W ith elections looming, politicians are making some big promises to garner support from American families. In March, President Biden outlined his 2025 budget, adding nearly $3 trillion in new spending. While the proposal was stuffed with policies apparently aimed at supporting families, such gross overspending will only generate more inflation and higher prices. Families deserve more thoughtful solutions.
Under the Biden administration, our country has sustained the highest levels of spending in U.S. history — with policy-makers on both sides opening their wallets and paying for pet projects we can’t afford. Meanwhile, inflation continues to rise despite the Federal Reserve’s best efforts to tamp it down.
Families, especially single-parent households, are feeling a unique amount of pressure from our abundant spending. The cost of raising a child has risen significantly as inflation pushes up the cost of child care, food, diapers, and other essentials to child rearing. The best response that the federal government has to these rising costs is more spending through expanded social-welfare programs. But more spending will only exacerbate inflation, making it even harder for families to afford their daily necessities.
Child-care costs are just one example of how inflation has impacted our country’s families. The average cost to enroll in a licensed day care is $16,692 annually — more than what some pay in college tuition. To put this in perspective, the average weekly cost of day care in 1985 was around $123. That’s compared to the weekly average of $321 parents are spending on day care today.
Across the country, there are 33 states where the cost of child care exceeds the cost of college. Inflation is largely driving this uptick in child-care costs. The cost of day care and preschool rose by 4.4 percent in March, outpacing overall inflation.
On top of exorbitant child-care costs, parents are now paying more for child-related consumer goods as well. Baby food has seen among the highest price hikes on consumer goods, rising by 6.7 percent in March. While the Consumer Price Index doesn’t track the price of diapers, the private price-tracking firm NielsenIQ reports that the cost of diapers has risen by 22 percent since 2018. It’s no wonder that nearly half of American families struggle to afford diapers. Overall, the cost to raise a child from birth to 18 has risen by nearly 30 percent since 2017, a number that will only keep growing if inflation remains out of control.
It’s not that legislators are unaware of these high costs. It’s that their only response is more inflationary spending. Earlier this year, policy-makers voted to expand the child tax credit, a decision that will cost over $1 trillion in the next ten years. And that’s not to mention the attempts to enact a federal paid family-leave program and expand nutrition programs in Biden’s $7.3 trillion budget blueprint he released in March. The inclusion of these programs is just more spending that has been stretching families’ wallets for the past four years. These are merely political moves that do nothing to address the real problem.
Monetary policy and fiscal policy are closely linked; each can affect the success or failure of the other. Raising interest rates alone can only do so much to tamp down inflation. The Fed would have had a better chance at addressing Covid-era inflation had Congress slowed spending. Instead, congressional spending made the Fed’s tools less effective — meaning more inflation, higher costs, and more families struggling to afford their necessities. It’s easy for policy-makers to ignore these economic realities. It’s much harder for a single mother trying to pay for her children’s diapers, baby food, and nanny to ignore the consequences of reckless spending.
Until legislators get serious about reducing spending, any attempts they make to reduce the costs for families are futile. Expensive social-welfare programs will only make it harder for the Fed to get inflation under control, counteracting any potential benefit these programs may have.
If policy-makers are serious about making it easier and more affordable to raise children, they should focus on fiscal discipline — not more social spending. Or at the very least, offset their spending elsewhere in the budget. We are not stronger with more spending.