POLITICS
08/30/2018 12:00 am ET

Rubio’s New Paid Leave Bill Threatens The Very Idea Of Social Security, Report Finds

His proposal would cut lifetime benefits between 3 and 10 percent and cost $10 billion a year.
Ivanka Trump has been pushing the GOP on the paid leave issue.
Alex Wong via Getty Images
Ivanka Trump has been pushing the GOP on the paid leave issue.

The paid maternity and paternity leave bill proposed by Sen. Marco Rubio (R-Fla.) would offer meaningful benefits for new parents but only at a grave cost to Americans’ retirement savings and the core idea of Social Security, according to a new analysis from the Urban Institute.

The nonpartisan think-tank is the first to delve deeply into the particulars of Rubio’s bill, which he unveiled in early August. It’s unclear whether it has enough GOP support to even get off the ground, but the idea of paid leave has been gaining favor with Republicans recently thanks, in part, to the efforts of White House aide and first daughter Ivanka Trump.

Unlike the paid leave bill supported by congressional Democrats that is funded by a small payroll tax paid by employees and employers, Rubio’s Economic Security For New Parents Act taps Social Security funds. The bill provides new parents anywhere from 55 to 80 percent of their regular pre-tax pay for two or three months, but it “borrows” from their future retirement accounts to do so.

The bill’s supporters say the only cost to parents is a slight delay in retirement ― which is fine, they say, since Americans want to work longer anyway. Rubio has also touted the bill as “budget neutral.”

Neither claim is quite accurate, the new report shows.

A parent using Rubio’s leave benefit would see a significant lifetime reduction in Social Security benefits ― between 3 and 10 percent, according to the report.

This is because those who take leave would have to pay back the money, with interest, upon retirement, and at that point, it could be as much as four times what they took out, the new analysis found.

The cut to benefits would imperil financial security at what is already a precarious time for older Americans.

“There’s already a concern about retirement security and income. And people are increasingly entering retirement with mortgages and other kinds of debt,” said Richard W. Johnson, a senior fellow at the Urban Institute who co-authored the report. “The idea we would reduce those retirement incomes further is scary.”

Taking the bill’s version of parental leave would be voluntary, Rubio has pointed out. But new parents would be making that choice based on limited information since it’s difficult to predict what your retirement needs will be decades down the line.

“Sometimes people don’t make the best choices,” Johnson said.

And despite Rubio’s assurances of budget neutrality, the report finds that the legislation would actually cost the federal government an additional $10 billion annually. While parents would ultimately “pay back” the money used for leave, that money wouldn’t be shelled out for many decades, and the U.S. Treasury would float the costs in the meantime. Nor would all of the money be paid back, as some leave-takers would inevitably need to leave the workforce earlier than anticipated or die before reaching retirement age.

There’s already a concern about retirement security and income. And people are increasingly entering retirement with mortgages and other kinds of debt. The idea we would reduce those retirement incomes further is scary. Richard W. Johnson, a senior fellow at the Urban Institute

The bill also raises fundamental questions about Social Security itself, note the report’s authors. The program was designed as a social insurance program to gird Americans against the financial risks of old age and has been remarkably successful at keeping the elderly out of poverty.

Rubio’s bill would transform Social Security from mandatory social insurance to essentially a forced savings account, the report’s authors warn ― which is exactly how Rubio has painted it.

The Rubio bill is modeled on an idea that the ultra-conservative Independent Women’s Forum proposed in February. Such a proposal “could have long-term advantages in reshaping how the public thinks about government and public safety nets,” wrote Carrie Lukas, the group’s managing director of the Independent Women’s Forum.

The United States is one of only a handful of nations that don’t offer some kind of paid maternity leave benefit to women, and it is the only developed country with no paid leave. Polling shows wide and growing bipartisan support for changing this. While Democrats and progressives have long been pushed for paid parental leave, Rubio’s bill is the first serious proposal from a Republican legislator.

Progressive advocates have widely criticized the proposal not only because it raids retirement savings to fund another crucial benefit, but because it also fails to cover the vast majority of people who need paid family leave for reasons other than the birth or adoption of a new child.

Seventy percent of those who currently take unpaid leave through the federal Family and Medical Leave Act do so to care for a sick family member ― including children ― or tend to their own illness. That kind of leave is covered in the six states that have paid leave policies similar to the model Democrats have proposed at the federal level.

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