Advertisement

The Republican proposal for paid family leave is a sham that would wreck your retirement

The Republican proposal for paid family leave is a sham that would wreck your retirement
Sen. Joni Ernst, R-Iowa, has a plan to let you raid your Social Security to pay for parental leave. Don’t buy it. (Jim Lo Scalzo / EPA-EFE/REX)

Republican Sens. Joni Ernst of Iowa and Mike Lee of Utah have been beating the drums for their “Cradle Act,” a proposal to institute up to 12 weeks of paid leave for new parents.

They’ve been draping their proposal in all sorts of uplifting words about the virtues of family leave — the bonding of mothers, fathers and offspring, the long-term benefits for children and so on.

Advertisement

But they’ve concealed the chief drawbacks of their plan, which are the same features that make it palatable to a GOP constituency: It would undermine Social Security, force seniors to work longer, and carry hidden costs that wouldn’t be evident until it’s too late.

Diverting Social Security to cover nonretirement needs could significantly erode retirement security.


Share quote & link

We analyzed this plan last April, when it was being pushed by Ivanka Trump and Sen. Marco Rubio, R-Fla., while Ernst and Lee were standing by in the wings. It was a dumb, even dangerous idea then, and that hasn’t changed. It’s a poisoned chalice, and you shouldn’t drink from it.

The GOP plan contrasts sharply with a Democratic plan offered by Rep. Rosa DeLauro of Connecticut and Sen. Kirsten Gillibrand of New York. Their Family and Medical Leave Act would extend benefits not only to new parents but to workers facing serious medical conditions or the necessity of caring for a family member. It would be funded by payroll contributions of .4 percent of wages — two cents per $10 of wages — split between employers and employees.

Moreover, it evades the question of why Social Security needs to be dragged into a program of this sort at all. More on that in a moment.

The Urban Institute, which took a close look at the GOP proposal last year, found that it would raise Social Security’s annual costs, accelerate its fiscal problems, and open the door to other raids that “could undermine Social Security’s ability to ensure basic retirement security for all Americans.”

Indeed, the Republican proposals depend on Americans not understanding what Social Security really is about.

Social Security “was designed as a social insurance program to provide basic retirement income and insure people against the financial risks associated with becoming widowed, orphaned, or disabled,” the Urban Institute observed. “Allowing people to borrow against their future retirement benefits to meet needs at younger ages would fundamentally change the program from a social insurance program to a forced saving program…. Diverting Social Security to cover nonretirement needs could significantly erode retirement security.”

The proponents of raiding Social Security for family leave tend to gloss over the consequences for real-world recipients. Ernst and Lee acknowledge that every week of paid family leave would require two weeks’ delay in taking Social Security benefits at retirement — the full 12 weeks, in other words, would mean a deferral of nearly six months in retirement benefits.

But the Urban Institute noted that delaying Social Security translates into a real financial loss; its report reckoned that parents who took a single 12-week leave would lose about 3% of their future retirement benefits, and those who took four leaves would lose 10%.

The GOP plan to fund parental leave through Social Security would harm the system's finances because repayments via retirement benefits (blue line) would lag well behind outlays for parents (yellow), producing costs (black).
The GOP plan to fund parental leave through Social Security would harm the system's finances because repayments via retirement benefits (blue line) would lag well behind outlays for parents (yellow), producing costs (black). (Urban Institute)

The consequences of this reduction might be especially severe for mothers, in part because they’re likelier than men to take parental leave from their jobs, so they’re likelier to lose more retirement benefits. Women already tend to be disadvantaged by the Social Security system compared to men; among other things, they don’t get any Social Security work credits for the years they spend as caregivers in the home.

The leave proposal would undermine Social Security’s fiscal condition, especially in the near term. That’s because the system would pay out benefits now but not be repaid for 30 years or so. In 2050, for example, the system would pay out an estimated $4 billion in benefits but receive only $2 billion in repayments.

The hidden agenda of this proposal is to remake Social Security so it’s less useful for retirees. Carrie Lukas, president of the Independent Women’s Forum, a Koch-connected organization that has been pushing this plan, gave the game away in a February 2018 post at the right-wing Federalist website.

She noted that the proposal might end up “requiring people to give up retirement benefits of greater value than the parental leave benefits they use.” Why would that be a good thing? Because “public opinion will undergo a sea change to embrace personal accounts or other substantial Social Security reforms.” That’s part of the right-wing playbook, in which “Social Security reforms” typically mean lower benefits and the shift of more cost and risk to the working class.

The United States is the only industrialized country — and one of the only three on Earth — without government-paid family leave covering the first weeks of parenthood.

Advertisement

The Urban Institute estimated that a parental leave program would cost between $7.2 billion and $15 billion in 2025, based on participation estimates ranging from 24% to 50% of new parents. Is this really outside the financial capability of the richest nation on the planet, with a gross domestic product of some $20 trillion? Is it not a better investment then sending more than $1.5 trillion over the next 10 year to the top 1% of U.S. earners via a massively unnecessary tax cut?

Here’s what would convince us that Ernst and Lee are serious about providing paid parental leave to American families: Let’s see them propose taking back some of that tax cut to fund it, rather than forcing families to raid their own retirement resources.

Advertisement
Advertisement