Four Reasons Trump’s Parental Leave And Child Care Plan Doesn’t Add Up
Research ››› ››› BOBBY LEWIS & ALEX MORASH
Republican presidential nominee Donald Trump has announced that he will unveil a plan for parental leave and child care affordability, which he claims he would pay for by ending unemployment insurance fraud. The plan would include six weeks of maternity leave, tax deductions for child care, and family savings accounts. Journalists reporting on the plan should know that it does not actually include paid family and paternity leave, it favors the wealthy, it does not include sufficient funding, and it contradicts his few previous statements on child care.
Trump To Unveil Child Care, Parental Leave Plan
Wash. Post: Trump Expected To Propose Plans For Child Care Costs, “Paid Leave.” The Washington Post reported that Republican presidential nominee Donald Trump will “unveil several policy proposals for lowering child-care costs,” including “a plan for paid leave” on September 13 in Aston, PA. Trump’s plan reportedly includes six weeks of paid leave for mothers, which would “not be transferable to fathers,” and will be “financed through savings achieved by eliminating fraud in the unemployment insurance program” so that “it wouldn't cost taxpayers anything more.” The Post also reported that Trump’s plan will allow “parents to deduct the cost of child-care expenses from their income taxes” for individuals making up to $250,000 a year and $500,000 for couples. From The Washington Post:
Trump campaign officials said Tuesday morning that the Republican presidential nominee will propose a plan for paid leave that they believe can gain bipartisan approval. While details of the proposal remained unclear ahead of Trump's speech, the officials said it wouldn't cost taxpayers anything more; instead, it would be financed through savings achieved by eliminating fraud in the unemployment insurance program. The plan would apply to mothers and not be transferable to fathers.
The officials also said that Trump would lay out specific plans for enabling parents to deduct the cost of child-care expenses from their income taxes. Trump first mentioned allowing parents to “fully deduct” expenses last month when he announced his economic agenda in Detroit. Some of these expenses are already deductible under the law.
A campaign memo shared early Tuesday with The Washington Post shows that Trump’s plan “will rewrite the tax code to allow working parents to deduct from their income taxes child-care expenses for up to four children and elderly dependents.”
That deduction would be capped at the “average cost of care” in the state of residence, and it would not be available to individuals earning more than $250,000 or a couple earning more than $500,000.
Also included in Tuesday’s speech: additional spending rebates through the Earned Income Tax Credit, expanded deduction opportunities for stay-at-home parents, and revised federal savings accounts to set aside funds for child development and educational needs. [The Washington Post, 9/13/16]
The Myriad Shortcomings Of Trump’s Plan
It Does Not Include Family Leave Or Paternity Leave
CNN’s Jeremy Diamond: “Important Note On Trump's 6-Week Maternity Leave Plan: It's NOT Full Paid Maternity Leave. It's A Safety Net: 6 Weeks Unemployment Benefits.” CNN’s Jeremy Diamond tweeted a note that Trump’s plan is specifically focused on “maternity leave,” which would not include paid paternity leave or family leave, which would allow care for sick family members. He added that the proposal is not “full paid maternity leave,” but rather is a six-week extension of unemployment benefits for working moms:
Important note on Trump's 6-week maternity leave plan: it's NOT full paid maternity leave. It's a safety net: 6 weeks unemployment benefits
— Jeremy Diamond (@JDiamond1) September 13, 2016
AP: Trump’s Family Leave Plan “Would Not Apply To Working Fathers.” The Associated Press (AP) reported on September 13 that Trump’s proposed parental “leave program would not apply to working fathers.” The exclusion of paternity leave would by definition exclude some LGBT families from his plan. [The Associated Press, 9/13/16]
ThinkProgress: Trump’s Plan Ignores New Fathers, Adoptive Parents, Paid Sick Leave, And Family Leave While Making Things Worse For Mothers. ThinkProgress economic policy editor Bryce Covert highlighted several shortcomings in Trump’s proposal, including that his focus on maternity leave “would mean that new fathers and potentially all adoptive parents would be completely left out” along with any workers “whose parents become sick” as well as “anyone who went through a major illness.” Covert also explained that the focus on maternity leave could actually encourage discrimination against working mothers and “all women of childbearing age” by making them potentially more costly than their male counterparts. Extending parental leave to mothers and fathers would reduce the “motherhood penalty” faced by women in the workforce. [ThinkProgress, 9/13/16]
It Ignores The Poor And Favors The Wealthy
AP: Trump Proposes To Reduce Child Care Costs With A Tax Deduction Rather Than A Tax Credit, Meaning It Would Not Apply To “More Than 40 Percent Of U.S. Taxpayers.” The AP noted that Trump’s plan to “reduc[e] child care costs by allowing parents to fully deduct the average cost of child care from their taxes” would not apply to “more than 40% of U.S. taxpayers,” who “don't make enough money to owe taxes to the federal government” in the first place:
Trump in August had proposed reducing child care costs by allowing parents to fully deduct the average cost of child care from their taxes. He is expected to flesh out that plan Tuesday, including expanding the deduction to include costs associated with caring for elderly dependent relatives.
But as a tax deduction, rather than a tax credit, critics say the plan would primarily help more affluent households. More than 40 percent of U.S. taxpayers don't make enough money to owe taxes to the federal government, meaning they would not benefit from a deduction. [The Associated Press, 9/13/16]
AP: Proposed Dependent Care Savings Accounts “Would Create A Potential Tax Shelter For Wealthy People.” The AP also reported that the Center for American Progress’ Carmel Martin said Trump’s proposed “Dependent Care Savings Accounts,” intended to “allow families to set aside money to look after children or elderly parents,” would in fact “create a potential tax shelter for wealthy people.” Martin also pointed out “that Trump's proposals remain tilted to the rich because the low-income child-care rebates top out at $1,200.” [The Associated Press, 9/13/16]
NPR: Deduction Income Caps “Far Exceed Most People’s Definition Of Working Class.” National Public Radio (NPR) reporters Scott Detrow and Domenico Montanaro noted that Trump’s proposed income caps for child care tax deductions -- $250,000 for individuals and $500,000 for couples -- “far exceed most people’s definition of working class,” despite the campaign’s claims that the plan “is focused on ‘working and middle-class families.’” [NPR, 9/13/16]
It’s Not Sufficiently Funded
Vox: “There Isn’t Enough Unemployment Fraud In The United States” To Pay For Trump’s Maternity Leave. Vox’s Libby Nelson explained that “Trump has said he’d cover the cost by rooting out unemployment insurance fraud.” Nelson noted that “there’s about $3 billion in unemployment fraud in the US every year” and that “even if Trump could root it all out, it would probably take at least three times that much money to afford a bare-bones paid family leave program.” According to the September 13 Vox article:
As always, the big question is how to pay for such a major new initiative. Trump has said he’d cover the cost by rooting out unemployment insurance fraud. So the first question is how much Trump’s plan would cost — and the second is whether there’s enough fraud to pay for it.
Hillary Clinton’s plan to offer 12 weeks of leave at two-thirds of a worker’s previous salary would cost $300 billion over 10 years. Even assuming Trump’s is much less generous, offering six weeks instead of 12 and a smaller fraction of salary, there isn’t enough unemployment fraud in the United States to come close to paying for it.
A study published in 2013 by the St. Louis Federal Reserve found that unemployment fraud in 2011 totaled $3.3 billion, about 3 percent of total unemployment benefits paid out that year.
$3.3 billion is a lot of money. But given how much the government spends on unemployment, it’s not an astronomically high fraud rate: Worldwide, businesses lose about 5 percent of revenues to fraud. Even if Trump managed to drastically reduce unemployment insurance fraud, something he’s never mentioned a specific plan to do, he’d save a couple of billion at the most. Guaranteeing family leave would cost multiple times that. [Vox, 9/13/16]
NPR: Family Savings Accounts Would Cost $25 Billion, Which “The Trump Campaign Outlines No Way To Pay For.” NPR reported that Trump’s plan for a “Dependent Care Savings Account” would “come at a whopping cost” of $25 billion a year, which “the Trump campaign outlines no way to pay for.” According to the September 13 NPR article:
Trump would also create a Dependent Care Savings Account, which would allow "tax-deductible contributions and tax-free appreciation year-to-year," according to a campaign-provided fact sheet. What's more, the government would match half of the first $1,000 deposited per year.
That could come at a whopping cost. There are some 124 million households in the U.S., about 43 percent of which with children. That's more than 50 million households. If all of those families put in $1,000 per year, it would cost the government $25 billion annually. Even if half of all families contributed to it, that's still a big price tag, and the Trump campaign outlines no way to pay for it. Not to mention that that kind of benefit doesn't help the families who can't afford to put that much in per year.
Trump campaign policy adviser Stephen Miller told NPR's Sarah McCammon that a Trump administration would focus on fraud to finance the family leave portion. Miller's estimate was $5.3 billion in unemployment insurance fraud, which the campaign believes it can recoup half of.
"We estimate we can easily recover $2.5 [billion] for paid leave," Miller said.
That still would leave a sizable gap in how to pay for the overall plan. Miller added, "The rest is paid for through comprehensive tax and economic reform." And the campaign believes it would be "deficit-neutral." But if that's based on "growth," that can always be a murky calculation. [NPR, 9/13/16]
It’s (Another) Trump Flip-Flop
Wash. Post Wonkblog: Trump Previously Suggested Company In-House Child Care, Which “Doesn't Require Government Investment.” The Washington Post’s Danielle Paquette noted that “Trump hadn’t talked about a specific child-care policy on the campaign trail” before this plan, but in November, “he offered a solution that doesn't require government investment: company in-house child care.”
Before Monday, though, Trump hadn’t talked about a specific child-care policy on the campaign trail. At a town-hall event in Iowa in November, he offered a solution that doesn't require government investment: company in-house child care.
"It's not expensive for a company to do it," he said, according to news reports. "You need one person or two people, and you need some blocks and you need some swings and some toys. You know, surely, it's not expensive. It's not an expensive thing. I do it all over, and I get great people because of it. ... It's something that can be done, I think, very easily by a company." [The Washington Post, 9/13/16]
AP: Trump “Previously Touted” Trump Organization Child Care Programs, But His Businesses Offer Child Care Programs Only For “Guests And Club Members, Not Employees.” The AP reported that Trump “has previously touted similar programs at his hotels and golf clubs,” but the programs Trump cited as potential child care solutions “are offered to guests and club members, not employees”:
Trump is also expected to propose incentives for employers to provide child-care options at work. He has previously touted similar programs at his hotels and golf clubs — but The Associated Press has reported that those options are offered to guests and club members, not employees. [The Associated Press, 9/13/16]