Could Social Security be used to pay for a national family-leave program, at no cost to the taxpayer? Bloomberg View columnists Ramesh Ponnuru and Michael R. Strain discussed the idea in two recent columns, and reached different conclusions.
Ponnuru said the proposal qualified as a real reform, since employees who took family leave would be agreeing to delay the start of their Social Security checks to make up the difference in cost. Strain replied that it was a bad precedent to make future claims on Social Security, even if the costs were pitched as revenue-neutral. We asked them to discuss what their contrasting views say about the future of American entitlements.
Ramesh Ponnuru: Michael and I have a number of disagreements about this paid-leave proposal, and it seems only sporting for me to begin with one where he scores a point against me. I had argued that this proposal compared favorably to previous ideas for financing paid leave. Making companies pay for new parents’ leave, I said, would give companies an incentive not to hire or promote women of child-bearing age. (There is some evidence that companies act on this incentive in the presence of such policies.) I said, incautiously, that letting parents finance leave by borrowing from their future Social Security benefits would not create that incentive.
Michael pounces on this point, noting that if new parents have access to ready financing for leave, more mothers will take it — and therefore companies will both face new costs in the form of disruption and have an incentive to avoid those costs. This is an argument against letting new parents, and especially new mothers, take time off. Nearly any measure that improves their ability to take time off would have this effect. (I say “nearly” because a requirement that mothers and fathers both take the same amount of time off might avoid it, albeit at the cost of significant coercion.)
I concede that Michael has identified an effect I ignored. But I question its magnitude. This policy would certainly impose a much smaller cost on employers, and do less to distort personnel decisions, than a policy that made companies pay for leave themselves. The effect would be further limited by the new parents’ expectation that they would be giving up future benefits in return for their leave time. This proposal, in other words, creates an incentive for restraint.
But of course the claim that the policy includes a built-in restraint assumes that policymakers can credibly promise to make people who use some of their retirement benefits a few decades early actually give them up in the future. That assumption too is a point of contention between us.
Strain: I’m glad to turn to that issue, because I think it is critical. My skepticism that they will stems from my view that Social Security will likely look a lot different 30 years from now. For example, it might be means-tested, or it might be relatively less generous to retirees who were high earners. When changing the bones of Social Security, will Congress ensure that recipients of early benefits pay them back? Given that many who will take early benefits will likely be low-income women — over 70% of college-educated workers already have access to paid leave — I doubt it.