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Monday, August 27, 2018

Another Paid Leave Pundit Bites the Dust

I try very hard not to take jabs at people in the public policy arena. It is distractive and disrespectful. However, there are rare occasions when someone's intellectual circuit breaker has kicked in and interrupted the flow of analytical thinking. When that happens, it is difficult to debate their arguments without at least noting the analytical malfunction. 

Having grown up in Sweden, I am used to policy debate where depth and discernment barely break the two-dimensional barrier. I have endured many a contribution from truncated minds with influence on important issues in politics. It is unusual to find products with a comparable lack of thoughtfulness in the American conversation, but for some reason the debate over paid family leave seems to attract them to the media spotlight. 

Behold Ramesh Ponnoru, a conservative writer whose list of institutional affiliations is the most impressive part of his contribution to the paid-leave conversation. Ponnoru is a senior editor of the National Review, a visiting fellow at the American Enterprise Institute, a contributor to CBS News and a Bloomberg Opinion columnist. 

In his last capacity, on August 24 he opined that there is absolutely nothing to worry about with the paid family leave program that Senator Marco Rubio (RINO-FL) has introduced. Explains Ponnoru:
During the 2016 campaign, President Donald Trump broke with previous Republican nominees by pledging to make it easier for new mothers to take time off from work. Two Republicans, Senator Marco Rubio of Florida and Representative Ann Wagner of Missouri, are trying to make good on that pledge. They have introduced legislation to let parents finance leave by either delaying taking Social Security benefits when they retire or getting slightly reduced benefits. 
So far, so good. Then Ponnoru decides to try to counter the Wall Street Journal's arguments against paid family leave:
First: The [Wall Street Journal] editors say the bill would create “a new entitlement.” Horrors! Except . . . what’s so horrifying? 
A great deal. If Ponnoru has no problems with tax-paid entitlements, he might want to study up on the fiscal and macroeconomic consequences of the egalitarian welfare state. He does not have to read my latest book, although that could help; it is sufficient to take a closer look at Europe in general, a continent littered with fiscal disasters in the wake of botched attempts to keep tax-paid entitlements alive long past their fiscal best-before date

Then, of course, there is always the ideological issue: should, or should not, government provide for people's needs? If Ponnoru is perfectly fine with paid family leave on taxpayers' tab, what about health care?

Ponnoru will object that the Rubio-Wagner paid leave model is not at all an entitlement in the traditional sense. All it does is allow people to cash their future Social Security benefits at a young age. That way the system is fiscally neutral.

Yes. Ponnoru really believes this:
The proposal doesn’t raise federal spending over the long run, but only moves benefits forward in time from a person’s retirement to her working years. It’s true that paid-leave spending would resemble Medicare in that it would continue each year even without the enactment of a new appropriations bill. But permanent authorization wouldn’t generate runaway spending: If more parents used Social Security to finance time off with new babies, their future retirement benefits would fall accordingly. 
Ponnoru is of the opinion that if we spend an extra $100 in 2018 and cut spending by $100 in 2058, we have balanced the budget.

Back to his fiscal Orwellianism:
Second: The Journal says there’s no way that the government would make people who took leave get lower benefits in the future. It’s true that the actions of future governments cannot be perfectly controlled or predicted, but this fear has not come to pass in parallel cases. Since 1972 we have let disabled widows take their Social Security benefits early in return for making each month’s payment lower. They form about as politically sympathetic a group as can be imagined, but Congress has not moved to change this arrangement. 
This two-wrongs-make-a-right argument ignores the inconvenient little fact that a paid leave system would be vastly bigger. As I explained back in February, this system can easily run up a tab of $1.4 trillion over the next 15 years. Since there will be no compensating cuts in Social Security benefits for individuals who take their share of that money, one hundred percent of this bill is taken out of the Social Security trust fund. 

There is a point to be made about that fund, and about the 15-year horizon. Let us get back to it in a moment. First, we once again yield the floor to Mr. Ponnoru:
Third: Some young parents, the Journal points out, will stay at home after their leave is over. Some of them therefore won’t earn enough Social Security benefits from which to draw; so they won’t pay for their benefits. This point is true but trivial — just as it’s true that some parents will take leave and then die before hitting retirement. The way to handle these rare cases is to nick benefits a little bit more for the vast majority of leave-takers who will reach retirement. Which the bill does. 
Perhaps Mr. Ponnoru should revisit this point after taking a look at how many people use paid-leave programs in Europe. With standard Scandinavian participation rates in this paid-leave program, the "benefit nicking" Ponnoru proposes would prove catastrophic for a lot of retirees.

If Social Security survives that long. Which brings us to this point, courtesy of Ponnoru:
Fourth: Social Security already has a big financing gap. That’s true, but it’s hardly a reason for refusing to make a useful change to it that leaves the gap unchanged. 
As we just saw, it will take about 40 years before the Social Security system gets compensated for the first benefits withdrawn. After that, it will take quite a bit of time before retirement benefit cuts fully compensate for paid-leave benefits on a continuing, annual basis. 

The only problem is that Social Security will go bankrupt in 16 years, with a cash flow deficit already in 2020. And this is without adding a paid-leave program. Since it takes 40 years for the compensating benefits cuts to materialize, Ponnoru's paid leave model would shorten the life span of Social Security by every dime taken out of the system from today until the trust fund is spent down.

This is the point that neither Ponnoru nor Senator Rubio nor the good folks at the Independent Women's Forum seem to understand. Why?

Ponnoru keeps opining away at the Wall Street Journal. Most of his rhetoric is minute in nature, but he does bring up two more points worth noting. Here is the first:
Because Democrats will demand more generous leave policies, the Journal warns that the Rubio-Wagner proposal will backfire politically. But the bill is an attempt to satisfy a demand among voters for help with family leave. It’s not creating that demand. 
So if voters demand single-payer health care, should we create that, too? What about abolishing the Second Amendment? If voters wanted to nationalize the Fortune 500 companies, should Congress go ahead and do that?

Last but not least, Ponnoru suggests:
Last we reach the slippery slope. The Journal conjures a scenario in which enacting this bill is followed by irresistible legislative proposals to let people take early Social Security benefits to pay for college or home down payments. Let disabled widows draw benefits at 50, and next thing you know people with sprained wrists will get them at 45. 
Could Ponnoru please name one entitlement program that has not become costlier since its creation? Hint: the Social Security tax has gone up 20 times since 1950.

Sadly, Ramesh Ponnoru's advocacy for paid family leave is so poorly argued and thinly researched that I am surprised to hear other conservatives rely on it to advance their shiny, new entitlement. Is this really the standard at which we want to discuss a hugely important piece of entitlement legislation? Do we really want to drive another knife into the already deflating Social Security system, based on this level of "analysis"?

Last year I wrote a white paper on paid family leave. I would invite all proponents of this new entitlement to hold themselves to the same standard as I do in this paper. If they do, it will be to everyone's benefit.

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