The first bipartisan paid leave bill has been introduced in Congress by Senator Bill Cassidy (R-LA) and Senator Kyrsten Sinema (D-AZ) - marking a major achievement in the history of paid leave legislation in the United States.
On July 24th, the paid-leave plan - that uses the child tax credit (CTC) to provide new parents with immediate funds to finance time off from work or to offset the cost of infant care - was released for discussion.
The new proposal by Senators Cassidy and Sinema suggests another original means by which families can be guaranteed some financial security whilst taking time off after the birth or adoption of a new child under the age of 6 years. The idea is to allow people to use $5000 of their Child Tax Credit benefits - repaying into the system in future.
The CTC exists to help families with children. It has a minimum earned income requirement and is partly refundable. This allows families to claim cash benefits beyond their tax obligations - but does limit its benefits for the poorest households who do not have a tax liability.
Families on low income who would not meet the criteria for the full, refundable CTC would be able to bring forward their CTC benefit, receiving the equivalent of 12 weeks' wage replacement and their adjusted CTC benefit over the next 15 years.
In a statement, Senator Cassidy said:
"In many cases, the first year of life is the most expensive for a family. This legislation addresses this, focuses resources and eases financial strain to provide a longer bonding period for the family."
This proposal is thought to appeal to Republicans - it does not impose a new tax, nor requires people to seek money from Social Security - it simply allows people to take an interest-free loan from the government at their time of maximum need. Also, it offers flexibility - new parents can decide not to take the time off or alternatively, take advantage of an employer paid leave policy and still receive the regular CTC.
However, Politico - an American political journalism company based in Arlington County, Virginia - reports:
"The use of tax credits could win over reluctant Republicans worried about creating an expensive new program, but the lack of leave for family and medical emergencies will likely keep Democratic leaders from supporting the proposal”
Senator Cassidy stated:
"This is a common-ground solution that can pass Congress and become law,"
Senator Sinema said that the proposal was an important first step that offers parents a new option to finance time off from work or to help pay for child care.
She added:
"Too many parents are forced to choose between losing time with a new child or taking on debt to make up for lost wages."
Aparna Mathur - a resident scholar for economic policy at the American Enterprise Institute (a conservative-leaning think tank in Washington, D.C.) - wrote in an online post:
"The CTC exists precisely to help families with children. It has a minimal earned income requirement and is partly refundable, which allows families to claim cash benefits beyond their tax obligations.
Given the political divide on what constitutes a perfect policy when it comes to constructing a federal paid-leave policy, it makes sense to start with small wins and some compromises."
