Earlier this year, Ivanka Trump unveiled a paid family leave plan that would allow parents to cover the costs of staying home with a new baby by drawing on their future Social Security benefits. The controversial plan was devised by the Independent Women’s Forum, a conservative Washington DC think tank and is being championed in Congress by Florida Senator Marco Rubio, who introduced it in the Senate on August 2 as the Economic Security for New Parents Act.
This week, the first in-depth analysis of the Rubio plan was released by the progressive think tank Urban Institute and the findings weren’t positive. According to the report, while the plan would provide parents with up to almost 80-percent of their paycheck for a two-month leave (50 percent if they took a three-month leave), it would raise their retirement age by six months and reduce their total lifetime benefits by 3.2 percent per leave. This is because the money would need to be repaid with interest at the time of retirement. If a parent took three separate leaves to care for three kids, they would be out almost 10 percent of their lifetime benefits. Rubio has stressed, however, that the program is entirely voluntary.
He’s also pitched the legislation as ‘budget neutral,’ although the study didn’t find that to be the case. Instead, the US Treasury Department would cover the cost of the leave outlays but wouldn’t be reimbursed by the Social Security Trust Fund until decades later when parents started paying their accounts back at retirement. By 2023, the report estimates the program will cost $10.2 billion annual. Although the report notes that costs could be offset as more mothers are able to keep their jobs as a result of the paid leave, eventually earning more money, and thus contributing more to both social security and the general tax coffers.
That said, the authors did raise other concerns, albeit speculative ones, about the Rubio plan, including that it “could increase pressure to use Social Security for other needs such as student loan forgiveness and midcareer education.” It also had the potential to transform the program from a social safety net designed to protect Americans in retirement to a forced savings account. The result, the report notes, would be a further erosion of future financial security.
As of now, it’s unclear whether the Economic Security for New Parents Act will garner any support from Republicans in Congress, especially considering the White House has yet to give it a stamp of approval. The current White House paid leave plan as outlined in its most recent budget would guarantee six weeks of family leave to be paid for with unemployment insurance. Nonetheless, Missouri Republican Ann Wagner intends to introduce companion legislation in the House of Representatives next month. Democrats meanwhile are rallying behind Senator Kirsten Gillibrand’s (D-NY) proposed FAMILY Act, which would provide 12 weeks of paid leave at about 66 percent of a person’s salary to be funded with a .02 percent payroll tax.