Social Security, which just turned 81 years old this past weekend, is one of America’s longest functioning benefit programs, providing benefits to qualified workers who are disabled, retired, or the survivors of a deceased spouse. However, despite lasting 81 years, both Republicans and Democrats should realize Social Security is currently on a path to fiscal insolvency and is in need of reforms.
Due to the fact that Social Security is experiencing yearly loses and is currently on a path to fiscal insolvency, the Social Security Administration (SSA) has called upon legislators and politicians to take action in preventing Social Security’s Trust Fund from being exhausted. Without any reforms, Social Security beneficiaries will experience an automatic cut in benefits, which could greatly impact those that need it the most.
However, this presidential election involves two candidates that have failed to adequately address the problems within Social Security. Republican nominee Donald Trump has claimed he will fix Social Security by enacting pro-growth policies and creating a booming economy through lowering tax rates, re-negotiating trade deals, and by eliminating waste, fraud, and abuse. While some of these policies may be beneficial for other reasons, none of them directly address Social Security. A growing economy could help marginally prolong Social Security’s Trust Fund, but it would do little to address long-term problems, namely the program’s unfunded obligations for the future.
Democratic nominee Hillary Clinton has called for three expansions to benefits provided through Social Security. Clinton has called for providing a caregiver credit to individuals who leave the workforce to care for an elder or child. Since Social Security benefits are calculated based on a worker’s top 35 years in the workforce, providing care giver credits would increase benefits to workers who took time off to provide care and did not pay FICA taxes during that time. Calculations done by National Taxpayers Union Foundation (NTUF) estimate this proposal would cost $54 billion over ten years, or an increase in Social Security outlays by nearly 0.5%.
Clinton has called for increasing the minimum monthly benefits provided to low-income seniors who worked low-wage jobs and for expanding survivor benefits to widows and widowers. While it is unclear how expansive the new benefits would be, NTUF has calculated that these two policies could increase Social Security spending by at least $29 billion over five years and $12 billion over ten years, respectively, based on information from the SSA’s Office of the Chief Actuary.
Clinton plans to pay for these Social Security expansions though taxing higher income earners by raising the payroll tax cap (currently $118,500) and by taxing other forms of income that high-income earners tend to possess. These tax increases would stifle job creation, economic opportunity, and investments, which are key to a long-term growing economy.
Trump misses the mark on Social Security reform because his plan is too simplistic and fails to address the intricacies of the Social Security system. Clinton misses the mark because her plan is too elaborate and fails to take into consideration the unintended consequences of expanding Social Security spending when the program is headed toward insolvency. Neither candidate address Social Security in a sustainable way.
Taxpayers should look for policies that will secure Social Security benefits for individuals who need them the most. Social Security is not a retirement plan, nor should it be expected to function like one. Social Security’s original intent was to simply provide insurance for low-income elderly and disabled individuals during events that have a low probability, but catastrophic cost.
In addition to providing for their own retirement by investing in Individual Retirement Accounts and 401ks, taxpayers should seek concrete policies that will return solvency to the Social Security program and return it to its original intent of providing security for low-income individuals without raising taxes.
A detailed line-by-line analysis of the spending proposed by the Presidential candidates is available at CandidateCost.org.