An analysis from University of Chicago economics professor Casey Mulligan found that President Joe Biden’s “Build Back Better Act” could increase childcare expenses by more than 120%.
The multitrillion-dollar bill — which contains many portions of President Biden’s economic agenda — would introduce or expand various federal programs, including universal preschool, childcare subsidies, and climate change initiatives.
In an op-ed for The Wall Street Journal written by Mulligan — who also served as chief economist for the Council of Economic Advisers during the Trump administration — the legislation presents a “trifecta” of cost-increasing forces:
First, it would remove much of the incentive to offer lower-cost care. Millions of families would have their child-care expenses capped by statute, which means they’d pay the same at an expensive facility as at a cheaper one. Providers would quickly discover that lower prices no longer are much of a competitive advantage. Moreover, the providers would be reimbursed extra for what Congress calls “quality,” which is a euphemism for having more staff per child. The history of rate regulation is that cost-plus schemes result in needless waste and higher prices for consumers without quality improvements.
The bill’s limits on funding religious education contributes to part of the cost increase:
Churches and other faith-based institutions have a natural cost advantage in child care because church facilities would otherwise sit unused on weekdays, when the demand for care is greatest. Build Back Better would squander this advantage by financing capacity expansions only at nonreligious competitors.
The bill would also inflate costs by complicating the regulatory environment:
Second, providers would need extra staff to comprehend and comply with all the new statutes, certifications and agency rules. Just as physicians complain about paperwork eating up time that could be spent with patients, child-care providers will lose time they could be spending with kids. Third, the bill imposes “living wage” regulations on staff pay. In a study for the Committee to Unleash Prosperity, I estimate these regulations alone would add 80% to child-care costs.
Overall, Mulligan says that a family with an infant and a four-year-old would see an additional annual expense of up to $27,000 if they do not qualify for subsidies. He recommended cutting taxes so that children can receive “the best care available” — remaining at home with their parents.
In another scathing article, The Wall Street Journal’s editorial board argued that the “lie of the year” is the Biden administration’s attempts to hide the true costs of its proposals. Citing analyses from Penn Wharton Budget Model and the Congressional Budget Office, the columnists note that the Build Back Better Act would add roughly $3 trillion to the national debt over ten years — and that if the bill passes, Democrats would “own all of the deficits, debt and inflation that result.”
On Monday, former Speaker of the House Newt Gingrich said that Biden’s Build Back Better Act is a “direct assault” on Americans’ standard of living.
“I think the country understands that even more spending just increases the inflation rate. The numbers last month were the worst in 40 years,” Gingrich said. “If you’re a working American, or if you’re an American on a limited income, you’re paying more for gasoline, more for rent, more for food. It is a direct assault on the standard of living of most Americans.”
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Source: Dailywire
