Elizabeth Warren to release universal child care plan paid by ‘wealth tax’
Democratic presidential candidate Sen. Elizabeth Warren is set to release a sweeping universal child care plan on Tuesday that would guarantee child care from birth until the time children enter school.
The proposal marks the Massachusetts Democrat’s second major policy outline to be unveiled this year as she competes for the 2020 Democratic nomination. Last month, Warren released a “wealth tax” plan aimed at the most affluent Americans whose net worth exceeds $50 million.
According to Warren’s campaign, her child care proposal would create a federal program that establishes a network of public and family-run centers. The care would be free for families with incomes below 200% of the poverty level — about $51,500 for a family of four. Those earning more would pay a subsidized fee based on their income, with no households shelling out more than 7 percent of their income.
Notably, Warren’s child care plan would be paid by a part of the revenue from her proposed wealth tax. It is a clear indication that the tax proposal — in addition to fueling the broad public support for raising taxes on the rich— is already emerging as a major component of Warren’s overall platform.
The universal child care policy is of personal significance to Warren because she believes that, more than once, her career almost went off track because of challenges with child care.
On the stump over the past seven weeks, Warren has openly discussed — often in a light-hearted, self-deprecating tone — her decision to get married to her first husband at the age of 19 and the obstacles she confronted when she had two children soon thereafter. She recently described attending law school under those circumstances as “the craziest thing in America.”
Warren opened up to reporters in Las Vegas over the weekend, saying when she was a young working mom, “child care nearly turned me upside down.”
“I still remember vividly the day the babysitter quit and what it was like to scramble to find somebody else. And it’s just gotten harder since then,” Warren said. “Child care is one of those things we’ve got to do for working parents and we’ve got to do for our children.”
Child care is a major concern and expense for many families and can hinder some parents — particularly mothers — from holding down jobs. Those that pay for care typically spend $7,200 a year, according to Mark Zandi, chief economist at Moody’s Analytics, whose analysis of Warren’s plan was provided to CNN by the campaign.
Current federal programs are inadequate, he argues. Those targeted at low-income families, such as Head Start, reach only a small share. Federal child-care tax credits do not provide enough to cover the cost.
Warren advisers tell CNN that the child care proposal is a prime example of what she is referring to when she points to “big structural change” on the stump, and that she considers child care a “fundamental right.”
Currently, about 6.8 million children under the age of 5, or one-third, are in formal care arrangements, Zandi said. The legislation would increase that number to roughly 12 million. Families’ child care costs would drop about 17 percent to less than $6,000 a year.
The senator plans to introduce other proposals that would be paid for by the revenue from her proposed wealth tax, the advisers said. The levy would impose a 2 percent tax on Americans’ net worth above $50 million and a 3 percent tax on wealth above $1 billion.
The child care initiative would cost the federal government $700 billion over 10 years after accounting for the boost it would provide the economy, Zandi said.
The proposal “quickly lifts economic growth,” he maintains. It will give low- and middle-income households more money to spend, as well as allow more people to hold jobs and work longer hours.
Meanwhile, Zandi argues that hiking taxes on wealthy households will have “little impact” on the economy, though Republicans and right-leaning economists feel strongly that higher taxes hurt economic expansion.