What You Need to Know
- The New Parents Act would, essentially, let parents take an advance on their Social Security benefits to fund a three-month leave.
- Fellows at the Mercatus Center, a libertarian group, argue that the plan is built on faulty assumptions.
- Advocates for expanding Social Security don't like the bill, either.
Should new parents be allowed to tap Social Security to fund parental leave benefits?
Sens. Marco Rubio, R-Fla., and Mitt Romney, R-Utah, reintroduced last September the New Parents Act, legislation that would allow new parents up to three months of parental leave benefits, drawing the funds from their Social Security retirement benefits.
The debate over parental leave benefits has heated up since Roe v. Wade was overturned in June. Rubio has rolled the family-leave-for-Social-Security benefits provision of the New Parents Act into a broader bill — the Providing for Life Act.
The New Parents Act has drawn opposition from across the political spectrum.
“Unfortunately, the idea that the U.S. government can provide generous new benefits to Americans today while successfully financing this spending decades down the road is implausible, not least because the plan relies on a host of unrealistic assumptions,” Mercatus Center senior fellows Veronique de Rugy and Charles Blahous state in a new policy brief.
The two fellows at the libertarian policy group also say the New Parents Act “fails to account for political constraints that virtually guarantee the failure of its principal financing mechanism.”
Under the bill, parents would be able to receive a Social Security benefit providing up to three months’ worth of paid parental leave.
“Parents receiving the benefit would later pay it back either by increasing their Social Security full retirement age (which is 67 under current law) by three to six months or by receiving a proportionate reduction in monthly retirement benefits during their first five years of retirement,” de Rugy and Blahou explain. “In other words, every parent who receives paid leave benefits today would either begin receiving Social Security at a later age than other Americans or receive smaller Social Security benefits in their first years of retirement.”
In theory, they continue, “the plan would be budget neutral in the long run because the benefits paid today would be recouped by the government in the distant future. The stated goals of the plan are to invest in American families today in a way that produces substantial social and economic returns without increasing the net cost of government overall.”
The Mercatus fellows argue the plan will fail for three reasons.
Contrary to the popular narrative about Social Security, the two write, “there is no actual pot of money from which today’s young people can draw — only promises of future benefits.”
Second, “it is bad to set multiple retirement ages for different Social Security participants on the basis of their choices regarding parental leave-taking,” the fellows state.
The New Parents Act would also “reverse the traditional order of Social Security contributions and benefits,” the two state. “Although in practice Social Security is an income-transfer program, ostensibly, participants must still earn benefit entitlements; workers pay payroll taxes over their entire career, which makes them eligible for benefits later in retirement. Contributions come first, then benefits.”