- As the 2024 White House presidential race heats up, plans for the candidate’s Social Security are surfacing.
- Leading candidates have vowed to protect their benefits, but experts say the program will need to be reformed “sooner or later.”
- This may require bipartisan compromises on benefits and taxes, or even the creation of a more “modern” version of Social Security, as one applicant suggests. unknown.
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Last November’s midterm elections were expected to bring a so-called “red wave” victory to Republican candidates. But in the end, voters gave Democrats an edge in some of the most competitive constituencies.
AARP analysis after the Nov. 8 election found that one of the determining factors was the candidate’s message about Social Security and Medicare, which helped motivate voters, especially those over the age of 50.
Now, with the 2024 presidential election approaching and Republican candidates lining up for the party’s nomination, they face new pressure to determine where they stand, especially when it comes to Social Security.
Former President Donald Trump and Florida Governor Ron DeSantis — who is leading so far Republican polls show they have so far promised not to touch the plan.
“Under no circumstances should Republicans vote to cut Medicare or Social Security a dime to compensate for Joe Biden’s reckless spending.” President Trump said in January.
“As a Republican, we are not going to interfere in Social Security,” DeSantis told Fox News in March.
Their position is consistent with that of President Joe Biden, who urged both sides of the aisle during his State of the Union address to agree that the plan was “off the books.”
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The move has been popular with the public, but some experts say it’s unwise.
Whit Ayers, president of the center-right political pollster North Star Opinion Research, said, “Anyone who has looked into the finances of the program knows that it is going bankrupt. It’s fundamentally irresponsible to say you don’t touch it when you have it.” .
The situation is an opportunity for heroes to emerge who can put the program on a financially sound footing, Ayers said.
One of the Republican frontrunners, former Cranston, Rhode Island mayor Steve Laffey, will enter the race with his own bold plan to rebuild Social Security at the top of his agenda.
“Our biggest problem is this. We Americans don’t face our problems directly,” said Laffey.
Social Security is “the ultimate example of that,” he said.
According to the program’s administrators, an important tipping point has arrived, especially with respect to social security.
Social Security consolidation funds can only: Pay full benefits until 2034. At that point, if nothing is done sooner, only 80% of the benefits will be paid.
Legislators on both sides of the aisle need to agree on program modifications. These could include benefit cuts such as raising the retirement age, raising taxes, or a combination of both.
But with Democrats pledging to protect benefits and Republicans pledging not to raise taxes, there’s little room for compromise so far.
Washington’s leaders recently struck a deal to raise the country’s debt ceiling for two years, but the costs of Social Security and Medicare have come under scrutiny.
Social Security and Medicare both fall into the mandatory spending category, and they all fall into the mandatory spending category. more than two-thirds of the national budgetaccording to the Tax Foundation.
Therefore, it is impossible to address state spending without addressing these programs, according to Tax Foundation economist Alex Durante.
“The longer we push this policy forward, the harder it will be to protect everyone who benefits,” Durante said. “It is important that we address this issue sooner or later.”
Laffey’s Social Security plan breaks with the traditional approach of raising taxes and cutting benefits.
Instead, he wants to phase out the FICA tax entirely. Workers and employers are now Each pays 6.2% up to $160,200 Wages are used for social security.
This will be replaced by a new personal security system account in which workers contribute 10% of their salary. These balances will be invested in weighted indices of global equities, bonds and other securities.
The plan comes from Boston University economics professor Lawrence Kotlikoff, who has devoted much of his career to helping people get the most out of Social Security and unraveling the program’s many rules.
Kotlikov himself ran for president as a third-party candidate in 2012 and 2016. He urged Mr. Laffey to run for office in subsequent election cycles.
The two met while Raffey was working on the 2012 documentary Fixing America, which explored the American perspective on solving the country’s post-financial crisis problems. Raffey wrote and co-produced the documentary, and interviewed Kotlikoff for it.
Raffey, a former Morgan Keegan executive, has mostly stayed out of politics after serving two terms as mayor of Cranston, Rhode Island.
He ran for the Rhode Island Senate in 2006. In 2014, he ran for the Republican congressional nomination to represent Colorado, and now lives in Colorado. He failed in both races.
2024 Republican presidential nominee Steve Laffey arrives for an interview at a local television station in Cranston, Rhode Island, March 17, 2023.
Ed Jones | AFP | Getty Images
Mr. Laffey said he started his mayoral campaign at a time when Cranston’s bond rating was the lowest in the United States. His major accomplishments as mayor of Cranston have boosted the city’s bond rating. The city’s S&P rating rose from a B in 2002 to an A- in 2006, according to a spokesman for the city of Laffey.
According to Kotlikov, the social security system will become a fully funded system, with money returned in the form of inflation-linked pensions.
“This is the modern version of Social Security,” Kotlikov said.
The goal would be to give beneficiaries greater benefits than they do now.
It also aims to address current inequalities in the programme. The government will make matching contributions on behalf of the low-income, disabled and unemployed. Spouses share program contributions equally.
Investment strategies will be computerized and controlled by the federal government, not Wall Street. Kotlikov pointed out that everyone gets the same rate of return.
Over a period of 40 years, the account is expected to make up for years of downtime and ultimately provide workers with more money than the Social Security program does today.
The hope is that in 2025, a 20-year-old worker could end up getting $10,000 a month instead of $2,000, which would be “much better,” Raffey said.
The plan is consistent with Mr. Laffey’s plan to overhaul government spending, including: change the Federal Reserve’s inflation target to zerorather than the current target of 2% to force Congress to work within the budget.
Social Security changes come with grim sentiment, so the big question is whether lawmakers and the American public are ready to embrace the program’s new direction.
The idea of rethinking how social security funds are invested has surfaced before.
During his tenure, President George W. Bush proposed that Americans save a portion of their Social Security taxes in personal retirement accounts. This is called “partial privatization”.
Andrew Biggs, who worked on Social Security reform in the White House at the time and is now a senior fellow at the American Enterprise Institute, said that even though Social Security still had a surplus and Republicans dominated both. He recalls that the proposal did not come close to success. Houses of Parliament.
Privatization, which would fund individual accounts with some of the existing payroll taxes, would therefore go a long way, he said.
“If President Bush couldn’t do that, it’s not happening now, despite all the efforts,” Biggs said.
But it may be “more likely” to fund personal accounts on top of existing social security schemes, such as allowing everyone to join a retirement plan at work, he said. said.
Another challenge may be getting Americans to accept the idea.
Only wealthy, college-educated, white men prefer personal accounts, said Serinda Lake, a Democratic pollster and president of Lake Research Partners, who has conducted focus groups with her husband on the subject. says.
Women of all ages are unlikely to accept the idea because they are so worried about the future of the program for their own financial security, she said.
Biden and Trump campaign signs are held up as voters line up during early voting at the Alafaya Library in Orlando, Florida, Oct. 30, 2020.
Lake said taking such a position could jeopardize the viability of the primary and general election for a candidate.
But North Star Opinion Research’s Ayers sees an opportunity for reform similar to the one President Ronald Reagan helped introduce and put Social Security on a sound financial footing for half a century. said.
Ayers said that would probably not come from overhauling “impossible” programs, but from more subtle changes such as raising the retirement age by a few months or raising the social security income ceiling. rice field.
A bipartisan committee would be needed, similar to President Reagan’s efforts, he said.
As with the newly signed debt ceiling deal, “both sides will need to make some concessions,” Ayers said.
“It’s a fundamentally irresponsible position to just sit back and wait for bankruptcy,” he said.