Can we forget about the bill’s costs and just focus on the benefits of Building Back Better? That would be wonderful. Unfortunately, even the best criticisms of this legislation will reveal that America’s magical thinking behind such a costly spending program won’t improve its society.
Alan Blinder, an economist, urges us to be less focused on cost. He states: “The House bill contains several real winners. Are you against universal pre-K? It works. You are against child care that is more accessible? Most Americans disagree. Are you convinced that we shouldn’t ignore climate change worldwide? Think again if you think so.
However, these claims are weak. While you can be supportive of pre-K education, affordable child care, and concerned about climate change, it is not necessary to believe that government should have all the answers. There is a compelling argument to support the idea that getting out of the way would be the best policy for lawmakers to follow in order to reach these goals. In fact, it is likely that most of the BBB legislation would impede progress.
Pre-K and child care are the first. While it may sound appealing to claim that the massive spending bill will reduce what parents spend on pre-K education, and child care in general, it won’t.
First of all, it doesn’t answer why child care has become so costly in the first instance. More people seeking it will only collide with ill-advised government restrictions on the supply of such care—restrictions like the excessive occupational licensing and credential rules that prevent plenty of qualified people from offering their services. These restrictions would be removed if a bill was to truly reduce child care costs and enable parents to select any provider they choose.
BBB adds on to any existing restrictions but doesn’t remove them. Casey Mulligan from the University of Chicago explains: “The bill requires child-care workers to be paid a ‘living wage’ and that their earnings are ‘equivalent in wages for elementary educators of similar qualifications and experience. All families who don’t meet the criteria for free child care will be charged more.
Which is more costly? The answer depends on the way regulators enforce the rule. Mulligan points out that elementary-school teachers made an average salary of $63,930 per year in 2019, while child-care workers earned $25,510. Child-care centers would have to pay their workers 15% more if they were to meet this benchmark. Matt Bruenig of the Left-leaning People’s Policy Project made the identical point. If child care workers were paid the same as teachers, this would lead to an increase in child care costs for the middle class by $13,000 per.
Universal pre-K could increase the participation of mothers in the labour force. However, we shouldn’t assume that it will make children more productive. An analysis of the impact of universal child-care programs in Quebec found that the program caused a significant and substantial decline in the noncognitive skills and development of preschoolers. It also had a minimal effect on their cognitive abilities.
This is because, contrary to what economists believe, single-parenthood would be encouraged by these provisions. This is because the income of a father does not count against child care subsidies that a mother receives if they are legal members of the household. These disincentives, along with the extended child tax credit and expanded child care credit could cause problems for the children that the government wants to support.
Climate change, what do you think? It’s remarkable that legislators again are more concerned with subsidizing green businesses than stopping the government from engaging in problematic behaviors. The tax code and many agencies give huge subsidies to oil and gas businesses despite all their demonization.
Private-sector innovators are the most likely to find solutions for climate change. Arthur Diamond describes it in Creative Destruction: OpennessIn his 2019 book, “Innovative Dynamm” he states that creative inventors and innovators can find innovative ways to lower global warming. Entrepreneurs also will be able to adapt. This is why these innovators require capital. However, BBB’s increase in capital taxes would eventually lead to less investments in climate innovation.
We’ve all seen that green subsidies can be used to enrich the profits of those companies already active in this space. That means we shouldn’t expect many new entrants into this market—just lots of distortions in an area where we need real competition.
Although the bill is expensive, it has many benefits.
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