June 6, 2017

Is Parental Leave a Hidden Gem in President Trump’s Budget?

Like his predecessors President Obama, President Bush, President Clinton and others, President Trump presented his first federal budget proposal on May 23, a blueprint for federal spending and revenue for FY 2018 and beyond.

Also not unlike his predecessors, President Trump’s budget proposal got a frosty reception on Capitol Hill, where the real spending and taxing decisions will be made.

The FY 2018 budget calls for $4.1 trillion in federal government spending, on everything from agriculture crop insurance to veterans affairs, national defense, Social Security, Medicare and Medicaid, and some $3.6 trillion in revenue, mostly from individual income taxes and Social Security payroll taxes, for a one-year budget deficit of $440 billion.

The outstanding public debt of the U.S. is projected to hit $15 trillion in FY 2018 and climb to $18 trillion by 2024—all-time records, even as the President promises to cut outlays by over $4 trillion from current policy over the decade.

To be sure, the budget’s deep cuts in social programs like the Supplemental Nutrition Assistance Program (Food Stamps), Medicaid and the Children’s Health Insurance Program (CHIP), will encounter stiff resistance on Capitol Hill, and not just from opposition Democrats. Lawmakers are likely to view President Trump’s first budget as merely a suggestion, confirming the adage, “the President proposes and Congress disposes.”

A Hidden Gem?

Barely noticed in all the heated rhetoric surrounding the steep spending cuts was a little nugget buried on page 20 of A New Foundation for American Greatness, the formal title of the president’s budget: “Provide Paid Parental Leave.”

 The budget includes funding of some $25 billion over 10 years for a “fully paid-for proposal to provide six weeks of paid family leave to new mothers and fathers, including adoptive parents,” to allow families “to take time to recover from childbirth and bond with a new child without worrying about paying their bills.”

While specifics are lacking at this point, the basic idea seems to be to use the existing Unemployment Insurance (UI) system to encourage states “to establish paid parental leave programs in a way that is most appropriate for their workforce and economy.” While states would have wide latitude to “design and finance” their paid leave programs, the UI system would be the delivery mechanism for funding.

Impact of Paid Leave Proposal

Like any hidden gem, experts must use a loupe (a jeweler’s magnifying glass) to carefully inspect this stone’s hallmarks and blemishes. Inspecting the President’s paid leave proposal reveals clear impacts:

Most important is that in an otherwise tightfisted budget for discretionary social programs, paid parental leave appears as a striking new nationwide initiative. One should not underestimate the impact of having a Republican president call for a national paid leave program that would be available for mothers, fathers and adoptive parents.

Based on this critical first step, it’s fair to say that the chances of national paid leave legislation being enacted into law this year or next have doubled. Indeed, paid leave legislation has just flipped from being off the table to being very much on the table.

Another big plus is that the White House is putting substantial federal funds behind the proposal, though the precise financing mechanism is somewhat ambiguous.

The President’s paid leave initiative, however, with its reliance on the states, is a bit behind the curve of what some states are already doing. California, New Jersey and Rhode Island have enacted paid leave mandates, and New York’s program will take effect in 2018. Rather than put an additional burden on their state’s UI trust fund, these programs are funded with new employer and/or employee payroll taxes.

Critics may also point out that the scope of Mr. Trump’s proposal is narrower than might be expected—focused on parental leave as opposed to the broader family leave, i.e., paid time off to take care of a family member with a serious health condition. The President’s plan would also provide for six weeks of paid leave, not 12 weeks as in the New York law or as congressional Democrats have proposed—see the Gillibrand/DeLauro Family And Medical Insurance Leave (FAMILY) Act.

Another potential problem with the proposal’s focus on state flexibility is that it intends explicitly to encourage states to do their own thing—perpetuating the hodgepodge of conflicting state and local paid leave mandates that has frustrated employer compliance. If it becomes law as proposed, employers may need to grapple with a proliferation of state-by-state paid parental leave measures, possibly alongside a growing number of paid sick and family mandates.

A More Comprehensive Approach to Paid Leave?

Congress in 2017 has a full plate of legislative issues to address, including Affordable Care Act repeal and replace, as well as comprehensive tax reform. Meanwhile investigations into Russian interference in the presidential election is absorbing lawmakers’ time and attention.

Nevertheless, Democrats may seize the opportunity to break new public policy ground on paid leave. The Family & Medical Leave Act (FMLA), now 24 years old, provides for 12 weeks of job-guaranteed, unpaid leave. And FMLA eligibility requirements limit coverage so not all workers are eligible. With so much controversy over Obamacare, tax reform and a host of other issues, the White House may be eager to negotiate with Democrats and moderate Republicans on a more comprehensive approach to paid leave.

From a compliance standpoint as well, employers might prove more comfortable with a national paid leave standard as opposed to the patchwork quilt of conflicting state and local laws with which they now must contend. The big question in that scenario would be whether the national legislation preempts state and local laws—or at least allows employers adopting the national standard to be deemed compliant with state measures.

 In any event, President Trump has surprised supporters and critics alike by proposing what may be the first-ever national paid parental leave standard. It can be seen as a hidden gem in the polarized political world of Washington DC. It remains to be seen whether Republicans and Democrats can work together to make it happen.

Jim O'Connell

With more than 30 years of experience in federal legislative and regulatory affairs, Jim O’Connell focuses on HR and PAYROLL POLICY ISSUES, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. Follow him on Twitter JOCWashDC

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