By Igor Volsky and Victoria Fleischer
Sen. Bernie Sanders (I-VT) announced his candidacy for the presidency on Thursday with the goal of promoting progressive polices to reduce income inequality, climate change, and the influence of big money in American politics. Sanders hopes to inject his solutions into the national political conversation and shift the Overton window on a host of domestic and international priories.
Chief among them is Social Security, a program he describes as one of the “most successful government programs in American history.” However, without changes — benefit cuts or tax increases — the fund that maintains Social Security won’t be able to pay-out all of its obligations by 2033, leading lawmakers to propose a series of solutions to extend the program’s solvency. Sanders has long warned against prescriptions that would cut benefits or slow their growth, upending Washington’s consensus that government needs to cut entitlement programs to keep them sustainable. Instead, he has proposed legislation to expand the program.
Look at how the different proposals to alter Social Security from various declared and undeclared presidential candidates would impact the decades-old program.
Transcript:
IGOR VOLSKY: Social Security. It pulls millions of seniors out of poverty each year and is a lifeline to more than 59 million elderly and disabled beneficiaries.
The program works like this.
You and your employer split a dedicated tax — called the payroll tax — to fund the overwhelming majority of the program. It, in turn, pays you benefits based on how much you paid in and how old you are when you start collecting.
So far, this system has worked pretty well — some even say really really well.
But with more baby boomers retiring and people living longer than ever before, Social Security is facing a little problem.
After 2033, the trust fund won’t be able to pay for all of its obligations.
So, candidates hoping to get your vote for president are offering solutions. The options are pretty simple.
Here we have bucket 1: a combination of ideas offered by the likes of Chris Christie, Marco Rubio, and Jeb Bush!
Since Americans are living longer than ever, why not raise the retirement age to 69 or 70?
While that would extend the life of trust fund, it would force younger seniors to find jobs or work longer and ultimately provide them with fewer benefits over a lifetime.
The seniors most affected by the potential change?
Lower-income adults who generally engaged in more labor intensive jobs and tend to have shorter life expectancies.
Slow the growth of benefits by changing the cost-of-living adjustment.
Social Security adjusts benefits to keep up with purchasing power.
But lawmakers from both parties have proposed shifting to a new measurement that would slow the growth of benefits because, they argue, it would more accurately reflect spending patterns. Sound pretty good, right?
Well, that would mean many seniors would end up seeing a benefit cut.
Means test wealthier seniors.
Chris Christie thinks that some people should pay into the system, but are too wealthy to collect benefits.
After all, why should we fund Social Security for the likes of Warren Buffett and Bill Gates?
But would everyone continue to support Social Security if it becomes a program for the poor?
And how much money would this actually save?
Now for bucket 2, policies championed by people like Martin O’Malley and Bernie Sanders.
Boost benefits.
This group has proposed increasing benefits for Social Security beneficiaries, including boosting the special minimum benefits for the lowest-income seniors…arguing that nobody should retire in poverty.
Increase benefit growth.
Like the first group, these reformers also want to change the way the annual growth rate is calculated. But they’d make sure that benefits increase more every year. This they say, would reflect the actual living costs for the elderly.
And how would Social Security expanders pay for the added benefits?
Eliminate the cap on the payroll tax.
Currently there is a cap on how much your earnings can be taxed to fund Social Security.
Some proposals would bump up the cap, others would get rid of it altogether.
The result? Higher-income earners would pay into the system all year long.
While economists argue that the higher burden on wealthier Americans could discourage work and undermine support for the program…the tax increase would extend the life of the fund.
And some politicians are even talking about additional taxes on investments and using those funds for Social Security.
So what does this all mean for the 2016 elections? Well…that’s for you to decide.