May 25, 2021

At Hearing, Treasury Nominees Agree with Warren on Need for Child Care Investments and IRS Enforcement

Washington, DC - At today's Senate Finance Committee nomination hearing, United States Senator Elizabeth Warren (D-Mass.) highlighted the critical need to invest in our child care system as the country heads towards a post-pandemic economic recovery and emphasized that her tax proposals, the Restoring the IRS Act, the wealth tax and real corporate profits tax, could more than pay for child care investments.

At the hearing, Benjamin Harris, nominee to be Assistant Secretary of the Treasury for Economic Policy, agreed with Senator Warren about the critical need for robust child care to support economic recovery efforts. Mr. Harris said, "I agree that lack of child care was a massive concern prior to the pandemic. It is a continued concern after the pandemic, and women's labor force participation, as you mentioned, Senator, is a critical aspect of long term growth. And without a solution particularly on the supply side for child care, on the affordability of child care, I don't think we'll see the levels of participation that we need in order to see the levels of growth that we want."

During her exchange with Professor Lily L. Batchelder, nominee to be Assistant Secretary of the Treasury for Tax Policy, Senator Warren highlighted the need for her tax proposals such as the Restoring the IRS Act, which would give the IRS the resources to make sure that the wealthy and giant corporations pay what they already owe. When asked if we could fund transformative investments in child care with proposals such as Senator Warren's Restoring the IRS Act, Professor Batchelder said, "Yes, Senator. We could raise a large amount of revenue by reducing the tax gap and focusing that reduction on high net worth individuals and large corporations. The President has put forth a proposal that Treasury estimated would raise $700 billion in the first decade and $1.5 trillion in the following decade. And there are reasons to believe this might be an underestimate." Senator Warren and her colleagues have called for investing $700 billion in child care and early education over the next ten years.

Transcript: "Hearing to Consider the Pending Nominations of Lily Lawrence Batchelder to be an Assistant Secretary of the Treasury, Benjamin Harris to be an Assistant Secretary of the Treasury, J. Nellie Liang to be an Under Secretary of the Treasury, and Jonathan Davidson to be Deputy Under Secretary of the Treasury"
U.S. Senate Finance Committe
Tuesday, May 25, 2021

Senator Warren: I'm here. Thank you, Mr. Chairman.

Chairman Wyden: Great.

Senator Warren: Thank you. So congratulations to all of our nominees. I want to talk about how this economic crisis has affected women and families. This year, women's workforce participation hit its lowest levels since 1988. And 26% of women who became unemployed this year said that it was due to a lack of child care.

Mr. Harris, when you look at the data, do you agree that lack of child care is one factor that is now holding our economy back?

Benjamin Harris: I agree that yes, I agree that lack of child care was a massive concern prior to the pandemic. It is a continued concern after the pandemic and women's labor force participation as you mentioned Senator is a critical aspect of long term growth. And without a solution particularly on the supply side for child care, on affordability of child care, I don't think we'll see the levels of participation that we need in order to see the levels of growth that we want.

Senator Warren: Thank you, Mr. Harris.

In fact you were right when you referred it, it was already a problem before the pandemic. You know, this year the pandemic showed us what working families have always known: child care is critical infrastructure. And yet for generations now, we've under-invested in our babies and we have left parents to try to work it out on their own.

Even before the pandemic, half of all Americans lived in "child care deserts," which are areas where there aren't enough licensed child care slots for every child who needs one. And COVID only made this worse - thousands of child care providers have been forced to close their doors.

At the same time, child care workers - mostly women and disproportionately women of color - are being paid poverty-level wages.

So Mr. Harris let me ask you this, do you support a robust federal investment in child care to support families and to ensure that these caregiving jobs are good, middle-class dependable jobs?

Mr. Harris: Senator, I do support robust investment in child care for a few reasons including some of the ones I just mentioned. But it's also, it's not just about getting families and particularly female workers back in the labor market, it's also about making lives easier for working families. It doesn't have to be so hard.You mentioned the workforce issue, I believe a typical wage, I mentioned this earlier in my testimony, the typical wage for a child care worker is $12.25. That's inconsistent with their value towards children, and it's inconsistent with what we know about investment in child care and long run productivity. So I'm absolutely supportive of such an effort.

Senator Warren: Good. Well thank you, Mr. Harris. I appreciate it.

You know, I'm glad President Biden has put this issue front and center. But we need enough federal funding to actually solve the problem - not just nibble around the edges on this.

And that means a $700 billion investment to raise the wages of every child care worker and guarantee affordable care for every family.

We also need to provide enough high-quality spots for every child. And that's why I'm introducing the Building Child Care for a Better Future Act this week with Chairman Wyden. This bill increases the Child Care Entitlement to States to $10 billion per year. And it also creates a new $5 billion per year supply-building program to help child care providers open, get licensed, train and hire skilled staff, and provide high-quality care.

So, let me ask you Professor Batchelder, could we fund transformative investments in child care the kind we're talking about here simply by giving the IRS the resources to make sure that the wealthy and giant corporations are paying the taxes that they actually already owe?

Lily L. Batchelder: Yes, Senator. We could raise a large amount of revenue by reducing the tax gap and focusing that reduction on high net worth individuals and large corporations. The President has put forth a proposal that Treasury estimated would raise $700 billion in the first decade and $1.5 trillion in the following decade. And there are reasons to believe this might be an underestimate. It does not include the effects of upgrading IT systems or improving taxpayer services. And it also does not include the indirect effects of additional enforcement on voluntary compliance. There's a lot of evidence that people comply more when enforcement is improved even if they aren't personally audited. And one statistic that amazed me in that report and I had to write this down because there were so many zeros was that only 0.00004% of partnerships are audited. So just to talk about one industry that I know, there are some large law firms with thousands of attorneys, partners earn over a million of dollars a year, and I find it hard to believe that if one knows your audit rate is 0.00004% that that would not affect voluntary compliance.

Senator Warren: Well, thank you, Professor Batchelder. This is why yesterday I introduced the Restoring the IRS Act. This bill provides mandatory funding for the IRS to ensure that it has the resources it needs to go after wealthy tax cheats including the partnerships that you mentioned. Together with my wealth tax and real corporate profits tax, we could raise trillions of dollars without increasing the taxes on 99.9% of Americans by a single penny.

These three proposals together generate more than enough revenue to pay every cent of the Building Child Care for a Better Future Act, plus every cent of investments in child care in President Biden's American Jobs Plan and American Families Plan, and every cent of all the other critical investments in families and workers in those two plans combined. So let's not waste this historic opportunity to invest in American families.

Thank you, Mr. Chairman.

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