As the U.S. government hurtles toward a near-certain shutdown this weekend, a different kind of high-stakes shutdown will happen tonight.
In 2021, as part of a rescue package to combat the pandemic, the U.S. government made its single largest investment in child care, committing $24 billion to fund the sector that Treasury Secretary Janet Yellen has called a textbook example of a broken market. That funding expires at midnight, pulling a lifeline from more than 220,000 providers — about 80 percent of all child care centers across the country. In crisis-prone Washington, this one has been called the “child care cliff.”
The child care shortage already costs families $78 billion per year, and businesses another $23 billion per year, according to an analysis by the nonprofit group ReadyNation. And it could get more expensive: About 30 percent of providers who took the grants said that they would fold without the funds.
“Parents simply cannot afford to pay the true cost of providing care, and providers can’t afford to earn any less,” said Daniel Hains, a managing director at the National Association for the Education of Young Children.
Politicians on both sides of the aisle say they want affordable child care. Senator John Kennedy, Republican from Louisiana, compared affordable child care to Golden Retrievers. “No fair-minded person can be opposed to it,” he said during a hearing on child care policy this month.
But there is disagreement over the best way to make the math work. Child care providers used the funding to pay bills and offer more competitive wages. Democrats have proposed committing $16 billion per year for the next five years to prop up child care providers, but with no Republican co-sponsors it’s unlikely to pass. Hains argues that other measures, like subsidizing child care costs for families, are important but won’t accomplish much if child care providers can’t stay open in the first place. “We need to do more to stand up supply,” he said.
The Chamber of Commerce favors tax credits. The business lobbying group recently endorsed a bill that would expand tax incentive programs, including those for employers that provide child care to employees and for parents who pay for child care. While the bill has bipartisan support, some experts argue it is less robust than other proposals. “If you don’t have the money to pay for child care up front, it doesn’t help you at all,” said Julie Kashen, a senior fellow at the left-leaning think tank the Century Foundation who has written extensively about child care policy.
President Biden’s “Build Back Better” plan included near universal child care for children until age 5, but the provision was cut. Biden has since taken much less ambitious steps, like signing an executive order directing federal agencies to find ways to make child care cheaper and requiring companies seeking at least $150 million of funding under the CHIPS Act to guarantee child care.
In the meantime, the child care crisis will most likely get worse. In 41 states, the average annual cost of care for two children exceeds the average annual mortgage payment. Wages remain relatively low at child care providers, and even before the pandemic, about half of Americans lived in what’s called a “child care desert,” where supply does not meet demand, according to the Center for American Progress. Some states, like New York, created new funding for child care centers ahead of the cutoff in federal rescue financial assistance, and some centers have raised their prices to compensate for lost subsidies.
The cutoff won’t necessarily result in widespread sudden shutdowns of child care facilities, but it will likely contribute to the continuing shortage of affordable services. “I think that the child care cliff is probably the wrong way to think about it,” said Chris Herbst, a professor at Arizona State University who studies the economics of child care. “I think it’s a slow roll downhill.” — Sarah Kessler
IN CASE YOU MISSED IT
Countdown to a shutdown. Republicans have so far failed to reach a deal to maintain government funding before a deadline at the end of Saturday. Failure to find a solution would lead to thousands of federal employees being furloughed or working without pay — and a whole raft of consequences for business.
Lina Khan’s F.T.C. sues Amazon. The regulator and 17 states accused the e-commerce giant of acting illegally to maintain its monopolistic position. The lawsuit is seen as a test of theories that Khan outlined in a now-famous essay she wrote as a law student, which argued that antitrust policy’s singular focus on consumer prices was ill suited to an era of dominant tech platforms.
Autoworkers expand their strikes. The United Automobile Workers union said 7,000 more of its members would walk off the job as its labor dispute entered a third week. The decision was announced after President Biden and Donald Trump both visited Michigan this week to woo blue-collar voters in a swing state.
JPMorgan Chase settles its legal cases over ties to Jeffrey Epstein. The Wall Street bank agreed to a $75 million deal with the U.S. Virgin Islands and a separate agreement with Jes Staley, a former executive, to the convicted sex offender. The bank has paid a total of $365 million to settle claims related to Epstein, who remained a client after he pleaded guilty to soliciting prostitution from a minor.
The Taylor Swift effect hits the N.F.L.
When the pop megastar Taylor Swift appeared at a Kansas City Chiefs football game last weekend to cheer on her rumored boyfriend, Travis Kelce, the team’s superstar tight end, her visit set celebrity watchers and social media wild.
But it also signaled a collaboration between two of the world’s biggest brands: Swift, whose Eras tour is set to bring in $1.4 billion this summer, and the National Football League, the world’s most profitable sports league, The Times’s Claire Moses writes.
If Swift attends the Chiefs’ game against the New York Jets this Sunday, there may be even more big spending from new football fans.
Here are the numbers from Swift’s first outing:
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Sales of Kelce’s jersey jumped nearly 400 percent after the game, according to Fanatics, the N.F.L.’s official retailer.
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Fox Sports said the game was the week’s most-watched telecast on any network, with 24.3 million viewers. The broadcast, which repeatedly cut to Swift sitting next to Kelce’s mother, dominated among female viewers ages 12 to 49.
The N.F.L. has embraced Swift’s ardent fandom. For several days, the league’s official account on X, formerly known as Twitter, had “Taylor’s Version” as its biography. (The term referred to Swift’s re-recording of her albums after her former record label sold the rights to her back catalog.)
Experts applauded it as a marketing coup. “Taylor Swift is one of the biggest brands, if not the biggest brand, in the world right now,” David Byrne, head of creative services at Thinkhouse, a youth marketing and advertising agency, told DealBook. The singer could bring “millions of fans who’d never paid much attention,” he added.
Other brands are also trying to capitalize on the moment. Heinz released a limited-edition “Ketchup and Seemingly Ranch” sauce, referring to a picture of Swift eating fried chicken with those condiments at the game.
Some conservative football fans are less excited. Some on the alt-right are wary of Swift, pointing to her support of a Democratic political candidate in 2018. (Others have been leery of Kelce, objecting to his promotion of Pfizer’s latest Covid vaccine.) “What will break Kelce’s heart first? The COVID shot or Taylor Swift?” Charlie Kirk, the founder of the conservative activist group Turning Point USA, wrote on social media.
Kelce himself is slyly alluding to the boost in his stardom. On Wednesday, he and his brother Jason, a center for the Philadelphia Eagles, acknowledged a slew of new fans on their “New Heights” podcast, including many who were new to football. (They spent a portion of the show explaining the basics of the sport, from field goals to downs.)
“I can’t believe being a Swiftie has lead me to watch a FOOTBALL podcast. Never in my wildest dreams,” one commenter posted on the show’s YouTube page.
A ‘canary in the coal mine’ for A.I.
In 2020, Kashmir Hill, a technology reporter for The Times, broke the story of Clearview AI, a secretive start-up that built a powerful facial recognition tool used by police forces around the country. Clearview AI had scraped billions of photos of ordinary web users that were published online to build the app.
The article led to a larger discussion about the proliferation of surveillance technology and how such tools should be regulated.
Kashmir talked with DealBook about her new book, “Your Face Belongs to Us: A Secretive Startup’s Quest to End Privacy as We Know It,” which chronicles Clearview AI’s rise, and how facial recognition technology is changing our lives. The interview has been condensed and edited.
Are there parallels between facial recognition and the recent rise of generative A.I.?
I very much see facial recognition technology as the canary in the coal mine for what’s going to happen with the rest of A.I. It’s a matter of a company going out on the internet and collecting a whole bunch of data and information without anyone’s consent.
There’s a bit of a cautionary tale. If you don’t set up some boundaries, then you’re going to have a radical actor like Clearview AI come along and use the technology in the most boundary-pushing way.
Facebook and Google built similar tools, but decided they were too dangerous to release. What does that tell you?
I do think that these companies are just more risk averse than a radical start-up. And so having these small generative A.I. start-ups bought by the bigger tech giants might slow down the most shocking kind of use cases of it.
Facial recognition technology is simpler. It’s just faces. But a lot of the computing and the training to make powerful algorithms was done by powerful companies, and then they open-sourced it, so the algorithms themselves became accessible.
The parallel in generative A.I. would be Meta open-sourcing its LLaMA 2 technology. That is where we’re starting to see the possible move toward an unrestrained environment for A.I. where anybody could use the Meta model that they put out and do surprising things with that technology.
Knowing what you know about facial recognition technology, does it have any place in society, or should it be banned outright?
I think the tale of facial recognition technology, and these kinds of technologies, shows that you can restrain it. You can pass laws that work, and we’ve seen it before. One of the greatest examples is recording devices and bugs, which were coming out in the 1960s. And everybody was afraid that their conversations were going to be eavesdropped on and their phones were going to be wiretapped. Congress passed a law that said, you know, you can’t secretly record people. And this is why all the surveillance cameras that are all over the United States only watch us and don’t listen to us.
Just because we like using facial recognition technology to unlock our phone or to search a local criminal database doesn’t mean that we have to usher in the most radical version of it.
Thanks for reading! We’ll see you Monday.
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