Oct 20, 2016 | By Nick
Thornton
Presidential
candidates Hilary Clinton and Donald Trump were forced in their final debate to
address an issue that has been conspicuously absent from this year’s election
cycle: Social Security.
Of the topics
chosen by Fox News’ Chris Wallace, the last debate’s moderator, “debt and
entitlements” topped the list.
That the issue
has not been raised in the previous two debates has miffed some advocacy
groups. AARP members reportedly sent NBC’s Lester Holt, moderator of the firs
debate, 100,000 emails demanding the candidates address their positions on
Social Security, according to CNBC.com
The 2017 Social
Security cost-of-living adjustment (COLA) will take effect for more than 60
million Social Security beneficiaries beginning in...
Another 10,000
members took to social media urging ABC’s Martha Raddatz and CNN’s Anderson
Cooper to raise the issue. Neither did, nor did voters in the town hall format
raise it.
A survey from
the Pew Research Center conducted earlier this year shows Social Security is a
top issue for many voters, and not just seniors. Almost seven in 10 voters said
Social Security was “very important” this election season, which was more than
the importance respondents placed on trade, the environment and abortion.
Both Sec.
Clinton and Mr. Trump outlined their positions on Social Security in a June AARP
bulletin.
The Clinton
campaign said “Republicans are using scare tactics about the future and
effectiveness of Social Security to push through policies that would jeopardize
it,” and claimed “the real threat to Social Security is Republican attempts to
undermine the bedrock of the system.”
In the
bulletin, her campaign said Sec. Clinton would fight any attempt to privatize
the program, and said she opposes reducing annual cost-of-living adjustments
and raising the retirement age.
The campaign
also said a Clinton Administration would expand Social Security’s benefits to
“those who need it most,” and said “the most fortunate” would be asked to pay
more for expanded benefits.
Mr. Trump said his policy would
address the solvency of Social Security and other entitlement
programs by expanding the economy, and ultimately tax revenue, through tax, trade
and immigration reform.
“I will work
with Congress to ensure we have a pro-growth agenda in place,” Trump told AARP.
“If we are able to sustain growth rates in GDP that we had as a result of the
Kennedy and Reagan tax reforms, we will be able to secure Social Security for
the future. Our goal is to keep the promises made to Americans through our
Social Security program.”
According to
the Social Security Administration’s most recent trustees report, the program’s
trust funds will be depleted in 2034 under current law, at which time benefits
would have to be cut by about 20 percent. The Congressional Budget Office has
predicted the fund’s reserves will be exhausted by 2029.
Last April, the
Committee for a Responsible Federal Budget, a non-partisan think tank that
advocates for sound fiscal policy, and has scored each candidate’s budget and
tax proposals, released a list of the myths surrounding the Social Security
debate.
Here is a look
at some of the Social Security myths on that list:
Myth 1: We don’t need to worry about Social Security for many years
CRFB says
there is a high cost to waiting to reform Social Security. “The longer
lawmakers wait to enact Social Security reform, the more abrupt and less
targeted changes will have to be, the less time workers will have to plan and
adjust, and the fewer the options policymakers will have. Perhaps more
importantly, the size of the problem literally grows over time,” CRFB says.
The payroll
taxes that fund Social Security would need to increase 21 percent today to make
Social Security solvent. If lawmakers wait until 2034 to address the issue,
those taxes would have to increase by 32 percent, CRFB says.
Myth 2: Social Security faces only a small funding shortfall
CRFB says
significant adjustments have to be made to address Social Security’s “large but
manageable financing gap.”
In 2016, the
program is expected to pay out $70 billion more in benefits than it generates
in tax revenue. The gap is expected to widen as the population ages. This year,
Social Security spending will account for 13.9 percent of country’s total
payroll. By 2040, the SSA projects the benefits will grow to 16.7 percent of
payroll, even as tax revenue for the program remains equal to what it is
today—about 13 percent of payroll.
Myth 3: Social Security solvency can be achieved solely by making the
rich pay the same as everyone else
The existing
Social Security payroll tax is capped at a worker’s first $118,500 of income.
That covers about 83 percent of all the country’s wages, CRFP says, leaving 17
percent of wages untaxed for Social Security.
Policy experts
commonly suggest raising or eliminating that cap. Doing so would “significantly
improve Social Security’s finances, but it would not by itself make the program
sustainably solvent,” according to CRFB.
Even with the
cap’s elimination, some combination of reduced benefit increases and higher
taxes on wages below the cap would still be needed to make the program solvent
for the long run, CRFB says.
Myth 4: Today’s workers will not receive Social Security benefits
Even if
lawmakers do nothing, retirees will still receive benefits in 2034. Revenue
from taxes would be sufficient to pay about 79 percent of scheduled benefits.
“An immediate
cut of that magnitude – particularly for older and lower income retirees –
could be devastating. For that reason, most observers agree that Congress
should take action to avoid such an abrupt cut,” says CRFB.
Myth 5: Social Security can be saved by ending waste, fraud and abuse
Republicans
commonly cite the need to address fraud in the Social Security system as a
primary measure to address the larger solvency issue.
While
addressing fraud and abuse in the system would be sound policy, even
eliminating all fraud would not do much to improve the program’s overall
solvency, CRFB says.
That’s because
there isn’t enough waste, fraud or abuse to significantly impact the program’s
funding shortfalls. The SSA estimates that about $3 billion in improper
payments are doled out every year. By contrast, about $150 billion in benefit
cuts would have to be made every year going forward to make the program
solvent.
At best,
eliminating fraud and waste would only close 2 percent of the funding
shortfall, CRFB says.
Myth 6: Raising the retirement age would hit low-income seniors the hardest
Critics of
raising the normal retirement age argue the most vulnerable seniors would be
hit the hardest, but analysis from several sources suggests the contrary.
The CBO says
increasing the normal retirement age by one year, to age 68, would reduce the
lifetime benefits of the highest earners by 5 percent, and 3 percent for the
lowest earners. The Urban Institute came to a similar conclusion.
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