coast, remember that these statewide thresholds would likely apply to less costly landlocked countries in California and New York as well. Annual spending would be unlimited as it would increase as you enroll, which almost certainly makes the White House’s estimate of $ 225 billion fanciful.
This is all the more likely as capping payouts to 7% of income would undo healthy economic incentives. Once they hit that limit, families who choose a childcare option have no reason to think about costs. Get the upgrade as it would be on Uncle Sam. Childcare workers would have little reason to save, as upselling would be an easier way to generate income, just as colleges are now competing to build the funniest water sports center. Once Mr Biden juiced up the demand, prices would only go up.
On the supply side, Mr Biden sees more subsidies and cost inflation. His plan is to provide providers “with funding to meet the real cost of high-quality early childhood care”. Employees would get at least $ 15 an hour. Nursing staff with “qualifications similar to those of kindergarten teachers” would “receive comparable remuneration and benefits”. This is a formula for a bureaucratized national childcare system that is federally enforced and undoubtedly unionized.
The bad incentives don’t end there. Families with children whose ages are close, meaning that their childcare costs are stacked but last less years, could receive larger subsidies than similar families with separated children. And what about all those mothers or fathers who want to stay at home with children? The White House says Mr. Biden’s plan would “save the average family $ 14,800 a year.” Suddenly, the stay home option would come with a much higher opportunity cost. The grant is biased against parents who prefer to stay home.
The social benefits of childcare are oversold by Mr Biden. A look back in February the academic literature of Max Eden at the Manhattan Institute finds a decidedly mixed picture. The academic gains from the lead wane within a few years. Preschool trials that showed better results were very intense or only had dozens of students. In Quebec, children in two-parent families showed more hyperactivity and aggression after a government grant lured them into third-party childcare.
The most prudent course, based on research, writes Eden, would be “to reduce the number of students who receive publicly subsidized early education and to focus the available resources more intensely on the most disadvantaged children.” That makes sense: instead of trying to sell the middle class with a new claim, a president who wanted to unite the country could work on fixing the safety net for the people who really need it.
For Mr Biden and today’s Democrats, national childcare is a political project to make families and child-rearing more dependent on the government. Make it a claim, involve the middle class, organize the workforce, and consolidate political control.
Journal Editorial Report: The Best and the Worst of the Week by Kim Strassel, Jason Riley and Dan Henninger. Image: Sarah Silbiger / Getty Images
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Published in the print edition on May 10, 2021.