Affordable childcare has a ‘fundamental funding problem,’ according to top Obama economist Betsey Stevenson: kids can’t take out loans to pay for preschool like adults can for college

Classroom
  • Former Obama economist Betsey Stevenson told Insider affordable childcare is long overdue.
  • A lack of government funding for childcare has stripped kids of quality early education, she said.
  • She used the example of student debt, saying 3-year-olds can’t take out loans to pay for their education like adults can.
  • See more stories on Insider’s business page.

Betsey Stevenson, a top economic advisor to the last Democratic president, says the current one has a strong case for affordable childcare: children should have the same access to quality education that adults do.

Last week, House Democrats unveiled a plan to invest $761 billion to make childcare more affordable, including universal pre-K for 3- and 4-year-olds. Stevenson, a top economic advisor to President Barack Obama, joined 126 other economists in urging Congress to deliver on the investment, as President Joe Biden has proposed.

Stevenson told Insider in an interview that it’s long overdue, and children shouldn’t be stripped of a quality education just because they have fewer economic rights than adults.

“College students can take out loans to pay for college, but it’s absolutely impossible to take out a loan to pay for your own preschool,” Stevenson said. “It’s just not something a 3- or 4-year-old can do to manage their own education. So the idea that we have something that’s just as expensive as college and we don’t have any mechanism in place to fund it is why so few kids get access to high-quality early childhood education.”

Betsey Stevenson
Betsey Stevenson.

It’s a “fundamental funding problem,” Stevenson said, and it has cost the US economy $57 billion in lost earnings since the 1990s due to a surge in childcare costs, according to nonprofit Council for a Strong America. Democrats’ $3.5 trillion social spending bill is a chance to remedy that by extending a program that sends monthly checks to parents and capping how much families have to pay for childcare.

“The United States has failed to make the changes necessary to support working families and I think that was one of our real vulnerabilities during COVID,” Stevenson said. “This is our opportunity for reform.”

The US has created ‘a nation of kids who are underinvested in’

While children in preschool and children in kindergarten may only be separated by a year, one is government-funded and one is not, creating a gap in the number of kids who enroll. And that gap is not driven by kindergarten being “much more beneficial than the year before kindergarten,” Stevenson said.

“It’s driven by the fact that parents have to pay for preschool and kindergarten is available to our public school system,” she said. “So what we have done is create a nation of kids who are underinvested in, and that feeds into not just what our potential is as an economy, but it also feeds into inequality.”

So just years after birth, children’s education will depend on how much money their parents are bringing home. To ensure that isn’t a factor, House Democrats proposed a 7% cap on childcare spending, meaning families wouldn’t spend more that 7% of their incomes on childcare. Stevenson said this “makes a lot of sense” since people will only pay what they can afford instead of turning to cheaper, lower-quality options.

Other Democratic proposals, like a $300 monthly child tax credit, is also on the table to keep kids out of poverty and take pressure off of lower-income families, but face uncertainty as some centrist Democrats are proposing targeting that type of federal assistance to low-income Americans.

But Stevenson, and other economists’, point remains: if a college student can secure a loan or grant to receive a quality education, a 3-year-old should be able to have that same opportunity.

“We should think about government as representing kids who are going to be future adults, not just kids belonging to their parents and not having any representation in government until they reach 18,” Stevenson said. “We should have government that’s doing what’s best for investing in kids.”

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Janet Yellen says she wouldn’t be Treasury Secretary today if she ‘didn’t have an excellent babysitter 40 years ago’

Janet Yellen smiling in front of a microphone
Janet Yellen.

  • Treasury Sec. Janet Yellen credits “excellent” childcare for her professional success.
  • She urged Congress to invest in affordable childcare in the $3.5 trillion social spending bill.
  • The Treasury released a report on Wednesday detailing the lack of accessible childcare for parents.
  • See more stories on Insider’s business page.

Janet Yellen is the first female Treasury Secretary of the US, but she said it might not have been possible without the childcare made available to her after giving birth to her son four decades ago.

“Looking back, I’m not sure I would be here, in this job today, if I didn’t have an excellent babysitter 40 years ago,” Yellen said during remarks on Wednesday on shortages in the childcare system.

Yellen joined Vice President Kamala Harris at the Treasury Department in urging for increased investments in childcare, and she said that while she was lucky to have given her son great childcare, it is certainly not the norm for most families today. The Treasury released a report on Wednesday that found parents need childcare at a time when they can least afford it – right when they give birth – and there is currently no funding mechanism, stressing the need for reform.

“For the vast majority of Americans, the child care industry works in precisely the opposite way it worked for us, which is to say it doesn’t work at all: Those who provide child care aren’t paid well, and many who need it, can’t afford it,” Yellen said.

House Democrats recently unveiled their plan to invest $761 billion to make childcare more affordable as part of their social spending bill, which included a universal pre-K for three- and four-year-olds and investments to ensure children do not go hungry. It also includes a cap on families’ spending on childcare at 7% of income so anyone who wants care can afford it, regardless of how much money they make.

Insider reported on Tuesday that 110 economists echoed Yellen’s calls in a letter stressing the importance of affordable childcare in Democrats’ $3.5 trillion social spending bill. Betsey Stevenson, a top economist under Obama and one of the letter’ signatories, told Insider in an interview that the “fundamental flaw” in childcare is the lack of investment.

“What we have done is create a nation of kids who are underinvested in, and that feeds into not just what our potential is as an economy, but it also feeds into inequality,” Stevenson said.

Democrats are in the process of debating elements of the reconciliation bill, including an expanded $300 monthly child tax credit, but where benefits for children and families stand remain uncertain given hesitation from centrist lawmakers, like West Virginia Sen. Joe Manchin, who wants a work requirement for the benefits.

But Yellen said during her remarks it’s “past time that we treat child care as what it is – an element whose contribution to economic growth is as essential as infrastructure or energy.”

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Democrats have to pass Biden’s agenda or the US won’t get back to pre-crisis prosperity, Oxford Economics says

Joe Biden Chuck Schumer
President Joe Biden and Senate Majority Leader Chuck Schumer.

  • Passing Democrats’ spending plan is the difference between a stellar and a subpar recovery, according to Oxford Economics.
  • Failure to do so would slash economic growth and delay a full labor-market rebound, the firm says.
  • Democrats aim to pass a measure in September, but key disagreements risk killing the plan altogether.
  • See more stories on Insider’s business page.

Passing Democrats’ latest spending plan could mean the difference between a stellar economic rebound and a subpar recovery that lasts for years, experts at Oxford Economics said Wednesday.

Congressional Democrats are currently pushing forward with plans to pass President Joe Biden’s sweeping infrastructure proposal. Details around the plan – which includes $3.5 trillion in spending – have slowly emerged as House committees finalize their portions of the bill. But as Democrats near their September deadline for passing the plan, disagreement over key elements such as the child tax credit and the price tag threaten to delay a vote.

It might be better for Democrats to move forward with a smaller package, as failing to pass new spending would seriously hamper the US recovery, economists Nancy Vanden Houten and Gregory Daco of Oxford Economics said in a note. The team expects Democrats to shrink the latest spending proposal to $2.5 trillion before passing it through budget reconciliation. If lawmakers fumble efforts to pass the smaller measure with the $550 billion bipartisan infrastructure plan, the recovery will suffer for years, the economists said.

OXFORD
Chart via Oxford Economics.

For one, the US economy won’t grow nearly as fast. Failure to pass the bills would cut 2022 growth to 3.7% from 4.4%, Oxford Economics said. Growth in 2023 would slide by 1.4% from 2.6%.

It would also drag on the labor market’s rebound. A lack of new spending would lead to 1.2 million fewer jobs being created, according to the team. The unemployment rate would only fall to 4.2% through 2023, instead of 3.5% in the firm’s baseline scenario that sees both measures passing.

More broadly, botching both plans’ passages would leave the country struggling to return to its pre-pandemic economic health. Passing both packages would help US gross domestic product outpace its pre-crisis trend early next year, according to Oxford Economics’ forecasts. That would mark a substantial victory over the pandemic after nearly two years of harsh economic pain.

Conversely, a dearth of fresh stimulus dooms the country to a substandard recovery. Gross domestic product growth would retake its pre-crisis trend in 2022 but quickly slow and remain below the critical level well into 2023, the economists said.

Approving both bills, then, can determine whether the country ever returns to its pre-COVID welfare.

“September will be a pivotal month for the trajectory of US fiscal policy and President Biden’s domestic policy agenda,” the team said. Failure to pass the spending packages would drag on the economy just as other fiscal boosts are set to fade, they added.

Oxford Economics’ latest forecast comes after several banks slashed their own outlooks for the recovery ahead. Bank of America and Goldman Sachs nearly halved their GDP estimates in August, blaming the Delta wave and weaker spending for the gloomier projections.

JPMorgan followed on Wednesday, cutting its third-quarter growth forecast to 5% from 7%. While some of the lost growth will show up in the fourth quarter, much is permanently lost to supply-chain issues and weak demand, Michael Feroli, chief US economist at JPMorgan, said in a note.

With Delta case counts climbing higher through September, the US recovery is on the ropes. Democrats’ efforts to pass trillions of dollars in new spending could decide whether the rebound accelerates or runs out of steam.

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4 reasons Congress should permanently expand $300 monthly child tax credits, according to more than 400 economists

Nancy Pelosi and Chuck Schumer
Nancy Pelosi and Chuck Schumer.

  • 410 economists urged Congress to make permanent $300 monthly checks to families with children.
  • They wrote in a letter the child tax credit will significantly reduce childhood poverty in the US.
  • Democrats are clashing over how to include the credit in their $3.5 trillion social spending bill.
  • See more stories on Insider’s business page.

As Senate Democrats clash over what an expanded child tax credit will look like in their $3.5 trillion social spending bill, over 400 economists laid it out simply: the credit should be made permanent to combat child poverty in the country.

On Wednesday, 410 economists, led by Berkeley economics professor Hilary Hoynes and Director of Northwestern’s Institute for Policy Research Diane Schanzenbach, sent a letter to House and Senate leadership urging them to make the expanded child tax credit permanent.

The signatories, which included former top Obama administration economists Jason Furman and Betsey Stevenson, wrote that childhood poverty is a “staggering problem” in the US, affecting approximately one in seven children and indefinitely impacting their livelihoods as they grow up.

“Children growing up in poverty begin life at a disadvantage: on average they attain less education, face greater health challenges, and are more likely to have difficulty obtaining steady, well-paying employment in adulthood,” the economists wrote. The National Academy of Sciences estimated that because of those difficulties, child poverty has cost the country between $800 billion and $1.1 trillion each year.

The economists outlined four reasons why expanding, and making permanent, the child tax credit would be beneficial:

  1. It would dramatically reduce poverty and improve children’s lives by improving childrens’ health and educational attainment;
  2. It would be a long-term investment and bring in more tax revenue down the road by reducing government medical spending for children;
  3. It would have minimal impact on employment given that the credit would phase out for high levels of earning;
  4. And the vast majority of people use the credits to pay for necessities, like food and utilities.

President Joe Biden expanded the child tax credit through December in his stimulus law, in which individuals who earn $75,000 or less are eligible for up to either a $250 or $300 direct payment per child depending on their age.

Insider’s Madison Hoff reported last month that just the first round of payments managed to keep 3 million children out of poverty, signaling the substantial impact a further expanded credit would have for children and families across the country.

But Congressional Democrats are divided on basic provisions of the program, including how long to extend it and whether low-income families who don’t have to file taxes should be able to receive advance monthly payments, known as fully refundability.

House Democrats proposed renewing the program until 2025 in their social spending plan, along with locking in full refundability for families that don’t earn enough to pay taxes.

But the structure of the program could change due to resistance from Sen. Joe Manchin of West Virginia, a key centrist. He’s pushed a work requirement for parents to receive the credit. He told Insider on Tuesday that the benefit should only go to people paying taxes.

Many Democrats are balking at the idea, including architects of the measure like Rep. Suzan DelBene of Washington and Sen. Michael Bennet of Colorado.

“I think it’s already clear in the country the incredible benefits the child tax credit is delivering to families and I hope to find a way to preserve it in its current form,” Bennet told Insider on Tuesday.

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Rep. Alexandria Ocasio-Cortez blasts Sen. Joe Manchin for ‘weird, patronizing behavior’ after he referred to her as a ‘young lady’

alexandria ocasio-cortez and joe manchin
Rep. Alexandria Ocasio Cortez; Sen. Joe Manchin

  • Rep. Alexandria Ocasio-Cortez slammed Sen. Joe Manchin after he referred to her as a “young lady.”
  • The New York Democrat called Manchin’s comments “weird” and “patronizing.”
  • Ocasio-Cortez has criticized Manchin over his opposition to Democrat’s $3.5 trillion spending package.
  • See more stories on Insider’s business page.

Rep. Alexandria Ocasio-Cortez took a swipe at Sen. Joe Manchin after he referred to her as a “young lady” during a CNN appearance on Sunday.

“In Washington, I usually know my questions of power are getting somewhere when the powerful stop referring to me as ‘Congresswoman’ and start referring to me as ‘young lady,'” the New York Democrat tweeted Sunday evening, hours after Manchin’s interview aired.

“Why this kind of weird, patronizing behavior is so accepted is beyond me!” she added in a follow-up tweet.

Ocasio-Cortez’s comments came after Manchin, a West Virginia Democrat, refuted her claims that he is beholden to the oil and gas industry. In a tweet earlier this month, Ocasio-Cortez said that Manchin has “weekly huddles” with ExxonMobil and helps lobbyists draft “fossil fuel bills.”

“I keep my door open for everybody. That’s totally false,” Manchin told CNN of Ocasio-Cortez’s remarks. “And those type of superlatives – it’s just awful. Continue to divide, divide, divide.”

“I don’t know the young lady that well,” he added. “I really don’t. I met her one time, I think, between sets here. But that’s it. So we have not had any conversations. She’s just speculating and saying things because she wants to.”

A number of progressive-leaning House Democrats, such as Ocasio-Cortez, have recently criticized Manchin after he opposed the party’s $3.5 trillion pricetag for a spending package that covers a major chunk President Joe Biden’s domestic agenda.

The proposal aims to boost the country’s social safety net, including historic investments in health care and education with plans for tuition-free community college and Medicaid expansion, among other provisions.

“There’s not a rush to do that right now. We don’t have an urgency. Don’t you think we ought to debate a little bit more, talk about it, and see what we’ve got out there?” Manchin said of the package on ABC News on Sunday.

The moderate senator’s reluctance to embrace the proposal presents a rocky road ahead for Democrats to fulfill their legislative priorities. The party holds narrow majorities in both the House and Senate. Manchin’s support is crucial as Democrats attempt to skirt Republican opposition and approve the trillion-dollar package in a party-line vote through a process called reconciliation. But Manchin has raised objections to the plan, citing concerns over inflation and the federal government’s debt.

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Biden won’t extend $300 boost to weekly unemployment benefits past September

Joe Biden
President Joe Biden.

  • Janet Yellen and Marty Walsh confirmed Biden’ won’t extend federal unemployment benefits past September.
  • They wrote in a letter that Biden still supports states using stimulus funds to help the unemployed.
  • 26 states, all but one governed by Republicans, moved to end the unemployment boost early.
  • See more stories on Insider’s business page.

As part of his American Rescue Plan, President Joe Biden extended $300 weekly unemployment benefits through September 6. Top officials in his administration confirmed on Thursday that he won’t be extending the benefits any further.

Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh wrote a letter to the chairs of the House and Senate finance committees with an update on where unemployment benefits stand. They wrote that although the weekly benefits have been a “critical lifeline” for millions of unemployed Americans, a further extension of the benefits – which some Democrats have been pushing for – is off the table.

“The temporary $300 boost in benefits will expire on September 6th, as planned,” Yellen and Walsh wrote. “As President Biden has said, the boost was always intended to be temporary and it is appropriate for that benefit boost to expire.”

However, the officials noted that even as the economy is recovering from the pandemic and payrolls are being added to the labor market, unemployed people may still require financial assistance, and the Delta variant could bring economic setback, as well.

That’s why they said the Labor and Treasury Departments will take the following steps to help those are unemployed:

  1. The Treasury is reaffirming that states can use what they received from the $350 billion in stimulus aid to provide additional support for unemployed people beyond the expiration of the benefits;
  2. Labor will communicate with states on how they can best use their “existing UI (unemployment insurance) infrastructure” to support state-funded benefits using stimulus funds;
  3. And Labor is announcing $47 million in new grants to support reemployment services for all Americans.

Yellen and Marsh also wrote the pandemic has exposed “serious problems” in the UI system that requires reform, which is why Biden is asking Congress to consider long-term reform of UI in Senate Democrats’ $3.5 trillion reconciliation bill.

“The President has already laid out his principles for such reform: he believes a 21st century UI system should prevent fraud, promote equitable access, ensure timeliness of benefits, provide adequate support to the unemployed, and automatically expand benefits in a recession,” they wrote.

After a weak April jobs report, 25 GOP-led states – and one governed by a Democrat, Louisiana – moved to end unemployment benefits early for their residents because they believed the benefits disincentivized work. According to an analysis from the left-leaning People’s Policy Project, over 20 million Americans will lose their benefits when the September expiration rolls around.

Insider’s Joseph Zeballos-Roig and Juliana Kaplan reported that the Delta variant has people begging for more benefits, given that the variant could jeopardize the return to work. But even before Yellen and Walsh’s announcement, moderate Democrat Joe Manchin of West Virginia told Insider he would not support a further extension of the benefits in a reconciliation bill, suggesting a slim likelihood of it passing through Congress.

“I’m done with extensions,” he said. “The economy is coming back.”

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Bernie Sanders is going to campaign in pro-Trump districts to get more Republican support for Democrats’ $3.5 trillion budget package

Bernie Sanders addresses a woman at a campaign event, standing in front of a massive American flag.
US Sen. Bernie Sanders, I-Vt., speaks at “Our Rights, Our Courts” forum New Hampshire Technical Institute’s Concord Community College, Saturday, Feb. 8, 2020, in Concord, N.H.

  • Democrats’ $3.5 trillion reconciliation package would expand Medicare to cover dental and vision.
  • The budget proposal would also make community colleges tuition-free.
  • It currently has no support from Republican lawmakers, and Sen. Sanders is hoping to change that.
  • See more stories on Insider’s business page.

US Sen. Bernie Sanders is leaving Vermont to pitch the Democrats’ $3.5 trillion reconciliation package to Republican voters in Indiana and Iowa.

Sanders, who chairs the Senate Budget Committee, has called the proposal the “most significant piece of legislation… since the Great Depression.”

Financed by tax hikes on the wealthy and large corporations, it would expand Medicare to cover dental, vision, and hearing. It would aso provide universal preschool and cap childcare costs for most families at 7% of their income, while guaranteeing paid leave from work for family and personal health obligations.

The package, which needs only 50 votes for final passage in the Senate, currently has no Republican support. But Sanders thinks GOP voters could like what they hear.

“Democrats, Independents, and working-class Republicans all over the country support our plan to finally invest in the long-neglected needs of working families,” the senator said in a statement on Thursday.

Sanders will hold townhall meetings on August 27 and August 29: the first in West Lafayette, Indiana, and the other in Cedar Rapids, Iowa. His office described both locations as “Republican strongholds,” noting that former President Donald Trump got more votes in each the last time he ran, compared to 2016.

Have a news tip? Email this reporter: cdavis@insider.com

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Janet Yellen has 3 reasons why Biden’s trillions in spending won’t destroy the economy

Janet Yellen
Janet Yellen.

  • The Senate recently approved two spending packages totaling close to $4 trillion.
  • Treasury Sec. Janet Yellen wrote in an opinion piece that investments are making up for 40 years of underspending.
  • She said Biden’s economic agenda is “fiscally responsible” and paid for by reforming the tax code.
  • See more stories on Insider’s business page.

Last week, the Senate approved the $1 trillion bipartisan infrastructure plan, and Senate Democrats passed their $3.5 trillion reconciliation bill, full of measures like childcare, eldercare and universal pre-K. Biden’s Treasury Secretary Janet Yellen said those investments are just the things Americans need right now.

Yellen wrote an opinion piece for Yahoo Finance on Tuesday explaining why President Joe Biden’s economic agenda to boost the middle class and create jobs is not too much spending, contrary to Republican lawmakers’ arguments. She noted that 40 years of underinvesting in public goods, such as national paid leave and childcare, have pushed women out of the labor force and increased racial and gender pay gaps, and Biden’s economic plans would give Americans the economy they “should – and can – have.”

“I question whether we can if we remain a country where renting a home eats up the lion’s share of your paycheck, and owning one is out of the question; where young people can’t gain the skills to compete in the job market because they can’t afford the tuition bill; or where Americans must make a choice: have children or have a job,” Yellen wrote.

Here are three reasons why the trillions in spending Biden has proposed is not an over-investment, according to Yellen:

Real interest rates are negative

Now is the right time, economically, to be making these investments. Real interest rates are negative, meaning borrowers are credited interest instead of paying it to lenders, and the Congressional Budget Office expects interest rates to stay low for at least a decade.

Low interest rates mean more money to spend by consumers, and this could help boost the economy if they use the money to make large purchases on things like homes and cars. So, to Yellen’s point, Biden’s investments will help further boost the economy given the current and expected low interest rates.

Tax increases will go to the wealthy and corporations, not American families

Biden’s proposals are “fiscally responsible,” Yellen wrote. The investments are spread out over time and are paid for by raising taxes on the wealthy and corporations without impacting those making below $400,000 a year.

After the Senate passed the bipartisan infrastructure plan, Biden slammed President Donald Trump for racking up $8 trillion in debt from tax cuts and vowed his spending would be fully paid for by tax hikes on the rich.

Biden has remained committed to raising taxes on the wealthy and corporations. When he introduced his infrastructure proposals, he wanted to fund them with a corporate-tax hike to 28%, still only a partial reversal of Trump’s 2017 corporate-tax cut. He said at the time that he was “sick and tired of ordinary people being fleeced.”

Republicans have strictly opposed raising taxes on the wealthy and corporations, leading Democrats to put wealthy tax hikes in their reconciliation bill, which can be passed without any Republican votes.

It will be a lot more expensive to not invest in infrastructure

The opportunity cost of not making Biden’s proposed investments is high. “We’ve grown used to America as the world’s greatest economic power, but we aren’t destined to stay that way,” Yellen wrote.

The price tag of Biden’s American Jobs Plan was originally $2 trillion, but moderate and Republican concerns on the plan being too costly led to a bipartisan agreement that ended up cutting over half the cost of the president’s initial proposal. Those cuts included care-economy measures, like eldercare and climate initiatives, that are now in the Senate Democrats’ reconciliation bill.

Insider reported last week that nine moderate House Democrats threatened to block the reconciliation bill until the infrastructure bill passes the House and gets signed into law, prompting criticism from progressives who have been stressing the need to pass the care-economy package alongside infrastructure.

“Let’s stop pretending that Dems who threaten to tank the President’s agenda, kill childcare/Medicare expansion, and work w/ GOP to expand the cruelest parts of our immigration system are “‘moderate,'” New York Rep. Alexandria Ocasio-Cortez wrote on Twitter. “They are not moderate. They’re conservative.”

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Richard Nixon sabotaged a generation of women, but now Congress has another chance – if it can pass Biden’s $3.5 trillion spending plan

Nixon, duke
Richard Nixon vetoed care-economy measures in 1971 after they passed the House and Senate.

  • Joe Biden’s American Families Plan featured “care economy” measures that Congress is currently debating.
  • 50 years ago, a similar plan actually passed the House and Senate – before Richard Nixon vetoed it.
  • “The Nixon veto set our country back behind the rest of the world by a generation,” says Time’s Up Tina Tchen.
  • See more stories on Insider’s business page.

The American economy has a female-participation problem, and it’s related to the cost of childcare. The first is too low and the second is too high.

Over 2.3 million women dropped out of the labor force between February 2020 and February 2021, and women continue to struggle to return to work without childcare. In fact, the US experienced a bigger drop in women’s employment than any other nation because of the pandemic – a reduction of 9.4%, according to the International Labour Organization, a United Nations agency focused on advancing social and economic justice.

Likely related is the drastic decline of the US birthrate – a record 4% drop in 2020 – with ominous implications for the size of the next generation’s workforce, and its potential for driving economic growth.

President Joe Biden is trying to make it easier for women to return to work by passing legislation that would provide affordable, quality childcare for all families as well as pay childcare workers a fair wage to encourage more people to pursue a career in early childhood education. It forms a key part of his American Families Plan, which Congress is taking up as part of a huge $3.5 trillion spending package.

Joe Biden
President Joe Biden wants to pass legislation that would provide affordable childcare for all families and pay childcare workers a fair wage.

While this might sound like a radical idea, it’s not the first time Congress has tried to offer parents universal childcare and provide fair wages to childcare providers. Exactly 50 years ago, Congress succeeded in passing a bill into law, but the president at the time – Richard Nixon – had the opposite attitude to Biden.

Nixon vetoed the bill, not because of its costs and not because the legislation lacked bipartisan support, but because he said it was a “radical” idea that could weaken the family structure by giving government the authority to care for children and by pushing women into the labor market.

The declining US birthrate can be traced back to 1971 – the same year Nixon vetoed the Comprehensive Child Development Act. For a generation of Americans to replace themselves, there would need to be 2,100 births per 1,000 women. American women have given birth below this number every year since 2007, and in most years since 1971. It suggests that Nixon’s veto weakened the family structure in exactly the way he was trying to prevent.

“The Nixon veto set our country back behind the rest of the world by a generation,” said Tina Tchen, CEO of Time’s Up, a nonprofit focused on creating equity and power for women in the workplace. “It was an opportunity to put our country where the rest of world is by seeing caregiving as an essential public support for workers.”

Tina Tchen times up
Time’s Up CEO Tina Tchen says the Nixon veto was a missed opportunity to put the US in line with the rest of the world.

The pandemic made the childcare problem worse

The pandemic exposed just how great a problem the lack of affordable childcare is and how much it has impacted the US economy. Nearly half of childcare providers closed their facilities during the COVID-19 shutdown, and 18% of childcare centers remain closed, according to a 2020 survey by the National Association for the Education of Young Children.

Even before the pandemic, parents were postponing school and training programs, declining promotions and sometimes leaving the workforce entirely due to childcare challenges, the US Chamber of Commerce Foundation found in a study of Iowa, Idaho, Mississippi and Pennsylvania. Issues such as breakdowns in care, affordability, or limited access resulted in anywhere from $479 million to $3.47 billion in estimated annual losses for these states’ economies.

“We knew there was an issue with childcare access and affordability but everything was elevated during the pandemic,” said Cheryl A. Oldham, senior vice president of education and workforce at the US Chamber of Commerce Foundation. “We cannot get back to business if childcare centers are not in business.” The Chamber is currently studying childcare issues in six additional states – Arizona, Alaska, Arkansas, Missouri, West Virginia, and Texas – and plans to release those results in the fall.

The effects of that 1971 veto have been rippling through the U.S. economy ever since. Parents who do find childcare end up paying exorbitant fees. Despite US families paying, on average, almost a quarter of their net income on childcare, more than one in six women who are childcare workers live below the poverty line, according to Undervalued, a report by the National Women’s Law Center.

A lifetime of lower wages for women

The US childcare system has failed both Nina Perez and her mother, Amy Perez. If not for Nixon’s 1971 veto, Amy would have had the support she needed to return to work after giving birth to her first child. Instead, she was forced to quit her job as a flight attendant in 1981.

“My parents didn’t want to lose money so they made the decision that my mother would take care of my sister herself,” said Nina, who is now national director of early learning at MomsRising, an online organization focused on increasing family economic security and ending discrimination against women and mothers. But they didn’t consider the long-term consequences of that decision. Like many other women who give up a job to care for a child, Amy was never able to get fully back into the workforce and that has impacted her Social Security earnings and retirement savings.

Amy Perez isn’t the only woman to earn a lifetime of lower wages because of the lack of affordable childcare. A 2021 study by the National Women’s Law Center and The Columbia University Center on Poverty and Social Policy finds that, by retirement age, affordable childcare would mean that women with two children would have about $160 per month in additional cash flow from increased private savings and Social Security benefits. It’s one reason women experience higher rates of poverty than men. In 2018, 12.9% of women lived in poverty compared to 10.6% of men, according to the Center for American Progress.

Finding affordable childcare hasn’t gotten any easier 40 years later. When Nina Perez couldn’t find affordable childcare for her daughter two years ago, she turned to family to help take care of her daughter. “We would have had to go into our long-term savings to pay for childcare if my mother couldn’t help with our daughter’s care,” she said.

Working parents weren’t the only ones negatively impacted by Nixon’s veto. That decision also signaled that the United States wasn’t going to invest in the caregiving workforce, said Myra Jones-Taylor, chief policy officer at Zero to Three, a nonprofit focused on improving the lives of infants and toddlers. “It racialized and gendered the disinvestment of this workforce” – a workforce that is mainly Black, Latino and immigrant women, she said.

Congress considers its first investment in childcare in 30-plus years

Congress has the opportunity to fix this problem with the American Families Plan, a sweeping $1.8 trillion package outlined by the Biden Administration. The plan includes a $225 billion investment in childcare to:

  • Subsidize the costs of childcare. Parents would pay for childcare on a sliding scale with child care costs fully covered for families earning the least while families earning 1.5 times their state median income will pay no more than 7 percent of their income for all children under age five.
  • Pay the childcare workforce higher wages. Early childhood staff would be paid a $15 minimum wage and staff with qualifications similar to kindergarten teachers would receive comparable compensation and benefits.
  • Invest in high-quality childcare. Childcare providers would receive funding to cover the true cost of quality early childhood care and education, creating a professional pipeline for early childhood educators in all states and all settings.

The AFP would be the first new legislation aimed at childcare in more than 30 years, when the Child Care and Development Block Grant was passed in 1990. That was pegged to welfare reform and was focused on getting women to work, Jones-Taylor said, but it didn’t address the quality of childcare or the paltry wages of the childcare workforce. The only other childcare program is an earned income tax credit and child tax credit, signed by President Ford in 1975, which provided financial assistance to low-income, working families with children. Congress recently expanded this under the American Rescue Plan to $3,000 for each child between 6 and 17 years old and to $3,600 for each child under age 6 for 2021.

“The AFP is expensive because we haven’t spent money on this for a long time,” said Rasheed Malik, senior policy analyst for early childhood policy at the Center for American Progress. “We placed the burden on individual parents and families and that’s not how it is done in most of the world.”

In comparison, public expenditures on early childhood education and care is less than 0.5% of GDP in the United States, while it is higher than 1.0% of GDP in France and the Nordic countries, with total spending reaching as high as 1.6% in Sweden and 1.8% in Iceland, according to The Organisation for Economic Co-operation and Development.

Rasheed Malik of the Center for American Progress
Rasheed Malik of the Center for American Progress says that since 1971, the government has placed an extra burden on families.

It’s unclear if Congress will be able to fund everything outlined in the AFP. The budget reconciliation bill that Congress is expected to vote on before members leave for the August recess will determine how much money is available to pay for the AFP as well as the infrastructure bill that has been moving through Congress. Debate on the AFP will begin in the fall.

“This is a bipartisan issue,” Oldham said. “The more we talk about childcare as a workforce issue, the more bipartisanship there is. It’s when you get into the details of what to include that it can get partisan.” For instance, Oldham said, the Chamber doesn’t believe childcare programs should be entirely public funded or that the focus should be on universal pre-school programs.

“The lesson to learn from the Nixon veto is that when you lose a proposal like that, at this stage, it is not just gone for a year,” Tchen said. “The potential to lose it for another 50 years is great and we could lose that momentum for another generation.”

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9 House Democrats threaten to tank $3.5 trillion spending plan, potentially derailing Biden’s plan to overhaul the economy

Nancy Pelosi
House Speaker Nancy Pelosi.

  • Nine Democrats could stall the passage of a $3.5 trillion social-spending package that includes tax hikes on the rich.
  • Moderates want the infrastructure bill made law first, while progressives threaten to oppose it until they can vote on social legislation.
  • Democrats only have a three-seat House majority, so the rift stalls consideration of both bills.
  • See more stories on Insider’s business page.

Nine moderate House Democrats are threatening to block the passage of a $3.5 trillion social-spending package that includes tax hikes on the rich until the infrastructure bill gets through the House and is signed into law, The New York Times reported.

They plan on sending a letter to House Speaker Nancy Pelosi on Friday, warning they will oppose a budget resolution unless she brings a bipartisan infrastructure bill for an immediate vote. The Senate passed that piece of legislation on Tuesday with substantial GOP support.

Senate Democrats then advanced a follow-up $3.5 trillion spending blueprint early on Wednesday, which could pave the way for a major expansion of Medicare, tuition-free community college and affordable childcare that’s paid for with tax hikes on the wealthiest Americans.

Rep. Josh Gottheimer of New York, head of the House Problem Solvers Caucus, was the main author of the letter. Other signatories included Reps. Jared Golden of Maine and Kurt Schrader of Oregon.

“It’s time to get shovels in the ground and people to work,” the letter read. “We will not consider voting for a budget resolution until the bipartisan Infrastructure Investment and Jobs Act passes the House and is signed into law.”

The development represents a potent reminder of the razor-thin majority Pelosi oversees, the narrowest since World War I. House Democrats can only afford three defections – and if these moderates stick to their threat, it’s enough to block the plan.

Pelosi wants to advance the spending blueprint during the week of Aug. 23, setting the stage for a dozen Congressional committees to draft their parts of the bill with a Sept. 15 deadline. But other Democratic moderates also say they’re uneasy with approving the social legislation before the infrastructure bill, exposing a rift that may stall consideration of both bills.

A senior Democratic aide granted anonymity to speak candidly told Insider that “there are not sufficient votes to pass the bipartisan infrastructure bill this month.”

They noted the letter represented only nine lawmakers, in contrast to the “dozens upon dozens” of progressives also warning they will oppose the bipartisan package until Senate Democrats clear the separate party-line bill later this fall.

Democrats plan to press the $3.5 trillion spending plan through reconciliation. That allows passage of bills with only a simple majority instead of the 60 votes typically needed in the Senate, sidestepping what’s likely to be unanimous GOP opposition.

Pelosi has repeatedly said she wouldn’t bring the infrastructure bill to a House vote until the Senate passed the social policy package, part of a bid to appease progressive Democrats anxious about garnering support for the social-spending package from moderates.

She dug in on her strategy in a caucus call with House Democrats on Thursday, per a person familiar. “I am not freelancing. This is the consensus,” Pelosi told Democrats. “The votes in the House and Senate depend on us having both bills.”

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