Page 12 - Investment Advisor October 2022

Beginnings

WASHINGTON WATCH

By Melanie Waddell

Should Social Security Be Used to Fund

Parental Leave?

The New Parents Act is drawing opposition from libertarians and
Social Security advocates alike.

tionate 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
hould new parents be allowed to of paid parental leave. recouped by the government in the dis-
tap Social Security to fund paren- “Unfortunately, the idea that the tant future. The stated goals of the plan
Stal leave benefits? Sens. Marco U.S. government can provide generous are to invest in American families today
Rubio, R-Fla., and Mitt Romney, R-Utah, new benefits to Americans today while in a way that produces substantial social
reintroduced last September the New successfully financing this spending and economic returns without increas-
Parents Act, legislation that would allow decades down the road is implausible, ing the net cost of government overall.”
new parents up to three months of paren- not least because the plan relies on a host The Mercatus fellows argue the plan
tal leave benefits, drawing the funds from of unrealistic assumptions,” Mercatus will fail for three reasons. Contrary
their Social Security retirement benefits. Center senior fellows Veronique de to the popular narrative about Social
The debate over parental leave bene- Rugy and Charles Blahous state in a Security, the two write, “there is no
fits has heated up since Roe v. Wade was new policy brief. actual pot of money from which today’s
overturned in June. Rubio has rolled the The two fellows at the libertarian pol- young people can draw — only promises
family-leave-for-Social-Security ben- icy group also say the New Parents Act of future benefits.”
efits provision of the New Parents Act “fails to account for political constraints Second, “it is bad to set multiple
into a broader bill — the Providing for that virtually guarantee the failure of its retirement ages for different Social
Life Act. principal financing mechanism.” Security participants on the basis of
The New Parents Act has drawn “Parents receiving the benefit would their choices regarding parental leave-
opposition from across the political later pay it back either by increasing taking,” the fellows state.
spectrum. Under the bill, parents would their Social Security full retirement age The New Parents Act would also
be able to receive a Social Security ben- (which is 67 under current law) by three “reverse the traditional order of Social Adobe Stock
efit providing up to three months’ worth to six months or by receiving a propor- Security contributions and benefits,” the

10 INVESTMENT ADVISOR OCTOBER 2022 | ThinkAdvisor.com