The Trouble With Elizabeth Warren’s Child-Care Plan

The presidential candidate’s proposal risks accelerating the very trends she once warned against.

Elizabeth Warren
Brian Snyder / Reuters

Senator Elizabeth Warren’s call for a new federal child-care program is nothing if not shrewd. The dream of a comprehensive federal program that would liberate working parents from having to scrap for a seat in a safe, clean child-care facility that will provide for their little ones for a full day, and all for a price so low as to be negligible, has obvious appeal across the Democratic Party’s class divide. But it’s also an object lesson in the unseriousness of how we think about social policy. Instead of just helping working families, her proposal risks increasing the federal deficit, driving up the cost of child care, and squeezing stay-at-home parents. And that last risk is one Warren should understand particularly well because she made her reputation as a public intellectual by warning against it.

There is no question that a lack of affordable child care is a thorny problem facing almost all working parents, especially those who can’t rely on extended family members or other informal arrangements to meet their needs. This is true not only for low-income families, for whom access to affordable child care can be a matter of economic survival, but also for a not-inconsiderable number of affluent professionals, not least those residing in high-cost cities, where well-intentioned licensing and training requirements can combine with labor and land costs to render even rather spartan day-care options prohibitively expensive.

With this bleak landscape very much in mind, Warren proposes that households earning 200 percent of the federal poverty line would pay absolutely nothing for child care, and that those earning more than that would have their fees limited to no more than 7 percent of their income. Given that many high-income households pay many multiples of that amount for child care now, this would be nothing short of a bonanza for them, assuming the child care in question is as high-quality as advertised.

Yet this is where our brows should start furrowing. If costs are capped at 7 percent of household income for better-off families, what reason would they have to shop around, and what reason would the new day-care facilities that would surely spring up to take advantage of this new federal program have to contain their costs? As far as their customers are concerned, any expenditures that push the underlying cost of providing day care above the 7 percent of their income they’d be obliged to pay would be of no interest—indeed, they’re to be encouraged, insofar as they contribute to a more salubrious day-care experience for their kids.

One assumes that the federal government would eventually seek to impose various cost-control mechanisms to keep its spending on the program from spiraling upward, as it has in the case of Medicare. In principle, the federal government could do some good by, say, voiding burdensome state and local regulations that contribute to high and rising child-care costs, though of course the federal government could presumably take such bold action now if lawmakers were so inclined, and at minimal budgetary cost.

But if we’ve learned anything from efforts to control rising Medicare expenditures, it is that providers that come to depend on government largesse can do an awfully good job of extracting more of it over time, especially when the populations they’re serving are sympathetic. Lawmakers are notably reluctant to strip benefits from the elderly population served by Medicare, and it’s not a stretch to assume that they’d feel much the same way about the small children who’ve been signed up for federally subsidized day care, and more precisely, about their loving parents.

In fairness, Warren claims that her child-care plan could easily be paid for by her proposed “ultra-millionaire tax.” Leaving aside the fact that this new federal wealth tax is very unlikely to pass constitutional muster—this is where the new enthusiasm for court packing would come in, I assume—Warren expects it to raise $2.75 trillion in new federal revenue over the next 10 years, a truly impressive-sounding sum. To put this number in context, consider that federal deficits are expected to exceed $2 trillion per annum by the end of the next decade, and that debt held by the public is expected to increase by $12.5 trillion over the next 10 years under current law.

Spending on social-insurance programs will increase sharply as the U.S. population ages, longevity increases, and expensive new medical therapies continue to emerge. Closing future federal deficits with a wealth tax would require importing a slew of new ultra-millionaires from another dimension and then taxing them with abandon, and that’s before we start contemplating Medicare for all or a Green New Deal, let alone a new federal child-care program.

But imagine for a moment that Warren’s federal child-care program could indeed be paid for, and that fretting over cost control is a hateful exercise. Even then, there would still be reason to tread lightly. In the late 1990s, the Canadian province of Quebec embarked on an eerily familiar experiment. To better the lives of parents and children alike, its government offered heavily subsidized child care at an out-of-pocket price of $5 a day. In short order, Quebec families flocked to the new program, including many who had previously relied on more informal child-care arrangements.

The results were, on one level, a great success. Labor-force participation surged among mothers in the province, which was one of the Quebec policy’s chief objectives. As the economists Michael Baker, Jonathan Gruber, and Kevin Milligan have found, however, the outcomes for the children enrolled in the program were less encouraging. In a 2015 working paper, they reported that the Quebec policy appeared to have had “a lasting negative impact on the non-cognitive skills of exposed children,” one that was particularly pronounced among boys. Needless to say, the findings of Baker et al. are hardly the last word on the subject, and it is certainly possible that a federal child-care program in the United States would yield far superior results, perhaps by drawing on some of the lessons of the Quebec experience. But we can’t dismiss the results of the Quebec policy as the result of negligence or incompetence. Its designers were serious, thoughtful people who wanted to do right by Quebec families, yet their experiment had decidedly mixed results. It would be foolish to discount the possibility that the same might happen south of the border.

Then there is the fact that, as Patrick Brown observes in the latest issue of National Review, a large number of parents would much prefer to care for their children at home than to enroll them in day care. A 2015 Gallup survey found that 56 percent of mothers with children under the age of 18 reported that they would “ideally like to stay home and care for their house and family,” a number that might well be higher for the parents of young children.

Warren’s proposed federal child-care program would do nothing for stay-at-home mothers and fathers. Indeed, the sheer size of the benefit is such that it would nudge many parents who’d otherwise prefer to devote all of their time and energy to raising their children into the workforce. Apart from the fact that this would mean privileging one normative conception of family life over another, a controversial proposition in itself, another danger lurks. By boosting parental labor-force participation, a federal child-care program along these lines could boost household incomes (a good thing), which in turn could drive up home prices in neighborhoods with high-quality schools (a less good thing), thereby setting off a series of “frenzied bidding wars” that compel all two-parent families to become two-earner families, whether they want to or not. Or at least that’s what Warren and her daughter, Amelia Warren Tyagi, argued in their provocative book The Two-Income Trap, published in 2003. At the time, Warren was a professor at Harvard Law School known for her deep interest in the financial fragility of middle-income families and, unusually for academics of her stature, for her heterodox political sensibilities, which blended economic populism with a culturally conservative streak. Judging by her child-care proposal, that Warren has been replaced by someone else entirely.

None of this is to suggest that there’s no room to improve federal child-care policy. One can imagine other approaches that could do more good at a lower cost. In 2017, Grover J. Whitehurst, formerly of the Brookings Institution, proposed a new child-care-and-education savings account (CESA) that would be financed by repurposing existing federal funds devoted to child care and by trimming tax expenditures. Targeted at low-income households, Whitehurst’s CESA has a carryover provision that would encourage families to spend their child-care dollars wisely while not leaving stay-at-home parents out in the cold. It is the opposite of a one-size-fits-all policy, and it is one that could command broad support across the political spectrum. Overshadowed by chimerical promises of free lunches for all, CESA deserves a long look from Warren’s rivals, and from all those who want a federal child-care policy that is fiscally sustainable and fair to all families.