July 20, 2024

Keeping Media and Government Accountable.

Huge middle-income cost hike in Biden’s childcare scheme

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One of the provisions in President Biden’s Build Back Better plan professes to make childcare more affordable, but an opinion piece in the Wall Street Journal says costs will skyrocket for middle-income families.  It’s right out of the Obamacare playbook – promise big premium savings, knowing that most Americans will be hit hard by huge cost increases.

The column’s author, Casey Mulligan, is a professor of economics at the University of Chicago and senior fellow with the Committee to Unleash Prosperity.  According to his study, Biden’s plan would act as a $20,000 to $30,000 annual tax on many families “by regulating the industry and removing financial incentives to supply lower-cost care.”

“I estimate that BBB would increase childcare costs by 102 to 122 percent. For a family with an infant and a four-year-old, that would be an additional annual expense of up to $27,000 unless they could qualify for BBB’s subsidies. In 2022, that would be half of families currently using nonparental childcare. Even in 2024 when the subsidies are more generous, 27 percent of families currently using nonparental childcare would be paying more than double of what they do now. As taxpayers, even families without children would be paying for a childcare industry whose bloat was fueled by BBB.”

Mulligan cites “a trifecta of cost-increasing forces.”

The latest draft of the bill removes incentives for providers to compete on price because they will be reimbursed for what Congress calls “quality,” which Mulligan says is a euphemism for having more staff per child.  Build Back Better would also finance capacity expansions only at nonreligious providers.

He predicts that providers would need more administrative staff to comply with all the new regulatory requirements.

Finally, Mulligan estimates that the “living wage” provisions of BBB would add 80% to child care costs.  The plan requires child-focused care workers to be paid commensurate with their state’s elementary school teachers.  A Cato Institute analysis says “the average childcare nationally is currently paid $25,460, against $60,660 for the average elementary school teacher.”

Mulligan’s lower-end predicted cost increase of 102% is based on the Obamacare experience.  President Obama predicted that a typical family would save $2,500 annually in health insurance premiums.  But the cumulative premium increase between 2013 and 2018 was 131%.  Mulligan says that “put premiums 102 percent above what they would have been if increasing at an annual rate of 2.7 percent as they had from 2010 to 2013.”

Manipulating costs in the childcare industry is another in a long line of the Biden administration creating competitive disadvantages for their political opponents. Last month The Sentinel reported that Biden’s BBB scheme includes a $4,500 taxpayer subsidy for union-built electric cars.

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