Beneath the rancor,
Social Security’s future is on the ballot
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[October 27, 2016]
By Mark Miller
CHICAGO
(Reuters) - The future of Social Security is on the ballot this year -
not that you could tell by the U.S. presidential debates, or by any
other aspect of this rancorous, sensational election.
But 67 percent of registered voters rank Social Security as a “very
important” part of their voting decision this year - just behind the
economy, terrorism, gun policy and immigration, according to the Pew
Research Center.
And so it should be. Social Security is the most important retirement
benefit for most American workers - it provides at least half of the
income for 48 percent of retired couples, and for 71 percent of single
seniors, according to the Social Security Administration. Also, Social
Security benefits kept 22.1 million seniors, working-age adults and
children out of poverty in 2015 according to an analysis of Census data
released this week by the Center on Budget and Policy Priorities.
But Social Security’s retirement and disability trust funds are forecast
to be depleted in 2034. At that point, benefits would be cut an
estimated 21 percent, unless Congress takes action.
Meanwhile, a consensus is developing that an expansion of Social
Security benefits should be added to the reform agenda to address our
growing retirement security crisis. Solvency and expansion can both be
addressed by raising new revenue. Options include raising the cap on
income subject to payroll taxes, raising payroll tax rates very
gradually over a 10-year period or even allowing Social Security to
invest a portion of the trust fund in equities.
Democratic nominee Hillary Clinton and Republican rival Donald Trump
faced just one question about Social Security during their recent
debates - and the framing was wrong.
Moderator Chris Wallace of Fox News asked the candidates how they would
reform the program in light of its role as a key driver of the nation’s
debt. Wallace had it backwards - Social Security actually lends money to
the federal government, not the other way around.
![](http://archives.lincolndailynews.com/2016/Oct/27/images/ads/current/christian_village_sda_031616.png)
Surplus trust fund assets are invested in a special type of Treasury
note backed by the government’s full faith and credit. So Social
Security is no more a driver of the debt than other holders of
government bonds (China comes to mind). The Social Security trust fund
is a lender to a government that spends much more than it levies in
taxes. When the trust fund runs dry in 2034, there is no mechanism
available to make up the funding gap from general revenue.
Wallace asked if Trump would make a deal to save Social Security (and
Medicare) that included both tax increases and benefit cuts. Trump did
not answer, instead pivoting to a critique of the Patient Protection and
Affordable Care Act. Clinton, focusing on Social Security, reiterated
her support for raising revenue through higher payroll taxes on the
wealthy, fighting any benefit cuts and supporting targeted increases for
low-income workers and women.
Her response is in line with what voters want. Another Pew poll,
conducted back in March, found that 71 percent of registered voters
oppose benefit cuts. That figure does not change much when you filter
respondents by party affiliation or which candidates they supported in
the primaries. Other polling suggests a majority of Americans would
favor higher payroll taxes - on the wealthy or on themselves - to
support the program.
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PARTY PLATFORM SIGNALS
Aside from the two candidates, where would the two major political
parties take us on Social Security reform after the Nov. 8 election? The
party platforms adopted at this year’s conventions are instructive.
The Republican platform states that solvency should be restored without
tax increases. That is a de facto call for benefit cuts, because there
are only two ways to solve Social Security’s financial problems: either
you cut benefits or increase revenue.
The platform also states that Republicans “believe in the power of
markets to create wealth and to help secure the future of our Social
Security system.” That is a clear call for shifting Social Security to a
system of private accounts, as advocated by President George W. Bush in
2005.
![](http://archives.lincolndailynews.com/2016/Oct/27/images/ads/current/farmers_bank_sda_prom_050614.png)
Meanwhile, the Democratic platform says this: ”We will fight every
effort to cut, privatize, or weaken Social Security, including attempts
to raise the retirement age, diminish benefits by cutting cost-of-living
adjustments, or reducing earned benefits.” The platform document goes on
to call for benefit expansion, at least for “women who are widowed or
took time out of the workforce to care for their children, aging
parents, or ailing family members.”
It also calls for “exploration of alternatives” to Social Security’s
current annual cost-of-living adjustment that would be more “equitable”
for seniors.
What might happen if Clinton wins, as expected? Odds are good that she
would tackle Social Security reform sometime in a first or second term,
but much will depend on which party controls the two chambers of
Congress. Republicans can be expected to continue their push for a
higher retirement age, less generous cost-of-living adjustments and some
form of means-tested benefits. Democratic control of the Senate and
House of Representatives would create a historic opportunity for
legislative reform to restore Social Security’s long-range solvency and
expand benefits.
If the
Democrats fall short of that, their challenge will be to keep the debate about
Social Security reform separate from phony debt arguments, and away from back
room deals that do not require legislators to go on the record in favor of
cutting, sustaining or expanding Social Security. In that scenario, lawmakers
would have to explain to voters why they oppose putting some extra benefits in
their pockets. Or, worse - why they are OK with allowing Social Security to keep
veering toward a huge benefit cut in 2034?
![](http://archives.lincolndailynews.com/2016/Oct/27/images/ads/current/ldn_more4_121715.png)
The polling data tells us that expansion will win. Not that you could tell it in
this particular election season.
(The writer is a Reuters columnist. The opinions expressed are his own)
(Editing by Matthew Lewis)
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