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New Study: The Republican Plan for Paid Leave Is Going to Undermine Social Security

Photo illustration by Slate. Photos by Alex Wong/Getty Images and Thinkstock.

In 2016, for the first time in history, both parties’ presidential candidates called for paid parental leave. Recently, in consultation with Ivanka Trump, Sen. Marco Rubio put together a Republican alternative to the Democrats’ long-existing but stalled plan, the FAMILY Act. Sponsored by Sen. Kirsten Gillibrand and Rep. Rosa DeLauro, the FAMILY Act would set up a national insurance fund into which employers and employees would contribute (only about the cost of a cup of coffee per week), which people can access at the birth or adoption of a child or personal or family illness. The competing Republican plan would, in contrast, allow individuals to borrow from Social Security to replace around half of their usual income while they take leave. A study by the Urban Institute out Thursday analyzes the costs of such a plan. Its finding: The plan isn’t cost-neutral, as Republicans claim, and would cut or withhold Social Security benefits from future generations of parents—from a 3 percent reduction in retirement benefits for parents of one child to a 10 percent for parents of four children.

Urban Institute’s projections suggest that allowing people to borrow from Social Security would delay retirement benefits 20 to 25 weeks and would reduce future benefits by 3 to 10 percent. But more dramatically, borrowing against the future without creating additional revenue streams would fundamentally “undermine social security.” The Urban Institute finding is not at all surprising, given where the plan came from. The idea for using Social Security to fund paid leave originated with the conservative Independent Women’s Forum. IWF President Carrie Lukas has said publicly that she’d like to see Social Security as we know it become more of a personal (and private) insurance program, which she sees as the best thing conservatives can hope for, since “Americans are not going to accept the wholesale elimination of Social Security—at least not any time soon.”

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And, unlike the FAMILY Act, the Rubio plan is limited to providing paid leave to new parents. (Under the U.S.’s current unpaid leave plan, the Family and Medical Leave Act, most people use leave for a personal or family illness.) Since discriminatory wages between men and women emerge when women have children, only applying the law to new parents might justify discriminatory hiring of people of childbearing age. And by forcing people to delay taking Social Security, those who most need it, such as workers who have sustained injuries or disabilities over the course of their lifetimes (think: intensive domestic work or other physical labor), will be unable to take it when they need it. For these workers, simply delaying retirement to earn back what they took out earlier in life is much easier said than done.

The appeal of the Rubio proposal is that it wouldn’t impose costs on employers, wouldn’t require new taxes, and would provide meaningful paid leave. It almost sounds too good to be true. And it really is. The way Social Security works is that you pay taxes into it when you’re young and working. Those cover benefits for people retiring today. But by allowing people to borrow against the program, it turns it into a forced retirement savings plan. Under this plan, according to Richard W. Johnson, an Urban Institute senior fellow and co-author of the study, the taxes working people are paying now would be split into other pots, or double-dipped: “Your taxes are going to pay for your [Social Security] benefit, but also your parental leave benefit, and also retiree benefits for someone else. That creates a burden on the system that’s not trivial.” And if you were to become disabled or die before “repaying” the parental leave Social Security “loan” you took out to have a baby, the government is on the hook for the cost. Ultimately, this is how the Republican plan could threaten Social Security as we know it, and it’s precisely why having a publicly funded retirement plan that pools workers’ contributions rather than individualizing them is so important in the first place.

If Republicans are genuinely interested in providing Americans paid leave at last, why not just hop on board with a similar but better-thought-out policy suggestion like the FAMILY Act? Though still not as much time as infants, mothers, and parents ultimately need, the 12 weeks of inclusive paid family and medical leave it would provide would set an important floor for the country. And we need to find a way to pay for that without overburdening individual families or the system so many families are relying on for their retirement. According to Johnson, this decision is ultimately about what we value. “What people need to consider is who should pay for the cost of raising children. Given that the next generation is vital to economic growth and the health of the Social Security system, does it make sense for the costs of raising a family to be shared more broadly across society than just be the private cost of parents?”


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