CBO: DEMOCRATS’ PAID LEAVE PROPOSAL WOULD BLOW UP SPENDING, BURDEN SOCIAL SECURITY ADMINISTRATION
New York Democratic Senator Kirsten Gillibrand said that Democrats’ paid leave proposal, the Tax Every Family Act, would be self-sustaining and “cost only as much as a cup of coffee per week.” That must be some cup of coffee, because the program would cost taxpayers $547 billion over 10 years, leaving a massive budget hole of $228 billion over that same period, according to a new report from the Congressional Budget Office. The estimate was requested by Ways and Means Committee Republican Leader Kevin Brady and Rep. Jackie Walorski.
The CBO score confirms the Tax Every Family Act will create another big spending boondoggle without being paid for, leaving hardworking Americans on the hook for even more taxes than Democrats have advertised. How can a paid family leave program be cheap when Washington would need to tax more to pay for it?
According to the report, the 0.4% payroll tax increase won’t come anywhere near covering the actual cost of a paid Family and Medical Leave entitlement program:
- CBO estimates the cost of the FAMILY ACT benefits would be $547 billion/10 years
- The net revenue raised by a 0.4% payroll tax is just $319 billion/10 years
- That leaves a deficit of $228 billion/10 years
Even worse, this doesn’t even count how this would cause a strain on the Social Security Administration while jacking up costs. CBO estimates that this proposal would explode administrative costs for the Social Security Administration by $27 billion over 10 years. In 2030, the SSA’s budget would need to increase by $4.2 billion –that’s almost a third larger than the agency’s budget today.
Republicans have already made significant headway in increasing Americans’ access to paid family leave. In 2019, they successfully enacted a measure that provides 12 weeks of paid family leave to 2.1 million federal workers, extends a tax credit for employers that offer paid family and medical leave, and adds new flexibility to allow Americans who just had a baby or adopted a child to take a withdrawal of up to $5,000 from their retirement accounts without penalty.
Key excerpts from the letter:
- “In total, we estimate that the bill would increase the deficit by $228 billion over the 2020-2030 period.” (P.1)
- “CBO anticipates that even if payroll tax receipts were appropriated into the fund, they would be insufficient to cover the cost of paying full benefits to all eligible applicants over the 2020-2030 period.” (P.3)
- “Direct spending for the Social Security Administration (SSA) to administer the program would increase by $27 billion over the same period.” (P.3)
The letter can be found here.