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Saturday, March 16, 2019

CRADLE to GRAVE: The Neocon Welfare State

Never bark at the Big Dog. The Big Dog is always right. 

while the Republicans put more spotlight on Medicare for All, that other boondoggle entitlement is making headway on Capitol Hill. It is disconcerting to see that deeper layers of the GOP seem to be ready to back it. In fact, President Trump himself inadvertently shed the spotlight on the ideological contradiction at hand, when in his State of the Union speech he lambasted Democrats for advancing socialism, only to endorse paid family leave a minute or two later. 
I also noted that while leading Republicans have come out swinging against Medicaid for All, they are conspicuously silent on the paid-leave issue. I have had a growing suspicion that the reason for this is that Republicans were going to not only introduce their own alternative to paid leave, but get behind it full force as a party - and strike a deal with the Democrats over it. 

Alas, here we go, courtesy of Republican Senators Mike Lee of Utah and Joni Ernst of Iowa: 
Our proposal, the Cradle Act, would allow both natural and adoptive parents to receive one, two or three months of paid leave benefits. A few decades down the road, those parents would then “pay” for the benefit themselves by delaying their own retirement for two, four or six months. To choose the paid parental leave option, parents would first have to notify the Social Security Administration of their plan to take paid leave before the expected birth or adoption. Then, after parents applied for their baby’s Social Security number, payments would begin in two weeks. To qualify for the program, parents must have worked either four out of the previous four quarters, five out of the previous six quarters or at least 20 total quarters before an initial application is filed. Benefit levels would be determined by Social Security’s primary insurance amount, so that monthly benefits would be more generous the lower the beneficiary’s income.
For the fantazillionth time: Social Security is going bankrupt in 15 years. How are Senators Ernst and Lee going to pay for these benefits after 2034?

In fact, as I have demonstrated on several occasions, their idea - which originates with the left-of-center think tank Independent Women's Forum - will speed up the drainage of Social Security up to a point where there is no money left in the trust fund already by 2031. But it really does not matter whether the bankruptcy happens in 12 or 15 years. There is no way on God's Green Earth that the CRADLE Act will backfill the Social Security system before it goes belly-up.

Here is what this program is really about. It is not about caring for families. Neither the left nor the right see that as the prime reason for proposing this program. The left wants paid leave because, as I explained the other day, it socializes family savings. Government can smoothen out the differences in family savings by combining progressive taxes with income-dependent benefits: the more you make the more you pay; the less you make, the more you get. 

To the left, it is all about income redistribution. Egalitarianism, for short.

The right wants paid leave because it gives them a chance to provide a smarter welfare state than the left can provide. Social-security based paid leave is a perfect example. The neoconservative leadership of the Republican party thinks it is a smart way to save the welfare state. It gives people something in return for the higher taxes needed to save Social Security. There will no mention of the fact that this new tax will exceed what the paid-leave program supposedly needs, thus siphoning more money into the Social Security trust fund to patch up the bleeding patient.

What neither the left nor the right realize is that the taxes that would "save" the welfare state would be the death knell for the American economy. People look at the taxes needed to fund Medicaid for All, with numbers like $3 trillion per year being thrown around (half of which would be new taxes). Taxes of that magnitude are of course of proportions akin to insanity, but what is never mentioned is that a full-blown paid-leave program of European proportions would cost U.S. taxpayers $370-500 billion per year. 

Yes, that is correct. And I can explain exactly how you get to that number. Unlike the Independent Women's Forum; unlike Senators Lee and Ernst; I have done my homework on this issue.

Of course, the tax side of this is never being spoken of, for two reasons:

1. The left does not care about funding their programs. Under their new scheme, "modern monetary theory", it is perfectly fine to print as much money as government needs and then just blow it out in the economy. The fact that Venezuela got two million percent inflation thanks in good part to this theory, is not something you mention in leftist circles.
2. The right believes that once paid leave is created, it will never grow beyond those proportions. It is perfectly fine to not learn anything from history, but if you choose not to - and the neoconservatives in the Republican party have certainly made that choice - then you should not aspire to political leadership. It remains true, namely, that those who cannot remember the past are condemned to repeat it.

This ridiculous belief that paid leave would never grow still does not explain how a benefit withdrawn as paid leave from Social Security in 2019, being repaid upon retirement at 2059, would benefit a program that is going bankrupt in 2034. 

Maybe there is a time machine somewhere on Capitol Hill that can help us solve this problem. Barring that, let us make clear that the $370-500bn number does not even take into account the extra taxes needed to keep the old, ailing Social Security system alive. In other words, once the left has blown paid leave out of proportions, we can look forward to something like $700-800 billion in higher taxes, in today's prices, just for the Social Security/Paid Leave behemoth. 

Then it will be time to start closing the federal budget deficit, which today stands at $1 trillion. 

And, of course, to come up with taxes to pay for the next entitlement that the left wants, and the neoconservatives want to make smarter. There is no shortage of ideas: universal child care, free college, Medicaid for All... Add up, ring us out and tax away at our paychecks. 

If Senators Lee and Ernst get traction for their CRADLE Act, they will send our children straight to the GRAVE of prosperity.

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