How much do you need this job? Could you find another babysitting gig?
I know in some areas it is hard to find a good babysitter - so they should appreciate you more.
If you think you can easily find another job, I would be polite, firm and honest with them. That you feel uncomfortable for them monitoring your breaks. That every employee is entitled to have bathroom breaks and other breaks without some one watching them or monitoring them. And to be honest it is none of their business what you do in the bathroom. Tell them overall this makes you feel uncomfortable to the point you are considering employment elsewhere (now only say that if you truly feel you can get another gig or that you do not need it).
Really you are a human being and should be treated that way - outside of while you are caring for their child - they should not be even watching you.