This week, lawmakers unveiled legislation that would create a new federal paid parental leave program and pay for it using Social Security’s finances. In addition, The Senior Citizens League (TSCL) saw two key Social Security bills gain support in Congress.
Parental Leave Bill Jeopardizes Social Security Program
Late last week, Senator Marco Rubio (FL), Senator Mitt Romney (UT), Representative Ann Wagner (MO-2), and Representative Dan Crenshaw (TX-2) introduced the New Parents Act (S. 920, H.R. 1940) in the 116th Congress. If adopted, their bill would create a new federal paid parental leave program and pay for it using Social Security’s finances.
Here’s how the program would work. Following the birth or adoption of a child, new parents – both working and stay-at-home parents – would be eligible to claim up to three months of paid family leave. To cover the cost, individuals would borrow against their future Social Security benefits by delaying the claiming of their benefits in retirement or accepting reduced retirement benefits.
Those who take three months of paid family leave would see their full eligibility ages in retirement increase by around six months – double the duration of the leave. Those who take the paid leave benefit but do not delay their retirements would see their benefits reduced for their first five years of retirement.
The Senior Citizens League opposes the New Parents Act, and we are advocating against its adoption on Capitol Hill for these six reasons…
- It would lead to benefit cuts in retirement. According to a report conducted by the Urban Institute in 2018, parents who take paid leave under a program like the one outlined in the New Parents Act would see a 3.2 percent cut in their Social Security benefits in retirement – a sizable reduction for individuals living on fixed incomes for thirty years or more.
- It would penalize those who have more children. The Urban Institute estimates that those who take paid leave twice for two children would see permanent benefit cuts in retirement of around 5.5 percent, and those who take paid leave four times would see cuts of 10 percent.
- It would be a bad deal for women and low-wage workers. A program like this would be disproportionately utilized by women and low-income workers – the two populations who already receive significantly lower benefits in retirement and can least afford benefit reductions.
- It would disregard others in need of paid leave. TSCL understands the importance of paid leave – not just for new parents, but also for those who provide care to older family members and those with serious medical conditions. A comprehensive proposal that includes all populations in need is essential.
- It would worsen the solvency of the Social Security Trust Fund. Despite claims that this program would not cost one penny, research shows that it would strain the Social Security Trust Funds. According to a 2018 report from the American Action Forum, a proposal like this would have a net cost of around $226 billion.
- It would set a dangerous precedent. Allowing individuals to borrow against their future Social Security benefits for non-retirement purposes would undermine the program’s mission of providing financial protection to older and disabled Americans. Other programs offering education benefits or student loan forgiveness would likely follow if this parental leave program were implemented.
The Senior Citizens League urges lawmakers to reject the New Parents Act and to consider more fiscally responsible proposals that would offer more comprehensive paid leave benefits. For status updates on the New Parents Act, visit the Legislative News section of our website or follow The Senior Citizens League on Twitter.
Key Social Security Bills Gain Support
This week, The Senior Citizens League was pleased to see support grow for two key bills that would strengthen the Social Security program.
First, three new cosponsors – Representative Ann Kuster (NH-2), Representative Louie Gohmert (TX-1), and Representative Katie Hill (CA-25) – signed on to the bipartisan Fair COLA for Seniors Act (H.R. 1553). The cosponsor total is now up to twenty-six. If adopted, this critical bill would base Social Security cost-of-living adjustments (COLAs) on the Consumer Price Index for the Elderly (CPI-E). Under current law, annual COLAs underestimate the inflation older Americans experience because they are based on the way young workers spend their money, using the Consumer Price Index for Urban Wage Earners (CPI-W).
Second, one new cosponsor – Representative Pramila Jayapal (WA-7) – signed on to the Social Security Expansion Act (H.R. 1170), bringing the total up to twenty. If adopted, the Social Security Expansion Act would boost monthly benefits by around $70, base COLAs on the CPI-E, and set the special minimum benefit at 125 percent of the poverty line. It would also strength the finances of the program by applying the payroll tax to all income – including investment income – over $250,000.
The Senior Citizens League was pleased to see support grow for these two bills this week, and we thank the new cosponsors for their support. In the months ahead, The Senior Citizens League will continue to advocate for the passage of the Fair COLA for Seniors Act and the Social Security Expansion Act, and we urge Congress to enact them this year. For progress updates or for more information about these and other bills that would strengthen the Social Security program, visit the Bill Tracking section of our website or follow TSCL on Twitter.