As H.L. Menken once noted, “There is always a well-known solution to every human problem—neat, plausible, and wrong.”
No one can deny that raising kids is expensive these days, an average of $29,395 per year during the child’s first five years, and $16,857/year thereafter, not including college savings, travel, extracurricular activities, and school supplies. For families where one parent chooses to stay home to care for the kids this is a particularly heavy burden.
To help those families, the Trump administration has proposed a solution – give stay-at-home parents some money. It is a solution that is neat, plausible…and wrong.
There are few details yet, but reporting suggests that the administration would allow states to use funds from the Child Care and Development Fund (CCDF) to provide families earning less than the median family income ($87,460), in which a parent stays home to care for children, with up to $9,000/year per child in payments.
The CCDF is currently a block grant that states use to assist low-income families to pay for childcare so that they can work—work being an essential tool for getting and staying out of long term poverty. Most of the 994,000 families who currently receive child care subsidies through the CCDF are not married households, though most states do not check for non-marital partners). Roughly 35 percent have incomes below the Federal Poverty Level ($27,320 for a family of three), and another 26 percent have incomes between 100 and 150 percent of poverty.
The Trump administration has indicated that it does not plan to increase the $12 billion annually that the federal government currently spends on the program. Allowing millions of current stay-at-home parents to access those funds would inevitably mean fewer resources for working parent recipients. What’s more, the program is already stretched thin. There are currently waiting lists or freezes for CCDF subsidies in 17 states.
The administration’s plans would essentially take a program designed to help move low-income parents into the labor force and transform it into a sort of universal basic income based on parenthood. Indeed, by adding an entire new constituency to the program, the Trump plan would end up putting tremendous pressure on the states to expand the program even further—higher benefits, increased eligibility, and so on.
The proposed policy change would also likely be regressive. Because $9,000 is nowhere near enough money to offset the cost of raising a child, those families with a high-income earner or large nest egg are much more likely to be able to forgo one spouse’s income for an extended time. Extending benefits to stay-home parents would, therefore, squeeze resources for low-income families, while extending welfare benefits higher up the income ladder.
The changes under discussion would do little to fix the flaws in the current CCDF. For instance, child care subsidies often face some of the steepest welfare cliffs. That is, a point where even a modest increase in income results in such a large and quick loss in benefits that it can create a significant work and marriage disincentive. The way that states structure the CCDF subsidy also tends to favor large institutional childcare programs over smaller, local home-based centers that are less expensive, more widely available, and appear to be desired by many parents.
Not every good idea should be turned into a government program, especially in an age of $40 trillion national debt. Certainly, it is a valid and in many instances a beneficial choice for a parent to stay home to care for the children. (It is worth noting that roughly one out of five stay-at-home parents is a father.)
One can acknowledge this without calling for a new round of subsidies.
A far better approach would be for the Trump administration to focus on reducing the high cost of living generally, and the cost of raising a child in particular.