Over Labor Day weekend, amidst Americans’ attempts to enjoy the waning days of summer, The New York Times published an article titled “Trump Officials Draft Plan to Pay At-Home Parents, Using Funds for Working Ones.” Per the story, the administration’s proposal would use funds from the Child Care and Development Fund (CCDF), which subsidizes daycare for working parents, to pay stay-at-home parents for their at-home childcare.
My family could potentially qualify for the payment, but my wife and I understand that this program could jeopardize our children’s future. While families may find these cash transfers helpful in the short-term, the cost of these transfers could exacerbate the US’s already fiscally unstable situation.
What This Proposal Could Look Like
According to the Times article, the Trump administration is drafting a rule that would let some married households use CCDF funds to support a parent caring for their child at home. The other spouse would have to work at least 35 hours per week, and benefits would still be income-limited. Eligibility and payment terms would depend on final policy.
The CCDF currently funds “center-based childcare providers” (daycares) as well as family childcare providers and in-home childcare, so long as these providers are licensed and meet state and local requirements applicable for professional caregivers. The proposed change would make a qualifying child’s own parent eligible to receive the same support.
Outside of these scant details, little is known about the proposal. A similar policy was, however, proposed in a Heritage Foundation report last January. Instead of using CCDF funds, the report proposes a separate Home Childcare Equalization credit. The hypothetical tax credit would add up to $2,000 per eligible child under five to Heritage’s proposed Family and Marriage credit. Marriage and earned income would be required, and benefits received through the CCDF (as well as the child and dependent care tax credit) would reduce the proposed credits dollar for dollar.
Heritage estimates that its two credits together would cost about $188.7 billion over ten years, and proposes other spending cuts to offset part of the cost. The new proposal will have its own budget consequences. Redirecting existing funds and creating additional benefits require different fiscal assessments.
Greater Parental Choice, But Minimal Impact on Fertility
Care provided by a parent has an economic cost even when no bill arrives. When one parent stays home, that parent likely gives up earnings as well as career advancement. For most, the trade-off is worthwhile. Interviews of highly educated mothers who choose to be stay-at-home parents to many children found these women “see maternity as a high-risk and high-reward endeavor, an ambitious-but-potentially-thrilling life project.” Furthermore, research on mothers’ wellbeing strengthens the case for parental choice. A study of more than 2,000 mothers linked better wellbeing to employment arrangements that matched mothers’ preferences. A separate longitudinal study found elevated depressive symptoms among unemployed mothers only when they wanted paid work. Offering greater choice for parents among existing funds may provide a silver lining: parents will be better able to pursue the career-family dynamic that best suits their needs and goals.
That silver lining, however, must be taken into context. While not stated explicitly, this CCDF proposal is part of the administration’s broader efforts to combat declining birthrates. In May, the White House grouped support for stay-at-home parents with fertility benefits, the Child Tax Credits, and Trump Accounts. An IVF announcement last February explicitly cited declining fertility and the goal of “more babies and expanding American families.” That broader demographic ambition makes the likely impact on fertility relevant, even if the forthcoming CCDF proposal does not mention it.
Claims that this change (or other fiscal stimulus programs) can usher in a baby boom deserve skepticism. An OECD review finds that cash benefits and tax incentives generally produce modest, sometimes temporary fertility increases. As my colleague Jeff Degner and I noted last January, the Heritage report rightfully admits: “While other nations have tried to reverse declining birthrates through financially generous family policies, none has succeeded in restoring fertility to replacement levels. This demonstrates that government spending alone does not ensure demographic success.”
The evidence does not establish whether this proposal would increase fertility. Even if it did produce a temporary increase in births, that could partly reflect families having children sooner without increasing their eventual family size.
Greater choice can be assessed on its own merits; lawmakers should not count on a large fertility response to justify the expense.
The Best Inheritance? Fiscal Discipline and Prosperity
Broader eligibility does not automatically require more federal spending, but, with a fixed budget, more applicants could mean greater competition for smaller benefits. Families excluded from parental care payments could press for inclusion, while existing recipients seek protection from funding reductions. Lawmakers often find it easier to increase spending than to choose among competing claims.
Funding decisions about this proposal take place against a federal debt burden that has already passed $40 trillion. In its February outlook, the Congressional Budget Office projected that debt held by the public would rise from 101 percent of gross domestic product in 2026 to 120 percent by 2036. Existing commitments already put borrowing costs on an unsustainable path.
Persistent borrowing can absorb savings that would otherwise finance private investment, weakening the growth that supports future wages. CBO’s analysis of delayed debt stabilization finds that waiting to adjust increases the eventual shock and imposes greater burdens on younger generations. Those consequences belong in any discussion of helping children.
What really matters for family stability is sustained spending restraint that reduces deficits and makes room for lasting tax relief. Parents, my wife and I included, could keep more of what we earn and decide how to use it. Fiscal discipline must accompany the promises of lower taxes. Additionally, tackling inflation, the most corrosive anti-family force of all, can help make life more affordable.
Any CCDF reform should explain its funding limit and provide a workable transition for current recipients. Those standards should apply to the benefits my household may receive as firmly as to programs serving other Americans.
My wife and I would rather Washington make difficult spending choices while we can help bear the adjustment. Our children will live with the consequences of our choices now long after any parental care payments end. Lasting prosperity is the inheritance most worthy of preserving.
