In the wake of the latest trustees’ report that funding for Social Security, the premier government retirement program, will be exhausted by 2034, Hillary Clinton and Donald Trump squared off this week on how they would preserve the system and continue to provide adequate benefits for future retirees.
The dueling positions of the presumptive Democratic and Republican presidential nominees were stated as op-ed pieces in the upcoming bulletin of the AARP. And they underscore the continued dearth of Trump’s public policy ideas and Clinton’s relentless efforts to champion the middle class and placate the liberal wing of her party.
Trump is sticking to his guns that Social Security and other entitlement programs can be propped up indefinitely by “growing” the economy with tax cuts and other policy measures, without tampering with the basic benefits and funding mechanisms. Clinton agrees that the current Social Security system must be preserved or even expanded – but insists that can only be accomplished by imposing higher taxes on wealthy Americans.
AARP, the largest seniors’ advocacy group, has been pressing presidential candidates to “Take A Stand” and provide voters with substantive ideas for keeping the Social Security system solvent. The group has warned that if the Social Security trust fund begins to run short of revenues in the coming decades, retires could lose up to $10,000 a year in benefits.
Congress hasn’t done a major overhaul of the Social Security system since 1986, although several blue ribbon budget commissions, Republican congressional leaders including House Speaker Paul Ryan (R-WI) and the Obama administration have toyed with ideas for preserving the system. Those ideas have ranged from raising the retirement age and reducing the cost-of-living adjustment to privatizing the system for younger workers – an idea repeatedly pushed by Ryan and other House GOP leaders.
Trump, the billionaire real estate businessman, early this year broke with other Republican presidential candidates by vowing to protect Social Security, Medicare and other pricey federal entitlement programs from cuts, even while boasting that he would balance the budget and wipe out a major chunk of the $19.2 trillion federal debt. However, he provided few clues as to how he would achieve those simultaneous goals, other than to claim he would save hundreds of billions by eliminating “waste, fraud and abuse.”
In his latest attempt to explain his approach to preserving Social Security, Trump was equally opaque, asserting that the key is generating a “robust and growing: economy. He would do this, he said, by passing arguably the largest tax cut in U.S. history, repealing the Affordable Care Act and the Dodd-Frank financial reform legislation, spurring competition and rooting out government waste and fraud.
“If we are able to grow the economy, increase the tax base, bring capital and jobs back to the United States and encourage foreign direct investment, we will shore up our entitlement programs for the time being,” Trump wrote in the AARP bulletin. “For too long Americans have had a great deal of uncertainty in their lives, and the reforms I will bring to D.C. will remove that uncertainty and will restore confidence in the American economy.”
But Trump is being highly disingenuous in feigning a lack of interest in reforming Social Security to address its glaring weaknesses. In April, Sam Clovis, Trump's chief policy adviser, hinted at a Washington budget seminar that Trump would be open to curbing Social Security and other entitlements if his ideas of spurring growth didn’t pan out.
“After the administration has been in place, then we will start to take a look at all of the programs, including entitlement programs like Social Security and Medicare,” Clovis said. “We’ll start taking a hard look at those to start seeing what we can do in a bipartisan way.”
Clinton says that the Republicans like Ryan are using “scare tactics” concerning the future of Social Security and she has vowed to oppose any attempt to “undermine the bedrock of the system.”
She has gone on record against any attempts to “gamble seniors’ retirement security on the stock market through privatization.” She opposes any move towards reducing annual cost of living adjustments – something even President Obama has expressed interest in. Clinton also is against raising the retirement age or “closing the long-term shortfall on the backs of the middle class,” whether through reductions in monthly benefits or increases in the Social Security payroll tax.
Her long-term solution for preserving Social Security is to raise taxes on high-income Americans, including the possibility of taxing a portion of their income above the current Social Security cap. Right now, the Social Security payroll tax is phased out on wages above $118,500.
During the Democratic primary season, Sen. Bernie Sanders of Vermont put enormous pressure on Clinton to commit to an expansion of benefits to retirees using an increase in the payroll tax. That is an idea that is highly popular within the party’s liberal wing and was used as a litmus test of Clinton’s commit to progressive values.
Sanders said if he were elected president, he would use a tax increase to increase annual retirement benefits by $1,300 for everyone making under $16,000 a year.
Clinton says she would use the additional tax revenue to target the needs of women who are widows or who took significant time out from the work force to care for their children, elderly parents or ailing family members.
According to Clinton’s campaign, which prepared her responses to the AARP, the poverty rate for widowed women 65 or older is nearly 90 percent higher than for other seniors. That’s partly because when a male spouse dies, his surviving family can suffer a sharp loss in retirement benefits. In the case of a two-earner couple, benefits can drop by as much as a half in the case of a death.
“Hillary believes that we have to change that by reducing how much Social Security benefits drop when a spouse dies, so that the loss of a spouse doesn’t mean financial hardship or falling into poverty,” Clinton’s campaign says.
“Hillary firmly believes that we must not cut or privatize Social Security,” the Clinton campaign declared in response to the AARP request for comment. “Hillary will expand Social Security for those who need it most. Hillary will fight to expand Social Security for those who are treated unfairly today.”