Thursday, October 19, 2017

Paid Leave: Trump's Gift to the Left

Never bark at the Big Dog. The Big Dog is always right.

It is not just at the state level we are fighting to turn the tide on big government. Even with Donald Trump in the White House - and overall I think he is a good president - there is a significant risk that the egalitarian welfare state continues to grow. One example of this is the paid family leave program that President Trump included in his budget for fiscal year 2018. Contrary to what seems to be the prevailing opinion, this idea has neither died nor shrunk in fiscal size. My previous warnings about this budget boondoggle stand firm. 

As I explained in "Paid Family Leave: Egalitarian Victory, Conservative Surrender - And a Budget Disaster", the first in a series of Papers on the Welfare State, the annual cost for a federal paid-leave program could quickly run deep into the hundreds of billions of dollars.

The president's paid-leave idea is modeled after similar programs at the state level. There, evidence is pouring in that yours truly has been right all along. For example, on October 10, the Washington Post reported about the paid-leave program that went into effect this year in Washington, DC:
A D.C. Council committee held a hearing Tuesday on suggested changes to the law, which, in addition to parental leave, guarantees six weeks of paid time off to care for ailing relatives and two weeks of personal sick time. The requirements apply to private-sector workers in the District, but not federal workers or employees of the city government. Proponents of the various amendments say they would preserve the same amount of time off for workers while lightening the tax burden the current law places on businesses and avoiding the creation of a large new District bureaucracy to oversee the benefits. But advocates for the original law passed by the council last December say it could be fatally weakened by the tweaks under review, such as a provision that would allow large businesses that already grant their employees the prescribed amounts of paid leave to opt out of the city’s program and not support it through taxes.
This see-I-told-you-so experience continues. As recently as in September, I explained the cost-explosion dangers built into a paid-leave program. In July I pointed to the high costs of the program if it were implemented as a joint federal-state program (like Medicaid).

I don't write about this to gloat. (Well, OK, a little...) My main point, instead, is that we need to understand the full picture of what is at stake here. There is a direct line from the efforts at the federal level to create the remaining entitlement programs of the welfare state, to the state level and our fight to permanently reduce the size of our state and local government sector. This line is the line between welfare statism - the belief that the main function of government is to redistribute income and wealth between private citizens - and the founding principles of this country. 

And the founding principles of this country have their backs up against the wall. It is time to recognize that we are at a critical juncture, one where egalitarianism is on the verge of a historic victory. 

We can still win, but we have to acknowledge the depth of the fight we are in. To paraphrase President Reagan: prosperity is never more than one tax hike away from extinction. 

Back, now, to the paid-leave program fight. It  is almost impossible to exaggerate its importance in this context. Being a critical, final building block to complete the welfare state, its fate is much bigger than just another entitlement program. Therefore, the problems facing paid leave programs - while technical and minute when viewed in isolation - are key elements in the ideological, economic and political fight for the heart and soul of this country. 

The flaws of paid family leave, which - again - I explained in detail in my paper, are clearly visible in the individual examples we have at the state level. The Washington, DC program is a very good example, as it is so new. Already in February, weeks after the paid-leave law went into effect in the nation's capital, members of the D.C. City Council said they were...
willing to revisit the policy and possibly make changes to lessen the burden on businesses. “We’re open to more discussion,” said Council Chairman Phil Mendelson. “I expect that there will be a couple of bills introduced in the next month.” As it stands, benefits in the law would be funded through a 0.62 percent tax on all D.C. businesses, but the council is now examining possible alternatives for the financing mechanism that could reduce the tax rate, according to Mendelson. “There is a lot of upset over the tax,” he said. “We’re certainly willing to discuss alternative financing proposals.” Taxing businesses is expected to generate $250 million annually. The D.C. business community has largely been opposed to the measure, as has Bowser, who refused to sign it, allowing it to become law without her signature last week. Bowser has called the bill’s tax a burden on businesses, and she has been a vocal critic of the fact that much of the money generated by the new tax would benefit people who work in the District but live elsewhere.
One Council member said she "favors shifting part of the cost of the benefits to employees." Bluntly, the egalitarians in the District are scrambling for ways to contain the costs of a program that has not yet come close to the grotesque proportions of similar entitlement programs in Europe (or Canada, where government pays parents for a full year).

Predictably, egalitarians are forging ahead with this idea. In the forefront of the leftist enthusiasts we find Apartna Mathur of the American Enterprise Institute. Mathur is resident scholar at the American Enterprise Institute whose research focuses in part on "income inequality":
The need for a paid family leave policy in the U.S. is urgent. Demands on working families have grown dramatically over recent decades. A growing body of evidence shows children fare better when their parents have access to leave, and individuals are more likely to take leave when it’s paid. Fathers’ access to paid parental leave can improve gender equity in the household, fathers’ involvement in childcare and outcomes for children. Finally, national economic growth is dependent upon strong labor force participation by both men and women. 
The point about growth is perhaps the most uninformed of all Mathur's opinions. The countries with the longest, most generous paid-leave programs - all except one of which we find in Europe - are doing at best as good as the United States in terms of growth, though in most cases worse than us. As for the point about "gender equity", there is an ongoing debate in Sweden about splitting paid family leave by gender. It is motivated by the fact that men are much less inclined to use a paid-leave system that has been in place for almost half a century. In other words, simply creating a paid-leave program will not have the effects Mathur is after.

Besides, since when it is the federal government's business to promote "gender equity"?

Mathur is far from the only leftist out there demanding this massive, new entitlement program. Her fellow liberal travelers at the Center for American Progress try to sell the same idea with a study of alleged economic losses due to the absence of government-provided family leave - and more:
Every year, as our new analysis shows, working families in the United States lose out on at least $28.9 billion in lost wages because they lack access to affordable child care and paid family and medical leave. This hidden cost includes $8.3 billion in lost wages due to a lack of child care and $20.6 billion in lost wages due to a lack of access to paid family and medical leave.
There, they managed to throw in the last entitlement program that is missing in our welfare state: government-provided, tax-paid child care. Before we get back to the paid-leave debate, let us use the numbers presented here as an example of how distorted the arguments for more tax-paid entitlements can be. The losses that the Center for American Progress present are not balanced against the cost of providing child care on taxpayers' tab.

It only takes a couple of numbers to demonstrate what a flawed argument this is. There are about four million children born in this country every year. Assuming that each child is in child care three years of their lives, we would need child care for some 12 million kids. Suppose that each child-care institution, paid for with federal tax dollars, has five kids per teacher. This comes out to 2.4 million employees, each of which makes $50,000 per year including benefits. 

The end tab for that program runs up to $120 billion per year. 

Suppose only ten percent of all kids in America would use this federal child-care program. The total cost ends up at $12 billion - almost 45 percent more than the alleged wage losses from absence of child care programs. 

Despite these facts, some people are eager to expand the programs that already exist - another see-I-told-you-so moment for yours truly. In California, which has had a paid leave program in place since 2002, pundits are yet again marching for another expansion of the program. Jim Steyer, founder and CEO of an outfit called "Common Sense" (pun probably intended) has this to say:
With the end of this year’s legislative session, Gov. Jerry Brown must decide the fate of hundreds of bills on his desk. Of all those pieces of legislation, none is more important for the future of California families and the health of our children than the New Parent Leave Act. The bill, SB 63 by Sen. Hannah-Beth Jackson (D-Santa Barbara) would provide up to 12 weeks of job-protected maternity and paternity leave for thousands of California workers. It is common sense legislation that would allow parents to realize the promise of our state’s existing paid family leave program and ensure that up to 2.7 million more California parents have the opportunity to spend quality time with their newborn children without fear of economic retribution. Gov. Brown should sign the bill.
The two leftist organizations American Enterprise Institute and Common Nonsense probably won't have to worry much longer. There is a growing sense of confidence among the left on this issue, as if they know that paid family leave - courtesy of federal taxpayers - will probably happen soon. Back in September, Melinda Gates, who is no policy expert but intelligent and articulate and sits on her husband's software billions, explained to an excited CNN infotainment host that paid family leave better happen soon. The infotainment host asked if Gates liked the FAMILY Act, which has been introduced in Congress by Senator Gillibrand (D-NY). Gates cleverly stopped right at the doorstep of explicitly endorsing Gillibrand's budget bomb.

Also in September, Ivanka Trump allegedly had lunch with Senator Lamar Alexander (R-Tenn.) to push President Trump's paid-leave program. The outcome is increasingly likely to be in their favor, as support for paid family leave is growing.

There is a significant risk that President Trump will reach out to Democrats to get important legislation passed. In the bargain the president will give them what they want second-most of all after single payer health care, namely paid family leave. Once that program is in place, Democrats will push single-payer, and then universal child care, and the egalitarian welfare state is complete.

It is more important now than ever that we understand the systemic level of the current fiscal problems we are faced with, both in Wyoming and in the federal government's budget. These are not caused by tax cuts, nor by the decline in the minerals industry - that decline has exacerbated the problem, but did not cause it. The cause is, instead, a government that has made too many promises, and interfered too deeply with the private sector.  

We are at a point in our country where the ideological, economic and political lines converge. It has been a long time since a few legislative decisions on taxes and spending, at the state level as well as in Congress, could make such a profound difference to our country. The fight to save Wyoming's economic future is the same fight as to save our country from becoming a full-fledged egalitarian welfare state. We cannot leave either battle to "others". We need to be engaged in one and support those who take part in the other. 

Once we let go; once we let the welfare statists win; once we agree to raise taxes in Wyoming and to create the last welfare-state entitlements at the federal level; that's it.

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