Biden plan to subsidize child care could have unintended consequences, including price increases, experts say
From Fox News:
“The idea of using subsidies to essentially engineer some sort of outcome is not exactly a great idea. Any time you end up subsidizing something that represents a market manipulation,” Jonathan Bydlak of the R Street Institute told Fox News. “There’s always a potential, as we’ve seen in areas like education, for example, where… education costs are almost certainly higher as a result of the ways in which we subsidize that system.”
Many have argued that years of government subsidies for college have raised the spending power of the average person for higher education, but not necessarily to their benefit. Colleges and universities, those people say, have taken note of families’ increased spending power and raised their tuitions accordingly, resulting in the sky-high tuition rates that exist today.
The comparison between Biden’s child care subsidies and the massive subsidies for college tuition in the form of government grants and loans, Bydlak said, “is pretty similar and so is a reasonable one.”
Of government subsidies for child care, Bydlak said, “That ultimately will be a manipulation of the market, and market participants will end up responding to that and responding to those changed incentives.”
The subsidies may help families in the short term, Bydlak said, but “over the medium and long term” results could be “similar to what we’ve seen in the education space.”