Will the CRADLE Act Take the “Security” Out of “Social Security?”

Senators Mike Lee (R-UT) and Joni Ernst (R-IA) have introduced the second legislative attempt in a year to use Social Security as the nation’s piggy bank.

Their proposed bill, the CRADLE (Children Rearing And Development Leave Empowerment) Act, would use money from the Social Security Administration to fund a program of government-paid family leave for new parents.

After last fall’s Economic Security for New Parents Act–introduced by Marco Rubio—was met with pitched opposition and failed, Lee and Ernst curiously return with legislation that doesn’t fix the fatal flaw of the previous bill, its reliance on Social Security funds.

Under CRADLE, parents could opt for paid family leave of either one, two, or three months.  But in exchange, they’d delay their social security benefits.  The money for their leave would come from the Social Security Trust Fund, which would then owe them less in benefits upon retirement.  In comparison to the previous act, CRADLE doubles the delay in benefits—if Rob and Carla take two months’ leave, their benefits would kick in four months after they would otherwise.

So, you have young couples in their twenties or thirties doing some financial planning and wondering if they can balance parenthood and their careers.  Then, you have retired people who did all of this stuff decades ago.  What do the two have to do with each other?  Of all the ways to fund the opportunity for Rob and Carla to stay at home with their bundle of joy, why throw the already-threatened Social Security funding into greater chaos?

Senior Citizens don’t understand why they and the funds they paid into their whole adult lives are being dragged into this.  The Seniors Center not only opposed Rubio’s bill, but also faithfully documented the national outrage that helped kill it.

A recent Los Angeles Times article included an insight from the Urban Institute’s analysis of Rubio’s bill, that Social Security “was designed as a social insurance program to provide basic retirement income and to protect people against the financial risk of becoming widowed, orphaned, or disabled.”  The Institute continues that “Allowing people to borrow against their future retirement benefits…would fundamentally change the program from a social insurance program to a forced savings program.”

In other words, people can’t feel secure if their funds aren’t secure.  Money in the program has to stay where it is for it to work.  Expecting the delay in benefits to function as a full reimbursement isn’t as simple as it sounds.  An independent analysis The Seniors Center commissioned last fall tells us, “With a growing baby boomer cohort nearing retirement age and extended lifespans, benefits will be paid longer.  Coupled with decreasing births, fewer workers are paying into the system to support more retirees.” 

And as we head into that dusky future, we do so from a troubled present.  As we previously noted, for the first time in 2018, Social Security’s costs outpaced its budget.  The oft-repeated fact that the program is headed for insolvency by 2034 is further reason to distrust the strategy of borrowing from it.

Here’s another thing to consider.  Lee and Ernst’s proposal isn’t alone.  A competing bill, called the Family and Medical Insurance Leave Act (FAMILY) would provide partial income to new parents and would be funded with a raise in payroll taxes of a modest .2 percent, or roughly $2 a week for the average worker. Americans overwhelmingly support a government program to fund family leave.  Fifty-four percent go as far as to say they’d pay $200 per year in taxes (double the above estimate from the FAMILY act).  A popular concept can find funding.  Even if Congress were to be squeamish at the idea of raising taxes, having employers pay for leave is worth exploration: as of now, just 12% of workers have paid leave from the boss.

We must understand that looking to Social Security for funding is no accident—in fact, it isn’t even seen as a necessity. It’s a political strategy. Writing for The Federalist, Carrie Lukas praises plans with this kind of funding scheme, saying “encouraging people to think about Social Security’s assets as their property for use now or at retirement could even encourage them to want to move more in that direction…” (emphasis added).  In other words, as Lukas pushes elsewhere in the essay, devalue Social Security in the minds of Americans, in favor of personal accounts or “other substantial Social Security reforms.” 

This is not our view.  Social Security is the guarantee of security for all retirees. People who paid into Social Security their whole lives shouldn’t have this security threatened.