When it comes to establishing effective programs, legislative design matters. In its current iteration, the child care proposal included in the Build Back Better Act (BBB) contains enough flaws to seriously stand in the way of its intended aims. 

As has been thoroughly covered by Matt Bruenig at the People’s Policy Project, the proposed legislation does not create a universal child care program. States would need to pass their own legislation to accept the federal cash, raise funds to meet cost-sharing requirements, and establish new agencies to manage the plans. The federal program itself is temporary, meaning states would eventually need to shoulder the entire cost. There are also subsidy cliffs in the proposal that would hike child care costs dramatically for those over the income thresholds

It is unclear how many states will participate in the program if it passes (though given the limited funding, it seems likely that only a small fraction will). This is a missed opportunity to create more widely felt benefits, an unfortunate development in light of child care problems that were amplified by the pandemic. 

Significant child care disruptions increased by 37 percent last year, and problems accessing child care have continued into 2021. The struggle to secure consistent child care has hurt households’ employment situations and hampered families’ ability to cover basic expenses. In 2020, over a quarter of parents whose employment situations were impacted by child care issues reported struggling to make ends meet. That is more than three times the rate of those not affected by child care shortages.

Put the child care dollars into the Child Tax Credit

Child care sector insufficiencies are a real issue affecting families and are deserving of legislative action. Advocates see this as a once-in-a-generation opportunity. Higher wages for child care providers and increasing access to affordable child care are critical goals. However, the current proposal does not meet the challenge.  

When game-changing financial packages are too few and far between, maximizing the positive impact of each is vital. It is worth examining whether the funding dedicated to the current child care provisions could be more effective elsewhere. Absent upgrades to the Build Back Better child care proposal, legislators should consider reallocating the funds to the expanded Child Tax Credit (CTC). 

The temporarily revamped CTC began in July and has quickly become instrumental for families struggling to pay bills and access child care. Respondents listed the CTC as the second-most important source for meeting spending needs behind regular income among households with child care disruptions frustrating their work schedules. The rate of child poverty dropped substantially as well.

CTC funds’ flexibility allows parents to use them on child care expenses. In turn, this enables parents of young children to enter (or re-enter) the workforce. Recent research found that a $1,000 increase in the average CTC contributes to a 1.1 percentage point increase in the labor force participation of single parents, along with a 13.4 percentage point increase in the probability of children receiving family-based child care.

Building off the CTC’s successes is doable, but it will require sufficient financing. Regrettably, rather than doing a few things well, Democrats have responded to fiscal concerns by executing too many programs poorly or for arbitrarily short durations. This is a misguided approach and will likely result in what David Dayen of the American Prospect described as “pinched, constrained, unsatisfying policies.”

The CTC extension included in the reconciliation bill makes full refundability–meaning low-income households can receive the full amountpermanent, but extends the expanded 2021 payment levels and monthly payout structure for only one more year. A multi-year continuation would give parents greater certainty over their future budgets and allow the IRS to improve the CTC’s program administration. On the political front, extending the CTC to 2025 or beyond would put the program’s renewal safely beyond the 2022 midterms, when Republicans are expected to retake the House and potentially let the expansion expire. 

The frustration child care advocates may feel towards this solution is understandable. The problems they highlight with the child care industry, like low wages and high turnover rates, are indeed worrying and fixes are long overdue. But it would be an immense disappointment to earmark consequential funding for a child care program that would go unused by the vast majority of states and create a potential backlash in the states that participate.

At a minimum, Democrats in Congress should think about repurposing the child care dollars towards maintaining and reinforcing the recent improvements to the CTC. It’s a proven program that is relatively simple to administer and could benefit many more families with children. If the options are either doing an inadequate job at shoring-up the child care sector nationally or providing families with efficient and flexible resources directly, it would be a misstep for policymakers to not opt for the latter.

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