Social Security Should Not Be a Piggy Bank for Paid Leave

It’s hard to know how much the Rubio plan would cost, in part because of significant uncertainty around how many workers would sign up for the parental-leave benefit. A similar plan has been analyzed by the Urban Institute, which finds costs of $4.9 billion in 2019 and $9.2 billion by 2025. The bottom line is that reasonable cuts to Social Security borne most heavily by upper-income households could easily finance a federal paid-leave benefit, while also significantly reducing the federal budget deficit, which should be a goal of any Social Security reform effort.

That’s reform. Regarding flexibility, it is odd to congratulate this bill for that if the only expense to which early Social Security benefits can be applied is parental leave. Furthermore, it’s not clear why paid leave should be at the top of the list. Why not allow early Social Security benefits for other discrete, infrequent life events? College tuition and home purchases immediately come to mind.

A 2014 report by President Barack Obama’s Council of Economic Advisers found that 40% of working women report access to some form of paid leave following the birth of a child, and that this access increases with income. The more workers who receive the benefit from their employers, the less value offered by the bill’s (so-described) flexibility.

One reason not to allow early benefits for tuition and home purchases — and to stick with only paid leave — is to help ensure that spending through the Social Security system actually does not increase, a key promise of the plan. But if the Rubio bill were improved by including actual cuts to Social Security spending, then this concern is no longer operative. Hence my second suggestion: Don’t restrict new spending to paid parental leave.

One way to put this suggestion into effect would be to couple Social Security cuts with an expanded child tax credit, perhaps by making the credit larger in the year a household welcomes a new child. Lower-income households should get a relatively larger expansion. This money could be spent to finance a few months away from work — or, if the parents prefer, on any of the many expenses facing new parents.

This package — Social Security cuts and an expanded child credit — is much more attractive than the Rubio bill. It reduces federal spending, and it doesn’t expand the government’s scope. It actively reorients federal spending away from the elderly and toward children. It does not rely on spending cuts decades from now to finance new spending today, as the Rubio bill does.

And rather than deciding that they should direct their new resources to finance paid leave, it offers new parents real flexibility by allowing them to decide to spend on whatever they choose. Because what’s right for my family may not be what’s right for yours.

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Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy.”