Elizabeth Warren’s $70 billion child care boondoggle

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Sen. Elizabeth Warren’s universal child care proposal isn’t a solution in search of a problem — it’s a proposed pot of money in search of things to spend it on.

Usually, policymakers identify problems and then levy taxes to pay for them. But putting the cart before the horse, Warren, D-Mass., first proposed a wealth tax and then found it was burning a hole in her pocket. Her proposed Universal Child Care and Early Learning Act is the first of many poorly planned uses to justify her desire to tax those with more money than her.

Children are expensive. They not only drain bank accounts with needed spending on essentials like food, clothing, education and housing, but they also rob time from their parents that could be spent earning more. That’s not a criticism of youth or a disparagement of parenthood, but a fact. Having a safe and nurturing place for children to play and learn while mom and dad are at their jobs — daycare — is a practical solution currently used by millions of families.

Out-of-home care for children under age five (those proposed to be covered by the Warren proposal) costs on average about $10,000 per year nationally, twice that in places like Warren’s home state of Massachusetts, but about that amount in states like Alabama. Median household income in high-cost states is also about 50 percent higher than in low cost states. But how does the current national average cost for child care compare to the Warren proposal?

Estimates for the proposed universal child care scheme indicate that it will add about 5 million more children under the age of five years to the roles of daycare centers. And Warren’s own team of analysts estimate its cost at about $70 billion per year. This estimate has internal problems that suggest it is understating the total cost. But assuming it is true, it points to an annual cost of $14,000 per child, or 40 percent more per child than what child care currently costs.

In other words, at current prices, the same number of children could be cared for at a cost of just $50 billion per year. So where is the extra $20 billion going? The proposed plan does state that the new care workers will be paid wages comparable to that earned by teachers, so about half of the difference goes there. The remaining $10 billion appears to be overhead for about 120,000 new bureaucrats if they’re paid at the average federal wage of $77,000 per year. That’s about 50 percent more staff than the entire workforce of the IRS, and at a cost of about 25 percent more.

There is another consideration that at first appears to make sense, but on closer examination breaks down. I don’t dispute that caring for children is a valuable skill — one that you could never pay me enough to apply. But does providing a safe and nurturing environment for essentially infants (remember, the proposed plan only covers children through age five) require the skill and training of a K-12 teacher? The proposal clearly states that it would require the authorized care providers to pay wages comparable to those earned by teachers. The unintended consequence of this poorly-thought-out requirement would be to strain the already undersupplied labor pool of qualified K-12 educators. Why would anyone invest hundreds of thousands of dollars and years of their lives to become a teacher when, for the same compensation and without all the additional training, they could avoid much of the stress our teachers face in today’s school systems and still help children?

And here’s a final twist on the universal child care proposal. The proposed utopian plan is to pay for it with money from Warren’s previously proposed wealth tax. Study after study have confirmed a correlation between family size and income. Regardless of cause, higher-income families are smaller. And we can naturally infer that higher-income families also have more wealth. The Warren plan is to tax the wealthy to pay for child care — essentially, a punitive tax for not having children.

Kevin Cochrane teaches economics and business at Colorado Mesa University, and is a permanent visiting professor of economics at The University of International Relations in Beijing.

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