The U.S. Senate is considering a bill that would use Social Security to finance a new paid parental-leave benefit for couples with new children.
S. 3345, the Economic Security for New Parents Act, is the result of meetings between Sen. Marco Rubio (R-FL) and President Donald Trump’s daughter, Ivanka Trump, held in June 2017, discussing taxpayer-funded paid parental leave.
Under the proposal, individuals with newborn children would be able to receive Social Security payments for two months or more after the child’s birth, financing the parental leave from employment in return for agreeing to delay receiving Social Security by three to six months after reaching retirement age.
Rubio introduced the bill on August 1. It was referred to the Senate Committee on Finance for consideration.
Heading Toward Depletion
Ben Gitis, director of labor market policy at the American Action Forum, says Rubio’s bill would further deplete the funds of an already overstressed government program.
“The main challenge with this specific proposal is that its implementation coincides with the Social Security Trust Fund’s insolvency,” Gitis said. “Since 2010, Social Security has run annual cash deficits, and the Social Security Trust Funds are projected to reach depletion by 2034. At that point, all Social Security benefits will fall to only what tax revenues can support, which will be a 21 percent cut. Adding paid parental leave benefits to Social Security would accelerate trust fund depletion.”
Leave vs. Welfare
Carrie Lukas, president of the Independent Women’s Forum, says Rubio’s bill would represent a net benefit to taxpayers.
“When you think about this concept, it’s always good to look at the liability to the taxpayers as a whole,” Lukas said. “One thing that’s important is that if you don’t have paid leave, and if you’re giving birth and have to take time off of work, a share of people who don’t have paid leave end up on some other form of government assistance. Almost 17 percent of everyone who lacks paid leave, and nearly 50 percent of low-income workers who lack paid leave, end up using other forms of public assistance when they face those times and need paid leave.”
Rubio’s plan would shift people’s use of entitlement programs instead of increasing the overall amount of dependency on government, Lukas says.
“If this became law, while there would be people drawing on Social Security differently, taxpayers would likely be experiencing a reduction of expenses in things like food stamps, Medicaid, and other welfare programs,” Lukas said.
Transfer of Obligations
Gitis says the bill would ultimately stick taxpayers with a higher bill for the welfare state, by refilling Social Security’s depleted funds with money from the U.S. Treasury.
“The Rubio bill includes a provision to hold Social Security harmless from this effect by including authority for a Treasury general fund transfer to Social Security Trust Funds,” Gitis said. “That Treasury general-fund transfer would result in an additional increase in government debt—and essentially transfers that incremental cost from Social Security beneficiaries, who would see their benefits cut sooner from a more rapid depletion of Trust Funds—to taxpayers generally.”
Suggests Means Testing
Many private-sector employees already receive paid leave as a benefit, and a less universal government program would be less economically disruptive, Gitis says.
“Roughly 60 percent of those who take parental leave are already paid by employers,” Gitis said. “This doesn’t suggest that a universal benefit is needed. At best, a universal benefit would be a redundant use of resources for many. At worst, it would cause many people to lose employer-paid leave benefits.
“However, it also is clear low-income workers are the ones who lack access to virtually any type of paid leave from their employers,” Gitis said. “Thus, a policy that provides paid leave benefits specifically to low-income workers would be the most direct and cost-effective way to expand access to paid parental leave in the United States.”
Sees It As a Loan
Lukas says using Social Security to fund a paid-leave mandate is like lending money to people.
“As a conservative, I think that this is a really important distinction: if we create a program where you are giving people access to what amounts to a loan, on benefits that they are earning and due from the government, that’s better,” Lukas said. “We would rather have people do that than have them go on food stamps, welfare, or unemployment.”