How Democrats Inflated Their National Day Care Fraud Bubble In Plain Sight
A brief macroeconomic history of a very obvious scandal
According to the 2024 annual “Child Care in America: Price & Supply” report from ChildCareAware.org, the cost of child care rose 29 percent from 2020 to 2024 in the United States. Data from the Bureau of Labor Statistics seems to confirm this (see here and here, I let Grok do the number-crunching for me).
During that same period, the Consumer Price Index for All Urban Consumers (CPI-U) says that general inflation rose by ~22 percent. Bottom line: the cost of child care rose 7 points faster than the rate of inflation. Meanwhile, however, American fertility declined from 2019-2024, so there was no surge of new children to fill all these newly-opened child care centers. More money was spent on fewer toddlers.
Obvious questions arise. How did all these new child care businesses open if there was no new market demand? The American Rescue Plan Act (ARPA), passed in the pandemonium of 2021, pumped an extra $13 billion into the child care industry on a “temporary” basis over the next four years, roughly the same ratio compared to baseline spending as child care versus inflation. Huh.
Arguably, extra spending was initially necessary when day care centers were shut down for the covid emergency. Once they reopened, however, that money subsidized providers, subsidized wages, and subsidized family copays, ostensibly to expand child care access, with the 50 states left to manage the spending themselves, for years. We have seen how Minnesota managed themselves. For years. And it is the tip of a proverbial iceberg.
Coming in at $1.9 trillion, ARPA was a Democratic initiative under Biden, and so inflationary that Axios even blamed it for Kamala Harris’s election loss. Meanwhile, however, progressive policy wonks continued to praise ARPA for achieving social justice ends. It has become yet another sacred policy cow of the left.
Which brings us to the strange phenomenon of Donald Trump cutting off federal child care funding to the state of Minnesota. For while legitimate business owners are complaining, there has not been a corresponding wave of interviews with parents whose children are now denied child care because a Somali-owned business has shut down. Either journalists are falling down on the job, or those disappointed parents do not verifiably exist because the businesses were doing fraud the whole time.
Cooperation to discover the truth is not forthcoming. On the contrary, the ‘Somali community’ seems mainly interested in preventing federal authorities from doing any of the rudimentary ground work to investigate their various frauds. Two weeks ago, Dr. Mehmet Oz and Jim O’Neill, both Trump HHS appointees, told Liz Collin of Alpha News about their experience being chased out of buildings and followed by vehicles as they visited suspicious businesses.
At some point, fraudsters seem to have figured out that running a scam day care center (“Quality Learing Center”) was virtually risk-free in Minnesota, as well as other states with permissive regulatory environments, and the scam spread quickly through immigrant communities. Federal vouchers for nonexistent children were never checked against nonexistent records of attendance.
Subsidized nonprofit ‘low income’ day cares quickly threatened to crowd private day care operators out of the labor market unless they raised wages, raising consumer prices. American families received the double burden of fraud on the taxpayer and increased costs for child care — the extra price inflation.
Minnesota is hardly the only state where this has been happening and is still happening. In fact, the fraud bubble is probably much bigger in Gavin Newsom’s California, which is why Democrats want to have a fight in Minnesota, and make Minneapolis about something, anything else other than massive fraud on the taxpayer.
It would be fairly simple to fix this, for example by simply giving state inspectors genuine enforcement powers to shut down centers that never seem to have kids in them. Democrats like Newsom consistently make different choices. Blue states choose not to fix this, while red states where it is happening have Republicans moving to fix it, now.
The contrast is sharp. Abigail Spanberger ran for governor of Virginia on a promise to lower the cost of child care and recalled her promise on the first day in office. Her appointment of Jessica Looman as secretary of labor supports this policy move. The new Democratic legislative majority wants to increase state subsidies and make them less transparent than ever. They are inflating a new fraud bubble in plain sight.
Virginia parents were at the state house lobbying for cheaper child care, especially the kind of autism services that also figure prominently in the Somali fraud scandal. They should however expect the actions that Democrats take will increase the overall cost of care. Basic economics says that without Keynesian slack (idle facilities or labor waiting for investment), pumping money into a market will produce inflation, especially when the aggregate demand for that market (fertility) is shrinking.
Teachers’ unions have also been a key lobbying force behind this fraud bubble. Not by coincidence, unionized teachers have been a prominent contingent in the Minnesota anti-ICE protests. It is no secret that the teachers’ unions are a powerful lobby in the Democratic Party as well. Thus the emphasis on continuing the fraud unabated, and unashamed, so that their Marxist revolutionary project can advance unimpeded.
Until the tentative deal with the White House this week, Democrats and their nonprofit-industrial complex seemed committed to distracting chaos in Minnesota. They were determined to take our eyes off the problem even if they had to set America on fire.
The last thing Democrats want between now and November is for Ameircans to focus on the fraud bubbles inflated in California, Massachusetts, Washington state, Oregon, and Maine. They will inflate the bubble again in Virginia before our eyes and gaslight us the whole time while their media fondlers speak of nothing but ICE shootings. They speak of justice, but they want to take back power so they can get their revenge and keep their fraud.