As if Biden’s plan for paid family leave was not bad enough, he is also proposing a two-year universal preschool “reform” that will require big, new tax hikes at the state level.
The Biden budget for fiscal year 2022 proposes “universal access to high-quality preschool to all three- and four-year-olds, led by a well-trained and well-compensated workforce”. It is essential to take this proposed entitlement program for what it is spelled out to be, with the key term being “universal”.
Americans in general are not familiar with European welfare-state terminology, but since the Biden administration is working hard to complete the European-style welfare state we have, we must also understand their intentions in exactly that context. Therefore, “universal” means that:
- it will cover every child in the targeted age group; and
- it will become mandatory.
At this stage, there is no mention from the Biden administration of making preschool mandatory. This would formally look like an expansion of the program, and it would require them to come forth with the true cost of the program. However, the fact that the term “universal” is not spelled out to mean “mandatory for all” is in itself no reason to assume that it won’t happen. There is this conventional wisdom among conservatives that the welfare state is somehow a static project, not driven to expand over time. It is only when one looks at the ideological architecture – and the international history of similarly socialist welfare states – that one sees the underlying trajectory of structural growth.
What this means, plain and simple, is that once the preschool program is established, it will grow and expand – just like Medicaid has. And just like Medicaid back in the day, the now-proposed preschool program starts off as a limited offering with only a minor fiscal footprint. This is a tried-and-true tactic from the left: it is always easier to lure Republicans into accepting a new entitlement program if it looks small to begin with. People on the right side of the aisle are, namely, prone to believing that every new entitlement program will always be small, that government never expands, and that when it does all you need to do is cut taxes.
In the real world, where taxpayers live and where the left builds its socialist welfare state one entitlement program at a time, we have to assess the cost for every entitlement program based on the promises it makes. The goal of the left is, namely, always to expand their spending programs up to the point where they deliver on every single one of their promises. Therefore, when we want to see the likely cost of this program, we have to assume that all children aged 3-4 will be enrolled in the Biden administration’s proposed “universal” preschool.
The total amount of kids affected by this program depends, of course, on annual birthrates. Recently, births have dipped below four million, but assuming that they will climb again as memories of the 2020 economic shutdown fade into history, it is reasonable to assume that over time a total of eight million children will enroll in this preschool program.
What would the cost be to provide preschool to eight million kids? There is a great deal of variety in different assessments (none of which is included in the president’s budget) but a conservative estimate would place the cost at 50 percent of the cost of putting one child through public K-12 education. Based on Department of Education data we can expect the average K-12 student to cost taxpayers $14,784 in 2022.
If eight million children enrolled in preschool that year, and if we divide the K-12 per-student number by half, we get a total cost of $59.1 billion for this preschool program.
For 2022 the Biden administration has proposed $302 million in appropriations toward universal preschooling. In other words, one half of one percent of the maximum entitlement value that their reform comes with. This is, of course, due to the fact that the administration envisions a gradual phase-in of the preschool program, with full capacity being reached only several years into the future. At the same time, the Biden budget’s own ten-year outlook does not even come close to providing the full cost of a truly universal preschool program: by 2031 the Biden administration’s own proposed appropriations would only cover 38.4 percent of the expected annual cost of universal preschool.
In short: unless the administration expects only marginal enrollment in universal preschool, there is a major gap in the budget. Since the preschool appropriations are supposed to be paid out as federal aid to states, the burden for filling this gap will fall on state legislators.
It is entirely unclear what this would mean over time. The Biden budget offers no formula whatsoever for how the preschool cost be split between the federal government and the states. Since there is also no estimate of a program phase-in, our only reasonable approach to estimating the cost for the states is to run a simple simulation based on full enrollment of eight million three- and four-year-olds. Assuming that:
- The number of kids enrolled increases by one half of one percent per year;
- The per capita cost is half of that for K-12;
- Costs increase by 3.88 percent per year (equal to average annual K-12 cost increases over the past several years); and
- The increases in preschool funding happen as proposed in the Biden budget;
we get the following state share of costs over the past ten years (with blue representing total costs and green the state share):
It is, again, relevant to point out that this entitlement program would start in a fractional format and gradually expand until it is truly universal. As a result, initially the cost for the states would come in a lot lower. However, it is unlikely that the Biden budget paints an accurate picture of the phase-in they have in mind. To see why, suppose the program will split the cost 50/50 between the federal government and the states. Suppose, furthermore, that this formula holds over time and that the per-kid cost trajectory is the same as in Figure 1. By 2031, the “universal” program would still only cover a bit over 38 percent of all kids in the targeted age groups.
In other words, while the cost trajectory in Figure 1 is exaggerated, the Biden budget clearly under-estimates the true cost of its preschool program. The total cost will probably not reach the proportions in Figure 1 in the first few years – though that is likely to happen in the later half of this decade – but it is also likely that Figure 1 is closer to the actual cost trajectory for the whole ten-year period than anything we can derive from the Biden budget.
So far, we have examined two entitlement programs in the Biden budget and we have ended up with annual costs that are hundred of billions of dollars over what the president himself admits to. What else is hidden in there?