Democrats must obliterate this horrible conservative idea for paid leave
In this case, partial progress may be worse than nothing
One part of the primordial policy swamp which spawned ObamaCare was a conservative ruse. When the political mainstream develops a strong enough consensus that some problem or another must be addressed, and liberals push the usual expansion of government programs, conservatives typically dream up some more "market-friendly" counter-proposal — which they'll quickly forget about once they take power.
So as liberals worked on universal health care for year after year, in 1989 the Heritage Foundation knocked out a plan that included all the basic pieces of the ObamaCare exchanges: guaranteed issue, the individual mandate, and subsidies for people too poor to afford premiums. And after Democrats failed over and over and over to get a more liberal plan through Congress, they seized on the basic outline of the Heritage plan (with some additions like the expansion of Medicaid) as a sure winner. Result: ObamaCare.
Something like this may happen with paid family leave. Democrats have begun to converge around this as the next big hole in the American safety net — indeed, the U.S. is one of only two countries in the entire world without it — and have produced some plans ranging from reasonably good (the FAMILY Act) to the pretty excellent (D.C.'s proposed plan). All these are some variation on "the government pays new parents' wages so they can take time off work."
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In response, conservatives have obligingly begun to stamp out more markety plans, the first of which was recently outlined by the right-leaning Independent Women's Forum. The idea is to create a system of tax-free savings accounts that can be spent on paid leave, so parents are incentivized to save some money before they have kids.
Regular readers could probably have guessed that I was choking back bile reading about this idea. Like most such tax breaks, this will be a massive handout to the rich that is certain to fail at its ostensible purpose — except it's even worse than other varieties. Most people near retirement don't have nearly enough in their 401(k) accounts, but at least they have an entire lifetime of earnings to try and build up.
A paid leave account has the same problems as a 529 college savings plan, only worse. If the money is invested, the account could plummet in value if there's an unlucky market collapse when the baby is born. It will also pay out inverse to need, since rich people pay more taxes and thus benefit more from tax breaks. But most fundamentally, it fails to account for the simple facts of age and earnings.
The average age of a first-time mother in America is about 26. Most people have only been working for a few years at that time, and have only just begun along the career trajectory. Peak earnings come at around age 45-55, on average. Doing paid leave by pushing more savings from the earnings of people who are at the most income-constrained period of their lifecycle is simply idiotic financing. ObamaCare is a janky mess, but the basic idea is workable. A tax-free savings account for paid leave is not.
Yet it's extremely easy to imagine elite Democrats coming around to the idea. Chances are fairly good that Republicans will continue to hold the House and possibly the Senate too even if they lose the 2016 election. And while this would go against the current policy trend among Democrats, many of them (including President Obama) rather like tax credits, because it means you can kinda-sorta address some problem while also pretending not to spend any money.
It would also be appealing to the Democrats' Wall Street faction, led by people like probable future leader of Senate Democrats Chuck Schumer (D-N.Y.) and Sen. Cory Booker (D-N.J.). Another rotten tax-free saving plan means another cottage industry of investment swindlers who live off conning people into signing up for a high-fee accounts.
The bipartisan alliance is practically already taking shape. Everybody wins! (Well, except for like 85 percent of people who might have kids.)
It would also slot right in with Hillary Clinton's traditional triangulation instincts, and personal brand as an effective backroom negotiator. Indeed, she has already proposed an only somewhat less terrible tax break for carers. And you can bet that once this got through, there will be no getting rid of it. Best to start mobilizing against this piece of junk now.
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Ryan Cooper is a national correspondent at TheWeek.com. His work has appeared in the Washington Monthly, The New Republic, and the Washington Post.
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