Affordable childcare has a 'fundamental funding problem,' according to top Obama economist Betsey Stevenson: kids can't take out loans to pay for preschool like adults can for college

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  • Former Obama economist Betsey Stevenson told Insider affordable childcare is long overdue.

  • A lack of government funding for childcare has stripped kids of quality early education, she said.

  • She used the example of student debt, saying 3-year-olds can't take out loans to pay for their education like adults can.

  • See more stories on Insider's business page.

Betsey Stevenson, a top economic advisor to the last Democratic president, says the current one has a strong case for affordable childcare: children should have the same access to quality education that adults do.

Last week, House Democrats unveiled a plan to invest $761 billion to make childcare more affordable, including universal pre-K for 3- and 4-year-olds. Stevenson, a top economic advisor to President Barack Obama, joined 126 other economists in urging Congress to deliver on the investment, as President Joe Biden has proposed.

Stevenson told Insider in an interview that it's long overdue, and children shouldn't be stripped of a quality education just because they have fewer economic rights than adults.

"College students can take out loans to pay for college, but it's absolutely impossible to take out a loan to pay for your own preschool," Stevenson said. "It's just not something a 3- or 4-year-old can do to manage their own education. So the idea that we have something that's just as expensive as college and we don't have any mechanism in place to fund it is why so few kids get access to high-quality early childhood education."

Betsey Stevenson
Betsey Stevenson. Betsey Stevenson

It's a "fundamental funding problem," Stevenson said, and it has cost the US economy $57 billion in lost earnings since the 1990s due to a surge in childcare costs, according to nonprofit Council for a Strong America. Democrats' $3.5 trillion social spending bill is a chance to remedy that by extending a program that sends monthly checks to parents and capping how much families have to pay for childcare.

"The United States has failed to make the changes necessary to support working families and I think that was one of our real vulnerabilities during COVID," Stevenson said. "This is our opportunity for reform."

The US has created 'a nation of kids who are underinvested in'

While children in preschool and children in kindergarten may only be separated by a year, one is government-funded and one is not, creating a gap in the number of kids who enroll. And that gap is not driven by kindergarten being "much more beneficial than the year before kindergarten," Stevenson said.

"It's driven by the fact that parents have to pay for preschool and kindergarten is available to our public school system," she said. "So what we have done is create a nation of kids who are underinvested in, and that feeds into not just what our potential is as an economy, but it also feeds into inequality."

So just years after birth, children's education will depend on how much money their parents are bringing home. To ensure that isn't a factor, House Democrats proposed a 7% cap on childcare spending, meaning families wouldn't spend more that 7% of their incomes on childcare. Stevenson said this "makes a lot of sense" since people will only pay what they can afford instead of turning to cheaper, lower-quality options.

Other Democratic proposals, like a $300 monthly child tax credit, is also on the table to keep kids out of poverty and take pressure off of lower-income families, but face uncertainty as some centrist Democrats are proposing targeting that type of federal assistance to low-income Americans.

But Stevenson, and other economists', point remains: if a college student can secure a loan or grant to receive a quality education, a 3-year-old should be able to have that same opportunity.

"We should think about government as representing kids who are going to be future adults, not just kids belonging to their parents and not having any representation in government until they reach 18," Stevenson said. "We should have government that's doing what's best for investing in kids."

Read the original article on Business Insider

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