The Corner

Economy & Business

Conservatives Obsessing about the Social Security Trust Fund Miss the Big Picture

Much like Heritage and Mercatus, American Action Forum has come out with an analysis of IWF’s Social Security paid-leave proposal and found that the upfront costs of the program would modestly impact the program’s cash-flow (by allowing new parents to take some benefits today instead of at retirement) and move up the date on the Trust Fund’s depletion by about six months.

It is certainly important to consider how this proposal would impact Social Security’s financial operations and the problems with moving some costs upfront. However, it’s also important to keep the Trust Fund in perspective: Many have written how the Trust Fund is essentially an accounting device, and that Social Security’s financial problems are the same before and after the Trust Fund runs out. Either way, taxpayers still have to come up with funds to meet obligations, or benefit levels need to be reduced.

Moreover, these analyses of the paid-leave-reform idea ignore other factors that might work in the opposite direction. For example, access to paid leave is associated with greater labor-force attachment for women. Women who can take time off after giving birth are more likely to return to their jobs, which means that they will keep paying into Social Security, which will mean more revenue into Social Security’s Trust Fund, offsetting some of these costs.

It’s also important to look beyond just Social Security’s finances to how this would impact taxpayers more broadly. And the good news is that giving people access to paid parental leave could decrease the number of people using other public welfare programs. Currently, nearly 17 percent of workers who lack access to paid parental leave go on government assistance to finance their paid leave — and this number jumps to nearly 50 percent for low-income individuals. It’s far better for these people to access a benefit through Social Security — which they then pay back through delayed retirement benefits — than to use these forms of public assistance.

Finally, those worried about Social Security’s finances should keep in mind that, if we do not provide access to paid leave through Social Security, it is highly likely that taxpayers will be forced to pay for it in other ways — either through state-run programs supported through a payroll tax, or through a federal program, such as the one proposed by AEI and Brookings. Surely having taxpayers on the hook for an entirely new, open-ended, additional paid-leave entitlement program is a bigger threat to taxpayers than changing the timing of some of Social Security’s already outstanding obligations.

Conservatives’ current fixation on the date of the Social Security Trust Fund’s depletion seems to be very much focusing on one rather unimportant tree, and missing the forest and the overall picture of the size and cost of government and its burden on taxpayers.

Carrie Lukas — Carrie Lukas is the president of the Independent Women’s Forum.

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