Why Joe Biden’s So-Called “Infrastructure” Plan Is a Mistake

COMMENTARY Budget and Spending

Why Joe Biden’s So-Called “Infrastructure” Plan Is a Mistake

Apr 27th, 2021 6 min read

Commentary By

Rachel Greszler

Research Fellow in Economics, Budget and Entitlements

Lindsey M. Burke, Ph.D. @lindseymburke

Director, Center for Education Policy

U.S. President Biden, with Vice President Kamala Harris, speaks about infrastructure investment on the White House campus on April 7, 2021, in Washington, D.C. Brendan Smialowski / AFP / Getty Images

Key Takeaways

Rather than strengthen families, these programs will only undermine them, leaving them with fewer opportunities and less control over their circumstances.

Those who opt to stay home and invest in their children should not have to subsidize the child care costs of other families at the same time. 

Government subsidies won’t solve the challenge of child care for families, but they could further restrict families’ choices by driving up the cost of care.

What word pops to mind when you think about paid family leave, child care subsidies, and universal Pre-K education? If you said “infrastructure,” then you must be in the Biden administration. 

This week, President Joe Biden is expected to use his State of the Union address to pitch his estimated $1.8 trillion American families “infrastructure” package. But this package is really more of a grab-bag, filled with assorted left-wing goodies such as a $225 billion federal paid family leave program, a $225 billion child care subsidy, and $200 billion for universal Pre-K. 

The main problem with these programs isn’t their irrelevance to infrastructure or even their exorbitant expense. It’s that they won’t achieve their intended goals. Rather than strengthen families, these programs will only undermine them, leaving them with fewer opportunities and less control over their circumstances.

Consider the expected proposal for a nationwide, government-run paid family leave program. It would actually reverse the trend toward more and more company-paid maternity leave. The 2017 tax cuts freed up resources for companies, which plowed them largely into improved worker pay and benefits. As a result, the percentage of companies providing paid maternity leave more than doubled, from 26 percent in 2016 to 55 percent in 2020. The percent offering paid paternity leave jumped from 20 percent to 45 percent

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Biden’s plan to raise corporate taxes and offer a federal paid leave program would reverse this trend. Many employers would reduce or eliminate their benefits and require workers to use the less generous federal program instead.

Moreover, experience shows that government-paid family leave programs are incredibly regressive, benefiting primarily middle- and upper-income families. In California’s state-paid family program , for example, high-income mothers are five times more likely than low-income mothers to use the program. In Norway, expansions of the national program aimed to help low-income families were found to be “costly, [with]… no measurable effect on outcomes.” Instead, it “amounted to a pure leisure transfer, primarily to middle and upper income families.” 

The nonpartisan Congressional Budget Office determined that the FAMILY Act (the forerunner of the Biden proposal) amounted to a restrictive and unfunded federal entitlement program. While only 42% of workers eligible to take leave would do so, the government program would still be unsustainable, with costs 2.4 times its revenues. Either rationed benefits or tax hikes would be required to keep the program going. 

Put another way, this federal program would tax all workers, yet it would primarily benefit higher-income and dual-earner families at the expense of lower-income and single-earner families. 

What about that $225 billion in new child care subsidies and $200 billion for government-run Pre-K? While families should be able to choose the kind of child care options that best fit their needs, the Biden plan seems bent on “nudging” them to make the choice that the government desires—one which maximizes both tax revenues (by having all parents work full-time) and the government’s role in raising children.

While most single parents do not have the option of staying home, many two-parent households prefer to have one parent stay home full-time or part-time to care for children. Those who opt to stay home and invest in their children should not have to subsidize the child care costs of other families at the same time. 

Many policymakers claim that child care subsidies are an investment, yielding a positive return, but they are more likely to increase government tax revenues than the well-being of children and families.

When Quebec established a government-subsidized child care program, the number of mothers of young children working outside the home rose 14.5 percent, generating higher tax revenues. But researchers also found “striking evidence that children are worse off in a variety of behavioral and health dimensions, ranging from aggression to moto-social skills to illness. Our analysis also suggests that the new child care program led to more hostile, less consistent parenting, worse parental health, and lower-quality parental relationships.” Teens exposed to the program also had significantly higher rates of crime and anxiety as well as lower levels of health and life satisfaction.

In the United States, an analysis of a smaller-scale program also concluded that child care subsidies may undermine family well-being. The authors noted that “child care subsidies are associated with worse maternal health and poorer interactions between parents and their children,” including increased anxiety, depression, parenting stress, and physical and psychological aggression by mothers toward their children.

Studies of publicly-funded Pre-K programs have reached similar findings. Take the federal Head Start program, a Lyndon Johnson-era relic that is likely the closest analog to any new or expanded federal preschool program. 

In 2012, the Department of Health and Human Services released a scientifically rigorous evaluation of Head Start, tracking five thousand three- and four-year-old children through the end of third grade. It found that the program had little to no impact on parenting practices. Additionally, it did not have much impact on the cognitive, social-emotional, and health outcomes of participants.

Or take Tennessee’s Voluntary Pre-K program, lauded by proponents of government-funded preschool as a model program. Here again, a rigorous evaluation by researchers at Vanderbilt University reported no significant differences between the control group and the preschool group on any achievement measures by the end of kindergarten.

While family-based care is generally best for children, the reality is that many families either need to or choose to send their children to some type of preschool or child care. Finding the type of care they desire at a cost that they can afford can be incredibly difficult.

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Government subsidies won’t solve the challenge of child care for families, but they could further restrict families’ choices by driving up the cost of care and limiting child care options. Lawmakers should eliminate unnecessary regulations that drive up the cost of child care and that limit parental options instead of forcing families that do not use preschool and childcare to pay for those that do. Lawmakers should also expand the use of 529 savings plans and let families use existing childcare subsidies—including Head Start funds—at a child care or preschool provider of their own choosing.

To further expand the access of Americans to flexible and more generous paid family leave, policymakers should: implement Universal Savings Accounts; allow workers to choose between paid time off and overtime pay (the Working Families Flexibility Act would allow this); and increase access to private disability insurance that covers medical and maternity leave.

And, they can even call these effective reforms “infrastructure,” if it makes them feel good. 

This piece originally appeared in The National Interest https://nationalinterest.org/feature/why-joe-bidens-so-called-infrastructure-plan-mistake-183740