By Samuel Hammond
Monday, August 6, 2018
Last week, Florida senator Marco Rubio introduced the
Economic Security for New Parents Act, a paid-parental-leave plan. A companion
bill is expected from Missouri congresswoman Ann Wagner when the House returns
to session in September. And while the two bills differ in some subtle ways,
they share a key innovation: Both allow those with a newborn infant or newly
adopted child to transfer Social Security retirement benefits from the future
to the present.
In the Rubio bill, parents who take the minimum leave of
two months would delay their retirement by about three months. (The Social
Security Administration would determine the precise length of the delay each
year in a way that ensures budget neutrality.) Of course, this has many
progressives in a tizzy, with some arguing that it amounts to a “penalty” for
having kids and others seeing the seeds of a cynical plan to cannibalize Social
Security from within.
These takes aren’t just wrong — they’re exactly
backwards. Indeed, in some ways the most stunning thing about the Rubio-Wagner
plan is how it reinforces the social-insurance function of Social Security,
marking a clear deviation from previous Republican privatization efforts. The
unique advantage of public pensions — setting them apart from 401(k)s and
private savings accounts — is their ability to pool risks, smooth consumption,
and promote economic security through collective savings. Far from undermining
Social Security, the Rubio-Wagner plan strengthens this aspect of the program
by allowing parents to insure against the income and productivity shocks
associated with having a child, just as the program insures against the risk of
outliving one’s retirement savings.
This shows up in how Rubio and Wagner chose to frame the
plan in their
piece for USA Today, which leads
with a quotation from none other than President Franklin Delano Roosevelt. Upon
signing the Social Security Act in 1935, FDR emphasized the need to “give some
measure of protection to the average citizen and to his family.” Rubio and
Wagner’s plan rests on a similar notion, arguing that the hit to working-class
finances felt after childbirth represents the “social insecurity of our time.”
Rubio and Wagner are definitely on to something. America
is the only developed country without a national paid-parental-leave program.
As a result, per a 2016 working paper for the Washington Center for Equitable
Growth by Alexandra B. Stanczyk of U.C.-Berkeley, family income drops sharply
at the birth of a child — a shock that differs by demographics only in terms of
its severity. While the Rubio-Wagner plan is of course completely voluntary,
most working families would be unambiguously better off given the option to
transfer income from late in their career, when most are near the peak of their
earning potential, to a period of genuine income volatility.
We tend to think of Democrats as belonging to the party
of FDR, and yet today they look more and more like the party of the urban and
educated. Rubio and Wagner clearly see this as an opening for Republicans,
building on the rhetorical successes of President Trump, to take back the
blue-collar mantel and put a conservative spin on the sort of broad-based
social-insurance programs that simply don’t appeal to a knowledge class already
drowning in generous workplace goodies.
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