Unemployment & Social Security — Borrowing from the Future

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Should the unemployed be allowed to borrow against their future Social Security benefits? Chris Pope writes:

Sylvain Catherine, Max Miller, and Natasha Sarin of the University of Pennsylvania have demonstrated that as little as a 1 percent reduction in individuals’ future social security incomes could fund an increase in benefits more generous than the CARES Act bonus. This implicit endorsement of a Biggs-Rauh-like proposal landed Sarin, who is an advisor to the presumptive Democratic presidential nominee Joe Biden, in political hot water.  But it should not have because by mitigating the moral hazard of unnecessarily leading people out of the labor market, the proposal would allow more generous benefits to be provided with fewer associated strings, conditions, and negative side effects. It could also be provided federally – circumventing dysfunctions resulting from the administration of state unemployment insurance.

This proposal is similar to the one to let parents of new children use their benefits to finance leave from work. Some conservatives and libertarians have criticized that family-leave proposal, and I’ve defended it. I wonder whether this idea, if it took off, would attract as much of the same kind of criticism.

A big part of the argument from the critics has been that the federal government shouldn’t get involved in family leave at all, even in the form of adding flexibility to an existing program. It would be “a new entitlement.” While I don’t think that argument is very persuasive, it wouldn’t apply in the case of unemployment benefits, which are already provided by governments.

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Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.




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