Meaningful discussion of entitlement reform is completely absent among Democrats running for president, aside from loud promises to dramatically expand existing programs such as Medicare to provide “Medicare for All” and most recently, “Medicaid for All.” While candidates ignore Social Security, the outlook of the country’s largest welfare program is getting darker.
An April report from the Committee for a Responsible Budget reveals that the so-called Social Security Trust Fund that Congress has been plundering for years will be finally exhausted by 2035, in just 16 years. Once the fund is depleted, beneficiaries will begin to see 20 percent cuts across-the-board unless Congress fixes the program, and the year 2035 is also just an estimate. If there is a recession, future retirees can expect cuts to come much sooner, depending on the severity of the economic decline.
“With Social Security only 16 years from insolvency, policymakers cannot afford to continue delaying action,” the authors state in the report. “Refusing to make changes or compromises today to fix Social Security means putting the retirement security of 84 million beneficiaries and another 190 million workers at risk.”
Yet Democrats running for president have focused on other issues to attract voters and donors, including the drastic expansion of government health care, the elimination of the Electoral College, and the passage of an exorbitantly expensive, economically crippling “Green New Deal.” Fixing Social Security appears to be no one’s priority in the race among those vying for the nation’s highest office. Most candidates do not even mention the term “social security” on their campaign websites.
Fixing Social Security, the committee’s report states, would require an immediate 22 percent increase in payroll taxes, a 17 percent reduction in all benefits, or a 20 percent decrease in new benefits. A thorough solution would likely include a combination of these remedies. It must also take into account that retirees now live approximately a decade longer, on average, than when Social Security was enacted, and the more time policymakers take to act, the more drastic their cuts and tax increases will need to be to avert fiscal catastrophe, according to the report.
Gordon Gray is the director of fiscal policy at the American Action Forum, a center-right think tank. Gray said Social Security’s funding hole is only getting worse with each passing day.
“Further depletion of the trust fund requires even more extreme remedies to the problem,” Gray told The Federalist, adding that continuing to run the program as-is, which threatens a 20 percent cut to new retiree benefits in the relatively near future, makes it difficult for current middle-aged adults to trust that Social Security will be there when they retire.
Some Democrats have introduced and co-sponsored legislation on Social Security, offering insight into how they might seek to fix the program if elected, but they haven’t talked about it much on the campaign trail, if at all.
Sen. Bernie Sanders of Vermont introduced a plan earlier this year that would raise benefits across-the-board, which he claims could be paid for by increasing the cap on payroll taxes from $132,900 to $250,000. The plan has been co-sponsored by several 2020 rivals, including Sens. Cory Booker (D-N.J.), Kirsten Gillibrand (D-N.Y.), and Kamala Harris (D-Calif.). Sanders argues his plan would keep Social Security solvent until 2071, a 36-year extension past the date that the trust fund is expected to be depleted.
Some experts have argued that Sanders’ plan simply delays Social Security’s inherent financial instability and sticks it to future generations. Regardless, Robert Stoker, a political science professor at George Washington University who specializes in studying social programs, told The Federalist it would be unrealistic to solve the issues with Social Security today and never have to revisit the issue of redistributing younger workers’ earnings to the non-working aged who failed to save for their own retirements while they were young.
“The more interesting question is whether we give it a good kick or not,” Stoker said. “I don’t find it to be a compelling criticism that Sanders’ proposal, given current projections, only pushes the problem back 30 or 40 years. That seems like a significant accomplishment.”
Gray took a different stance, arguing that constantly raising taxes to fill financial holes for Social Security is the wrong place to start. Gray said proposals to fix Social Security should start with reducing benefits of higher-income retirees rather than raising taxes on future workers, who are already being taxed more and their earnings siphoned off through astronomical levels of federal, state, and local debt.
Sen. Elizabeth Warren, who co-chairs the Expanded Social Security Caucus with Sanders, is not a co-sponsor to his bill but has talked about scrapping the cap on payroll taxes altogether, essentially changing the Social Security tax from a regressive tax, in which people with lower incomes fund less of their own benefits, to a flat tax, in which everyone pays the same percentage of his income.
Across the Senate chamber in the House, U.S. Rep. John Larson (D-Conn.) introduced legislation co-sponsored by 2020 candidates Reps. Eric Swalwell (D-Calif.) and Seth Moulton (D-Mass.). Larson’s legislation increases the cap on payroll taxes to $400,000 with a gradual increase in the tax rate. Larson’s legislation would also increase subsidies for current and new retirees.
Stoker said that none of the current proposals were really new, and generally followed previous ideas to focus on increasing taxes on today’s workers to pay subsidies to yesterday’s workers.
The nature of the Social Security program has made it a third rail of American politics. The only way to fix it requires significant cuts to benefits or a spike in taxes, both of which are unpopular with an entitled public, making it a difficult and unlikely topic for politicians to address until it’s too late to make easier changes. Promising the American people “free” health care is a much more attractive alternative for politicians seeking popular support among a crowded field of candidates.
Still, Americans are anxious about their retirement. Eighty-five percent of Democrats and 74 percent of Republicans and Independents believe that the United States is facing a retirement crisis, according to a poll from the National Institute on Retirement Security released in February.
