Can better child care help women make more money years after their kids are big, or even convince workers to have more children in the first place?
Those are some of the conclusions economists have reached from studying the history of subsidized child-care plans like the one proposed by Democratic presidential candidate Sen. Elizabeth Warren of Massachusetts.
Her sweeping proposal calls for providing licensed early childhood care for every family in the country at a cost of no more than 7 percent of that family's income. For families making up to 200 percent of the federal poverty level ($51,000 for a family of four), child care would be free. Moody's estimates 12 million children will be eligible.
Warren's Universal Child Care and Early Learning Act is certain to change lots about the federal budget. It has an estimated cost of $70 billion a year — or $700 billion over a decade. That's a big number, but it does represent only one-third of 1 percent of GDP, and Warren has cited estimates that the tax on the ultra-wealthy she would implement to pay for the program would generate near-$3 trillion in revenue over a decade.
An analysis by Moody's Analytics says it may be deficit-neutral — raising as much money as it costs to run — since Warren proposes to pay for it with the annual tax on fortunes bigger than $50 million. Warren has described the levy on the ultra-rich as a "small tax" and has cited research from economists at the University of California who proposed a 2 percent tax on net worth above $50 million and an additional 1 percent tax on net worth above $1 billion.