Welfare State Paper 1 Paid Family Leave copy

S R Larson Paid Family Leave Wyoming Prosperity
Paid family leave: not for America
Even if there are no detectible advantages to paid family leave programs, an argument could be
made for a program based on fiscal considerations. The metaphorical sales pitch for the EILB
program over the FAMILY Act is that the former would be less fiscally burdensome; by
implication, once it is created it would prevent the creation of a costlier program. In fact, in his
August 15, 2016 introduction of the EILB, Ben Gitis specifically points out that the EILB is “much
less costly than the FAMILY Act”.
A similar fiscal argument seems to be built into President Trump’s paid-leave proposal. In his
introduction of the White House’s FY2018 budget on May 23, 2017, Office of Management and
Budget director Mick Mulvaney suggested that the cost of a federal paid-leave program would be
offset by reductions in the cost of the unemployment-benefit program. 22 He did, however, not
specify whether the offset would be complete or only partial.
Fiscal impact: uncertain at best
Given the federal government’s serious deficit problems, it is important to ask whether it is at
all possible to create a federal paid family leave program without aggravating the deficit problem.
This question has two parts, one immediately related to the fiscal mechanics of a paid-leave
program; the other part is related to more broadly defined goals for paid-leave programs, such as
the suggestion that they can be helpful to women in maintaining their ties to the labor market
through maternity and parental leave.
In other words: is it possible that a paid family leave program can be merited on, e.g., genderrelated
grounds even if its fiscal impact is not for the better?
The fiscal examination of an entitlement program inevitably takes place in the context of
America’s recent fiscal experience with entitlement programs. Since President Johnson declared
his War on Poverty in 1964 and created or expanded several entitlement programs, the federal
government has run budget deficits almost uninterruptedly. After a surplus in 1969, the federal
budget has only been in balance for four years (1998-2001). 23 This suggests a causal link between
ambitious entitlement policies and a persistent deficit.
President Trump’s budget does not give away many details on how his paid family leave program
would be organized. It is therefore difficult to do any qualified estimates of its budgetary impact.
The program-specific numbers in the budget are:
• Provision of benefits; Table S-6, p. 35;
• Cost-reduction estimates in the current unemployment program; these estimates result
from the provision of “re-employment services” related to eligibility assessments; Table
S-6, p. 35;
• An estimate of future receipts, ostensibly from a dedicated payroll tax; Table S-6, p. 39;
• Contributions to the budget deficit; Table S-2, p. 26.
22 Please see: https://www.whitehouse.gov/featured-videos/video/2017/05/23/briefing-officemanagement-and-budget-director-mick-mulvaney
23 Office of Management and Budget, Historic Table 1.1: Summary of Receipts, Outlays, and Surpluses or
Deficits. Available at http://omb.whitehouse.gov
23