Jim Clark: Social Security — what are the candidates’ positions?
Well, Tahoe residents, it’s time to make a choice. The Nevada presidential preference caucuses are right around the corner. Democrats meet and choose on February 20, Republicans on February 23.
Still not decided? Is Social Security a big issue with you? Here are some facts courtesy of Boston College’s Center for Retirement Research.
According to their analysis of the Social Security Trustees’ 2015 report:
1: The system’s 75 year projected deficit declined modestly from 2.88 percent to 2.68 percent of total payroll.
2: The deficit as a percent of gross domestic product remains at about 1 percent.
3: Projected exhaustion of the trust moved back slightly from 2033 to 2034 after which payroll taxes still cover about three quarters of promised benefits.
That’s a surprisingly optimistic report card on Social Security. The Center cautions that although the system’s deficit is manageable changes are needed for the long term; also the disability insurance program trust fund is expected to be exhausted next year which will require an immediate congressional Band-aid.
That said, let’s take a look at the presidential candidates’ stated positions on Social Security, again according to Boston College’s Center for Retirement research.
First the Republicans. Jeb Bush, Ted Cruz and Marco Rubio would raise the retirement age most likely from 65 to 67. Bush would go a step further and raise the earliest eligibility age too. Bush would also use a lower consumer price index to set annual cost of living adjustments.
Cruz would index benefit accruals during the accumulation stage by tying them to general inflation rather than the more aggressive wage growth index.
A reduction of benefits for higher earners is favored by Bush, John Kasich and Rubio. Bush and Rubio would also eliminate payroll taxes for older workers as well as the earnings test for benefit eligibility. Ben Carson and Cruz would allow workers to invest a portion of their Social Security account.
Where does Donald Trump stand on Social Security? Apparently he’s not saying, at least as far as the Center’s researchers can discover.
Next the Democrats. Both Hillary Clinton and Bernie Sanders would lift the cap on wages subject to Social Security taxes and both would broaden the tax base by including additional classes of worker in the program. Of course that would add more beneficiaries.
Sanders would go a step further and generally increase benefits, including the maximum benefit, and use a more aggressive consumer price index to set the annual cost of living adjustment. Clinton would create a Social Security credit for caregivers and raise survivor benefits.
President Franklin Roosevelt signed Social Security into law in 1935. Then, as now, full benefits became available when workers reached 65 years of age.
Of course in 1935 male life expectancy was 58 years, female 62, so the deal made actuarial sense. Increases in life expectancies have put the scheme in the red and periodic tinkering by Congress has been a series of band aids.
Incidentally, Sanders told Democratic debate watchers that his Social Security Expansion Act would, if passed, extend the life of the Social Security Trust by 58 years.
A fact check by USA Today disclosed that fund solvency would be extended by only 40 years, so Sanders’ plan would not kick the can as far down the road as he had hoped.
Note that the GOP proposals are all aimed at improving the fiscal soundness of the Social Security Trust while the Democrats want to increase benefits and add beneficiaries. Considering the system is already in a deficit that would just increase the amounts of money we will have to borrow from the Chinese.
Author Robert Heinlein wrote: “Democracy is doomed once people begin voting for bread and circuses.”
Jim Clark is president of Republican Advocates. He has served on the Washoe County and Nevada GOP Central Committees. He can be reached at firstname.lastname@example.org.