Thank you, Michael Strain!

I've already posted on this topic, linking to, and excerpting extensively from, a piece at The Federalist by Robert Tracinski, but Michael Strain of the American Enterprise Institute articulates the essence of the matter so cogently that I want to give his weighing-in a platform here as well:

Republicans have traditionally opposed government-provided paid leave, which their reticence reflected. But the Trump administration, led by first daughter Ivanka, is trying to change that.

The State of the Union speech breathed new life into the idea, along with a compelling proposal to fund paid leave without — its advocates claim — burdening employers, reducing job opportunities for women or increasing taxes. The idea is simple and elegant: Allow new parents to collect early Social Security benefits after the arrival of a child, provided that they are willing to delay collecting benefits when they begin their retirement decades into the future.

Consider a 26-year-old new mother with five years of work experience earning $31,100 per year. Under this plan, she could receive 12 weeks of paid leave, at a rate of close to $300 per week. In exchange, she would delay claiming retirement benefits by about six weeks.

This idea is gaining traction. Senator Marco Rubio, the Florida Republican, is working with Ivanka Trump on drafting a bill. Earlier this week, two other Republican senators, Joni Ernst of Iowa and Mike Lee of Utah, discussed the plan in a press call hosted by the Independent Women’s Forum, which first outlined the new approach. Some prominent conservative intellectuals are also getting behind the idea.

To its designers' credit, this is the best federal paid-leave proposal being discussed. My Bloomberg View colleague Ramesh Ponnuru agrees, writing that he hasn’t “seen a better plan.” Its underlying philosophy — that society should invest more in the young and less in retired individuals — is sound.

But it’s still a bad idea.

Spending on Social Security is projected to rise by 1.5 percentage points of annual economic output over the next three decades. Policy should be focused on decreasing projected spending to preserve Social Security for future generations. Social Security spending needs to be cut, not redirected.

And one wonders what else Congress might want to finance using future Social Security benefits if a family-leave plan creates that possibility.
Since Social Security is underfunded, the concept of letting people borrow from future benefits is on shaky ground. Social Security will soon pay out more to retirees than it receives in tax revenue and interest income, and its “trust fund” reserve is projected to be exhausted in 2034. By the time today’s new parents reach retirement age, either benefits will have been reduced or taxes will have increased. If the former, it is imprudent to allow new parents to use promised money ahead of schedule, since the anticipated benefits won’t be there in full when they retire. If the latter, then the claims of advocates that their plan doesn’t require tax increases could be misguided.

In addition, the realism and enforceability of the plan are questionable. It would be decades before the first wave of retirees would face reduced benefits because they tapped into Social Security when they welcomed a child. In the interim, Social Security could be significantly changed. In that case, those who received early benefits might not receive reduced benefits upon retirement, undermining the promises of the plan. Or future lawmakers could decide that retirees shouldn’t be “penalized” with lower benefits because they took paid time off. Any policy where the benefits are enjoyed today and the costs aren’t realized for decades should be met with skepticism.

Strain goes on to talk about how the shakeout of implementing this would be businesses hiring fewer women, women who had gone to the trouble and expense of getting good educations and preparing themselves for meaningful career trajectories.

That gets us closer to the bottom line of all this, as I pointed out in my first post on the subject: It is government injecting itself into the free market. Alway bad and wrong. And if government does so, businesses will respond in the most market-based way they can, much like water seeking its own level.

So, hats off to Michael Strain. Some of his AEI colleagues think this scheme is a great idea. If a back-and-forth ensues with them, I have every confidence that his better argument will prevail.