Only one gets a passing grade.
The remaining presidential candidates’ positions on Social Security reform can be grouped into three camps: (1) status quo – Hillary Clinton, Ted Cruz, and Donald Trump (politics does indeed make strange bedfellows); (2) massive expansion – Bernie Sanders; and (3) nonspecific reform – John Kasich. Beyond enjoying the wry smile that may have been induced by learning that Mrs. Clinton, Mr. Cruz, and Mr. Trump actually have something in common, why should members of the 2040 Matters community care?
We should care because generational justice is the foundation of the American Dream, and the ongoing transfer of wealth from younger working Americans to retired wealthy Americans through Social Security and Medicare, is anything but just. Younger Americans are being taxed to fund the entitlement programs today, but will not received their promised benefits tomorrow. With a few primaries remaining and neither nomination settled, it is again time to take a close look at the candidates’ positions on Social Security reform to see who has a plan that reflects a commitment to generational justice.
Unfortunately for Generation X+, there is not much to see and even less to support. Even though they “didn’t start the fire,” most of the leading candidates would prefer to play the part of Nero, fiddling while Social Security burns.
On the Democratic side, both candidates discuss Social Security, but only Mr. Sanders sets forth a reform plan. His reforms include increasing benefits for all recipients, using a more generous cost of living adjustment, and implementing payroll taxes on incomes above $250,000/year.
Mrs. Clinton primarily defends the status quo by attacking Republicans and outlining a laundry list of reforms she would oppose: privatization; benefit reductions or tax increases that affect the middle class; an increase in the retirement age; and a change in the annual cost of living adjustment formula. As for actual reforms, she proposes to increase benefits for widows and those who leave the workforce to care for an elderly parent. She supports unspecified payroll tax increases on the wealthy.
On the Republican side, Messrs. Trump and Cruz do not favor Social Security reform and ignore the topic on their websites. Mr. Kasich pledges to put together a commission on Social Security reform, arguing that it is impossible to reduce our deficits and control our debt without changes to the program.
So where does this leave Generation X+? Holding the bag, most likely.
The status quo camp completely fails to address the shortcomings in Social Security and the burdens it imposes on younger Americans – payroll taxes today in exchange for increased debt and reduced benefits tomorrow. Insofar as Mrs. Clinton’s plan arguably departs from the status quo, it is most similar to Mr. Sanders’ plan.
Messrs. Trump and Cruz: D
Mrs. Clinton: D-
And Generation X+ should be deeply skeptical of Mr. Sanders’ massive expansion plan. To begin with, it is unlikely that his proposed payroll tax increase would cover the cost of his proposed benefit increases and remedy the existing Social Security funding shortfall, thereby adding to our deficit and debt.
Moreover, in the event there were excess payroll taxes in any given year, they would be used to purchase Treasury bonds. Instead of investing these funds for future retirees, Treasury would spend the funds to cover the costs of other federal programs. This is precisely the unstable and unsustainable position the program is in today. Before supporting Mr. Sanders’ plan, young Americans should “remember the bills [they will] have to pay.”
But perhaps the biggest problem with Mr. Sanders’ plan is that it doubles-down on the inter-generational transfer of wealth. (Remember, Social Security is a “pay as you go” system – today’s workers fund today’s retirees.) Mr. Sanders’ proposes taxing wealthier younger Americans – people who are working, providing for their families, and saving for their retirements – in order to increase retirement benefits for older Americans today, including those who do not need them. Rather than asking wealthier older Americans to forego benefits they do not need, Mr. Sanders wants younger Americans to pay more in taxes. Although his tax increase is purportedly progressive, it is nonetheless contrary to generational justice, particularly because the unaddressed instability in the system will perpetuate the risk that younger Americans will never see their promised Social Security benefits.
Mr. Sanders’ Grade: F
That leaves Mr. Kasich. He proposes reform, but no specifics, such as raising the retirement age, changing the inflation measurement for benefit increases, or asking wealthier older Americans to forego benefits they do not need (a reform that would also be “progressive”). Nonetheless, given his emphasis on restraining spending, it’s clear that some or all of these reforms will need to be included in his actual proposal.
Mr. Kasich’s Grade: C+
Unfortunately, for those of us who care about achieving meaningful Social Security reform, it already looks like we “can’t get there from here.” This is a sad state of affairs for Generation X+ and the 2040 Matters community. We should demand better than a presidential candidate report card that reads: F, D-, D, D, and C+. As “helicopter parents,” we wouldn’t let our kids bring these grades home. Why do we accept this poor performance from our presidential candidates?
This is an updated version of a Post that ran before the New Hampshire Primary.