Aid+for+Child+Care+Drops+When+Its+Needed+Most+by+Daryl

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= =Aid for Child Care Drops When It Is Needed Most=

=SOURCE:= http://www.nytimes.com/2011/12/14/us/child-care-subsidies-drop-when-families-need-them-most.html?pagewanted=all

=DATE EXTRACT WAS WRITTEN:= December 13, 2011

=DATE CURRENT EVENT WAS WRITTEN:= March 25, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= This article talks about how the subsidy given for child care to help low income women has fallen because the states were under pressure to cut their budgets and federal stimulus money was gone. In the past years, low-income women relied greatly on the subsidy given to childcare because they had to spend most of their time at work to support their family. Linda Saterfield, vice chairwoman of the National Association of State Child Care Administrators, who oversees childcare for the state of Illinois, stated, “We’re being expected to do more with less.” This shows that the demand for childcare has increased (doubled in Pennsylvania) but the subsidy has decreased. This decreases the supply because the additional money given to childcare services decreased, which creates a lrger excess demand than before. The article states that measures had been devised but it is not being passed, which leaves the excess demand as it is. The government also tired solutions like cutting subsidies from other services, but that also met a dead end and there is really no choice but to cut down the subsidies given to childcare.

=VOCABULARY TERMS AND DEFINITIONS:=
 * Subsidy: An amount of money paid by the government to a firm, per unit of output, with the main objectives being to lower price to increase consumption, to guarantee supply of necessary goods, and to protect home industry.
 * Demand: The willingness and ability of a consumer to purchase a quantity of a good or service at all prices at any given time.
 * Excess Demand: Excess of the quantity demanded of good or service, at a given price, over its supply at that price

=DIAGRAMS:=

This graph shows the decrease in supply of the childcare service due to the cut of subsidy and the increase in demand. As shown in the graph, due to the shifts of the curves, there is an excess demand. Also, because the demand is relatively elastic, the price goes up a lot even with the decrease in supply.

=EVALUATION:= In this article, the government has cut the subsidy for childcare due to pressure to cut their budgets and federal stimulus money was gone. This cut in subsidy for childcare can be view as both good and bad. First of all, I want to talk about the good side. This method can be viewed as good on the government’s side. The government is having economic problems, as its budget is very shaky. By cutting down on the subsidy, the government budget will increase and will become more stable. Also, if we look at this in the long run, the government will be able to recover from its current economic problems and will be able to give subsidies to childcare more. Although there are good sides to this, there is obviously a bad side to this. The negative side is that due to this cut in subsidy, the low paid women will suffer more because they would be expected to do more with less. Because the demand has increased while the supply decreased, the effect will be more than expected. Also, because childcare is an essential good, or a necessity good, the demand for this kind of service is relatively inelastic. This suggests that the increase in demand and decrease in supply will have a greater impact on the price, raising it by a lot.