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Home»Economy»When policies are not credible

When policies are not credible

Economy
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In 2018, the New York Times discussed a proposed family leave policy authored by Marco Rubio:

The plan backed by Mr. Rubio (and soon to be introduced in the House by Representative Ann Wagner, Republican of Missouri) is much more comprehensive. But it still makes parents trade one benefit for another.

It would allow a parent to draw from Social Security benefits to take at least two months of paid time off at around 40 to 70 percent of current pay. But those parents would then have to delay retirement or reduce their Social Security benefits to cover the cost of the parental leave.

The Urban Institute found that taking 12 weeks at half pay would mean forgoing 25 weeks of retirement or reducing monthly checks by 3 percent.

I won’t discuss the overall merits of this plan.  But I believe that both its conservative supporters and its progressive critics are mistaken about one aspect of the proposal.  Senator Rubio likes the fact that the plan is “paid for” by future reductions in Social Security.  Progressive critics find that aspect to be punitive.  I find it completely non-credible.

I suspect that the plan would be quite popular with young mothers, as a cost to be paid 30 or 40 years in the future hardly seems like something worth worrying about today.  More importantly, many people might rationally reach the conclusion that the threat would never be carried out.  After all, the government has previously played this sort of shell game with expensive new programs supposedly “paid for” out of future taxes that are likely to be unpopular and that get repealed before taking effect.  Remember the “Cadillac tax”?

I suspect that in the 2060s, the population of developing countries will be declining due to low birth rates.  At that time, I doubt policymakers will want to punish mothers who opted to have children in the 2020s by giving them reduced Social Security benefits relative to those families that chose to remain childless.  (If cuts to Social Security are made at that time, I suspect they will affect affluent retirees.)

Politicians care much more about their pet projects getting enacted than they do about long run budget issues.  Thus they are willing to adopt almost any sort of financing gimmick or trickery if they think it will help to get the bill through Congress.

The NYT editorial writer (Bryce Covert) opposed Rubio’s plan.  I suspect that if she understood that threat to reduce future Social Security benefits would not carried out, then she might favor the plan.

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