Can America Afford To Underwrite Universal Child Care?

Can America Afford To Underwrite Universal Child Care?

Reprinted with permission from The American Prospect.

When Senator Elizabeth Warren issued a bold plan for universal child care last week, the question some people asked was the usual one: How will she pay for it? Warren has a good answer to that question, which I’ll come to. But there’s a second question that is actually more difficult: How will child care get the necessary public and media attention to make it a top priority?

In 2016, Hillary Clinton issued a proposal for universal access to child care that was similar to Warren’s, though not as extensive. Clinton called for federal subsidies to cap child care costs at 10 percent of family income, whereas Warren proposes to cap those costs at 7 percent. Like Warren today, Clinton wanted to build on existing locally run programs such as Head Start to make child care affordable for all families. And like Warren, Clinton also framed the program as serving the purposes of both economic growth and family well-being, as Katie Hamm and Sarah Jane Glynn of the Center for American Progress explained in a fall 2016 American Prospect article, “Putting Family Policy on the Governing Agenda.”

Some people writing this week about Warren’s proposal seem to have forgotten or to be unaware that the last Democratic presidential candidate wanted to move in the same direction. But if you never heard about that Clinton child-care proposal, it’s hardly your fault. Media coverage of all substantive policy issues was astonishingly limited in the 2016 presidential race. In a study in the Columbia Journalism Review, Duncan J. Watts and David M. Rothschild found that in just the six days after FBI Director James Comey announced the reopening of the agency’s email inquiry, The New York Times published as many cover stories about Clinton’s emails as it had published about all policy issues combined in the two months before the election.

The analog to coverage of Clinton’s emails may be coverage about Warren’s Native American ancestry. Still, the chances may be better this time for putting work-family issues at the center of public debate. The midterms saw an upsurge of political activism among women and a record number of women elected to Congress, and the race for the Democratic presidential nomination has not just one woman in the running but at least four who are in the top tier of candidates.

That’s not to say child care is exclusively a “women’s issue,” just that women in the public arena are more likely to make an issue of it. The changes in gender politics over the past several years could help elevate child care to the prominence it deserves. Let all the candidates, not just Warren, come up with proposals and debate child care the way Democratic candidates in recent elections have debated health-care reform.

Back to the financing: In a column on paying for a progressive agenda, Paul Krugman makes a useful distinction among three types of expenditures: investments that can be paid for through borrowing because they generate an economic return; benefit enhancements that can be paid for through higher taxes on the rich; and major system overhauls that involve such drastic changes in taxes and social arrangements that Democrats would be wise to put them off.

As an example of a major system overall, Krugman points to pure Medicare for All proposals that would replace employer-sponsored coverage with tax-financed public insurance. As he says in an understatement, that would be “a much heavier political lift” than the other two types of expenditures: “You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now.”

That’s exactly my view of Medicare for All proposals, but that is not tantamount to saying Democrats should refrain from ambitious ideas. On the contrary, those other ambitious ideas—like universal child care—wouldn’t have a chance if Medicare for All, with its staggering fiscal demands, dominates Democratic priorities. As Krugman argues, Democrats have options that are both good policy and good politics for financing both big investments (such as many of the Green New Deal ideas) and benefit enhancements (such as universal child care). Those are the ideas that should be at the top of their agenda for 2020.

Warren calls for financing her Universal Child Care and Early Learning Act with the proceeds from the wealth tax that she proposed earlier—a tax of 2 percent on net worth for people with more than $50 million in assets and an additional 1 percent for those with more than $1 billion in assets. Public opinion surveys have shown strong support for the general idea of higher taxes on the rich and in particular for Warren’s wealth tax. I have some concerns about the wealth tax because of its vulnerability to a challenge in the Supreme Court, given the Court’s current right-wing majority. But I believe its aims could be achieved through changes in the income and estate taxes, where the legal foundations are firm.

In an economic analysis of Warren’s proposal, Mark Zandi and Sophia Koropeckyj of Moody’s Analytics find that the wealth tax would more than cover the cost of the child care plan, which they put at $70 billion annually, when taking into account its first-order economic effects in stimulating consumer spending and increasing labor participation. There are also longer-term benefits from improvements in early childhood learning; to use Krugman’s categories, the child-care proposal is both an investment and a benefit enhancement.

Of course, there’s a lot more that would need to be done to resolve the problems in child care. Warren’s proposal aims to improve the pay of child-care workers and the quality of child-care services, but it would take time and government involvement to build out the capacity to provide that high-quality care on a fully universal basis. An alternative approach presented last week by Matt Breunig calls for more direct government involvement on the supply side and free access to child care (under Warren’s proposal only families with incomes below twice the poverty level would get child care at no charge). Curiously enough, coming from the left, Breunig also criticizes Warren’s proposal for not including payments to parents who care for their children at home and for lacking adequate cost controls (and he may well be right about that).

These are exactly the kind of questions that ought to be front and center in the national debate on child care policy as the 2020 campaign unfolds. It’s time American politics gave young families the attention and help with child-care costs they need. This baby is long overdue.


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