Department of National Child Care

Do you like the rising cost of health care and higher education, even as government subsidies also rise? Then you’ll love President Biden’s new plan for national child care.

Mr. Biden wants to subsidize child care so families pay “based on a sliding scale.” For the “most hard-pressed working families,” the White House says, costs would be “fully covered,” with payments coming out of a $225 billion pot that Mr. Biden is asking Congress to fill. For the middle class: “Families earning 1.5 times their state median income will pay no more than 7 percent of their income.”

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The first problem is that this is a new suburban entitlement, not aid to the needy. There’s no legislative language yet, but the White House talking points suggest that any family that qualifies would get the subsidy automatically.

California’s median household income, multiplied by 1.5, is around $121,000. For New York it’s about $108,000. And before anyone gets huffy about the cost of living on the coasts, remember that those statewide thresholds would presumably apply to less costly inland California and New York, too. There would be no limit on annual spending, since it would increase with enrollment, which almost surely makes the White House estimate of $225 billion fanciful.

This is all the more likely because capping out-of-pocket payments at 7% of income would obliterate healthy economic incentives. Once they hit that limit, families choosing a child-care option would have no reason to consider costs. Get the upgrade, since it’d be on Uncle Sam. Child-care providers would have little reason to economize, since upselling would be an easier path to revenue, in the same way that colleges now compete to build the splashiest aquatics center. Once Mr. Biden juiced demand, prices would only go up.

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