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Stimulating Child Care

As we've previously noted, the economic crisis is hitting early childhood care and education programs, too. Parents who've lost their jobs are pulling their children out of preschool and child care programs. Child care centers in hard-hit areas are struggling to stay afloat amid growing vacancies, threatening the care other families need to stay in the workforce. Even worse, some financially strapped families, faced with choosing between child care and other essential bills, are choosing to leave their young children home alone while they work--a situtation that puts little ones in considerable danger. And states face budget shortfalls that could lead to cuts in child care funds.

These factors add up to a strong case for including child care in the stimulus package. That doesn't mean that the stimulus is the right place to fund preschool and early education expansions--we don't think it is. But it does mean that Congress should take steps in the stimulus to ensure that parents continue to have access to affordable child care that allows them to work. General support to plug the holes in state budgets might be the best way to support child care. But a number of organizations have put together proposals for how the stimulus can support child care:

The National Women's Law Center, the Early Care and Education Consortium, the Coalition on Human Needs, and other groups have called on Congress to include in the stimulus $3 billion in increased funding for the Child Care and Development Block Grant. These funds would expand child care assistance funding for nearly half a million additional children and would create 190,000 new child care jobs. The Center for Law and Social Policy and the Center for American Progress have proposed increasing CCDBG funding by $956 million as a part of the stimulus, to provide child care assistance for 164,000 children. The Center for American Progress has also called for a $832 million increase in Head Start funding to protect agains program cuts. The National Association of Child Care Resource and Referral Agencies has called for a $1 billion increase in CCDBG funding, as well as a waiver of the state match for new funds. NACCRA has also proposed specific policy changes, in addition to new funding, to help parents through this time, such as encouraging states to maintain child care assistance for a longer period of time after parents lose their jobs, so that parents don't lose access to care while looking for a new job, and encouraging states to provide temporary assistance to child care centers with high vacancy rates due to local job layoffs, so that these centers don't go out of business.

All of these proposals are targeted towards low-income families who receive child care subsidies, as well as to supporting the existing child care infrastructure through this tough economic time. In contrast, Third Way, a centrist think tank, has put forward an economic recovery plan that would increase the value of the child care tax credit for middle- and higher income families, by eliminating the phase out that currently lowers the value of the credit from 35 percent of qualified child care expenditures by the lowest income families (up to $3,000 for one child and $6,000 for more than one child) to 20 percent of qualified expenditures for families with incomes over $43,000. This is a highly regressive proposal that might put an extra $900 in the pockets of the richest families come tax time, but would do nothing to help the many low- to moderate income families with children who have little or no income tax liability. Nor would it do anything to support the existing child care infrastructure or quality.

Looking at the child care tax credit as part of the stimulus package isn't necessarily a bad idea, but a better idea than Third Way's proposal would be to make the tax credit partially refundable--as President-elect Obama proposed during the 2008 presidential campaign. Still, tax credits are no substitute for increased subsidy funding that would put child care assistance into parents' hands and the child care system right now.

Photo courtesy of flickr user Blueberry Muffin.