Shouldn't We Help Parents Be Parents?

David Blankenhorn, New York Times, 12/19/1997

Everything we know about children tells us that we should encourage parents to spend more time with their children, not less. Could there possibly be a worse policy than taxing everyone, including millions of struggling at-home parents, to help relatively affluent families put their children in day care? Instead of increasing a tax credit that benefits only parents who use paid child care, why not extend the credit to all parents of preschool children? Similarly, instead of giving tax breaks to corporations that sponsor day care, why not give the money directly to parents – for instance, by giving them a one-time tax benefit by increasing the existing child credit for the year in which a child is born or adopted? Some parents could use this "baby bonus" for day care, and others could use it to allow them to stay home with the new baby longer.

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Subjects: Parenthood, Family policy, Child care, Family

More by: David Blankenhorn

Guided by an admirable desire to address the nation's child care problem, President Clinton is preparing to announce two proposals that are socially irresponsible and morally wrong. He wants to create new tax breaks for corporations that provide day care for children of employees, and he wants to expand the tax credit for employed parents who use paid child care.

Both of these proposals are flawed for the same reason: this Democratic President is making the classic Republican mistake of believing that we can solve a social problem by subsidizing private business. As a result, instead of focusing on all children, these policies focus on a minority of children whose parents are relatively affluent. And, because the heart of the President's plan consists of special subsidies for commercial child care, it would, in effect, punish parents who want to spend more time with their children.

About 77 percent of preschoolers are cared for by mothers, fathers or other family members, according to Census Bureau data. Day care centers serve only about 15 percent of preschoolers; the rest are cared for by baby sitters or other nonrelatives, most of whom are unlicensed.

The small but growing child care industry, like any industry large or small, wants to expand its customer base. Toward that end, its lobbyists, especially those in its nonprofit sector, make frequent statements about their high-minded goals. (Much of this rhetoric was on display and endorsed at the recent White House conference on child care.) Also like lobbyists from other businesses, the child care lobby often seeks special benefits and protections from government, including direct financial subsidies and pro-industry regulations.

The President's main child care initiatives go a long way toward embracing the industry's point of view. But, as we ought to have learned by now, simply meeting the demands of a special interest group is almost never an effective way to confront a social problem. For starters, a tax break for corporate day care would essentially be a subsidy for the affluent, since it would primarily benefit employees (and stockholders) of large, high-wage companies offering good benefits. Expanding the dependent care tax credit would also be primarily a subsidy for the affluent, since two-earner couples with children, who are the credit's main beneficiaries, are significantly wealthier than one-earner couples with children.

A Government-endorsed day care strategy for employees might also crowd out other, more popular options. Many parents avoid full-time day care because they believe it is not good for their children. For these parents, flexible work hours, home-based work or part-time employment would be much more desirable than day care. Why should the Government subsidize one benefit for working parents but not others?

More important, the President's proposals would create a subsidy only for those parents who use commercial child care. That type of subsidy is what economists call a market distortion, causing some people to act differently than they otherwise would. It is also what most people who study child development would call a crazy idea.

Everything we know about children tells us that we should encourage parents to spend more time with their children, not less. Could there possibly be a worse policy than taxing everyone, including millions of struggling at-home parents, to help relatively affluent families put their children in day care?

Instead of increasing a tax credit that benefits only parents who use paid child care, why not extend the credit to all parents of preschool children? Similarly, instead of giving tax breaks to corporations that sponsor day care, why not give the money directly to parents – for instance, by giving them a one-time tax benefit by increasing the existing child credit for the year in which a child is born or adopted? Some parents could use this "baby bonus" for day care, and others could use it to allow them to stay home with the new baby longer.

The Administration won't formally release its proposals until the State of the Union Message in late January. It's not too late for the President to do the right thing.

This article originally appeared here.

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