There is no such thing as free childcare
During the 2020 presidential campaign period, free childcare for all was one of the most popular promises among Democratic Party candidates. Bernie Sanders and Elizabeth Warren, for example, promised some form of free childcare for most, if not all, American kids.
If his American Families Plan, which was announced on April 28, passes, Joe Biden will be on his way to fulfilling that promise as well — free universal childcare for all American children aged 3 and 4.
Except there is no such thing as free childcare. In fact, according to the Wall Street Journal,
President Biden proposes spending $225 billion over 10 years to subsidize child care, including by capping costs for low- and moderate-income families, boosting pay and training for child-care workers and providing federal dollars for care centers. He also wants to spend $200 billion over a decade to establish a national preschool program for all 3- and 4-year-olds in partnership with states.
This money will have to come from somewhere. And according to the Biden administration, that somewhere is ‘big corporations.’
Unfortunately, however, big corporations are not people. But they are comprised of people who will ultimately bear the burden of these new taxes. This includes workers, who might see their wages stagnate or decline. Investors could also face some of this tax burden through decreased profitability. In some instances, consumers could also bear some portion of these taxes through higher prices.
If the Biden Administration were to issue debt instead, taxpayers would have to cover the interest payments to service and retire that debt. High levels of debt could also raise interest rates, slowing the economy.
So, would free childcare really cost Americans $0? In short, no.
This applies to virtually any government-provided good or service. Governments pay for “free” goods or services by collecting taxes. All that public subsidies do is shift the cost of a good or service from the people directly benefiting to taxpayers.