Give Stay At-Home Parents Equity

Since 1976, a federal tax credit has helped working parents to defray some of the costs of paid child care. In his State of the Union address, President Clinton proposed not only significantly increasing the size of this credit but also extending it on a limited basis to parents who choose to stay home to care for a new baby. Unlike last year’s credit-enlarging proposal from the White House, which ignored at-home parents, this new version is an endorsement of the principle that full-time parents should no longer be treated by public policy as irrelevant. Much to his credit, President Clinton has helped to shift the terms of the child care debate. From now on, all parents count.

The bad news is that this more generous definition is threatened from three directions: from the indifference of the Republicans, from the skepticism of many child care advocates and from the inconsistencies within the president’s own proposal.

Ironically, after having argued for years against policies that favored paid care over parent-provided care, many Republicans now seem ready to forget this issue altogether, preferring instead to focus on across-the-board tax relief. But a general tax cut would freeze into place a number of policies, including the current child care tax credit, that ignore marriage and discourage parental care of children.

Moreover, under the main, current Republican tax-cut proposal, two-thirds of the relief would go to households without children under age 18. The greatest relief would go to the wealthiest one-fifth of households, in which children are underrepresented. In its response to the president’s State of the Union message, the GOP did not even mention child care.

At the same time, many Democrats are less than enthusiastic about expanding the definition of child care to include at-home parents. As Faith Wohl of the Child Care Action Campaign put it last year: “We will not have a serious debate about how to allocate scarce resources to remedy what is really wrong with day care as long as the issue is parental equity rather than the child care infrastructure.” So much for parental equity.

Finally, the details of the president’s new proposal fail by a long shot to achieve the ideal of fair treatment that the president has now embraced.

To see why, imagine two similar families, the Smiths and the Smithereens. Last year, both couples had family incomes totaling $50,000. This year, both couples become first-time parents. The Smiths put the baby in day care so that both of them can return to work. This costs them $2,500 annually in child-care expenses. The Smithereens decide that one of them will quit work. This eliminates day care costs, but reduces the Smithereens’ income by $20,000. In economic terms, the Smithereens’ child care decision is about seven times as costly as the Smiths’ child care decision.

Now imagine that Clinton’s entire 1999 child care package has become law. The expanded child care tax credit available to the two-earner Smiths, who use paid child care, would jump in value from about $600 per year to about $1,000, and could be used until the child is 13. The one-earner Smithereens can use the child care tax credit for a benefit of about $180, and they can only use it for the baby’s first year.

Over the next five years, these new policies would effectively lower the total cost of the Smiths’ day care decision by about $5,000, while lowering the cost of the Smithereens’ parent-at-home decision by about $180. This is equity? This is recognition for the work that parents do?

Of course, it isn’t. The best solution--the only way for public policy to reflect the principle that child care means caring for children--is to both expand and universalize fully the current child care tax credit, making it available on a nondiscriminatory basis to all families.

It would be fair. It would expand the choices available to all young parents, even employed parents, who could pursue options such as flexible hours or job-sharing without losing the benefit. And by offering new help to parents who want to spend more time with their children, it would strike a small blow for the dignity of parenthood, especially motherhood. Politically, it could be the basis of a bipartisan consensus on child care that would help millions of families.