New Biden administration rule would lower child care costs across the country

The Department of Health and Human Services on Tuesday announced a proposed new federal rule designed to lower child care costs and provide stability for child care providers. The White House described the initiative as a core pillar of President Joe Biden’s economic agenda, which it has dubbed “Bidenomics.”

The rule applies to the Child Care and Development Fund, which provides federal subsidies to families to help to pay child care providers. When fully implemented, the rule would cap copayments for families receiving help at no more than 7% of their income. The rule would also allow states to completely waive copayments for families who are at or below 150% of the federal poverty level — currently an annual income of $30,000 for a family of four. The White House estimates that nearly 80,000 families would see a reduction in child care payments under the rule.

“I strongly believe that when we lift up the status and the economic status of families, we lift up the economic status of communities. Our entire economy and our entire nation benefits as a result,” Vice President Kamala Harris said on a call with reporters on Tuesday to discuss the rule.

Harris gave an example of a family in Montana earning $46,000 a year that would save over $1,000 a year under the rule, which would free up funds for necessities like groceries or home repairs. Additionally, the rule would change the formula for how child care providers are paid, so they would receive payment earlier in the process of providing care than they currently do. The administration forecasts that this change would affect nearly 200,000 providers.

The proposed rule follows an executive order signed by Biden on April 18 instructing agencies to find ways to increase access to care and support caregivers.

Polling has shown support for expanding child care assistance. In a 2021 Public Opinion Strategies poll of 1,000 voters in Florida, North Carolina, Ohio, Pennsylvania, and Wisconsin, 63% of respondents in the five states and 40 congressional districts surveyed said they believed it was important or very important to help working families afford quality child care.

Biden campaigned in 2020 on assisting families with child care. A provision of the 2021 American Rescue Plan that he signed into law provided support for child care providers during the COVID-19 pandemic, and a 2022 HHS study determined that those funds helped to keep 200,000 child care facilities open.

The Rescue Plan also provided child tax credits to families. A 2022 report from the Economic Policy Institute determined that those subsidies had helped to reduce the U.S. poverty rate to a historic low in 2021. Those credits expired at the end of that year, and an attempt to include the credits in the 2022 federal spending bill passed by Congress failed.

As part of his proposed 2024 budget, Biden has called for a renewal of child tax credits, but Congress has not yet officially considered the proposal.

Published with permission of The American Independent Foundation.