Marco Rubio has a paid-parental-leave bill that would allow parents to collect Social Security benefits following the arrival of a new child. In exchange, new parents who take the early benefits would delay receiving Social Security payments by several months when they reach normal retirement age, decades later.
This is a bad idea for several reasons. Our focus should be on reducing projected Social Security spending, not redirecting it. Social Security is underfunded, so allowing people to borrow from future benefits is deeply problematic. This is especially true given the senator’s insistence that the policy wouldn’t increase taxes or federal spending.
And this policy would burden employers by increasing the number of workers who take long periods of time off work following the arrival of a new child. This burden would likely make it harder for less-educated women of child-bearing age to find a job.
This is a textbook instance of the law of unintended consequences — a well-meaning policy would end up hurting the very people it is intended to help.
Supporters of Senator Rubio’s bill have begun to argue that it reforms Social Security by introducing flexibility into the program. In my latest Bloomberg column, I argue that reform and flexibility are appealing. But if that’s the goal, I have two suggestions.
First, don’t rely on the promise that benefits today will be paid back by delayed receipt of retirement benefits decades from now. Instead, any Social Security reform should reduce federal spending. There are reasonable cost-saving measures that would put Social Security on more stable footing and that would reduce the budget deficit. They should be enacted.
Second, in addition to deficit reduction, these cuts would create space to expand the child tax credit, perhaps by offering a larger credit in the year in which a household welcomes a new child. This offers much more flexibility to new parents than a federal paid-leave payment. Parents could use the expanded credit to finance time away from work, of course — or on any of the new expenses they will face.