The final report of President Obama’s debt commission — which failed to receive the required number of votes to actually move forward — included an unfair and regressive cut in Social Security benefits via raising the retirement age. When the commission was crafting its proposal, many of its members relied on false characterizations about Social Security’s financial stability in order to justify cutting benefits for lower- and middle-class workers.
The commission’s report came after a wave of 2010 Congressional candidates voiced support for privatizing Social Security (while trying to dress their idea up as something it wasn’t). So to once again review: If nothing is done to Social Security, it will pay full benefits until the year 2037. After that, the program is still projected to pay out 75 percent of benefits until 2084, which is close to full benefits once inflation is accounted for.
But that doesn’t mean that there aren’t progressive changes that can be made to the program to ensure that offer the best insurance benefits to those who need them the most. To that end, CAP has released its own proposal for modernizing Social Security, laid out here in “Building It Up, Not Tearing It Down: A Progressive Approach to Strengthening Social Security.” Our proposed changes include:
– Create a minimum benefit level: This improved benefit level will allow a full- time career worker to receive benefits that will exceed at least the poverty line.
– Raise benefits for the oldest of the old: America’s seniors exhaust their savings and rely heavily on Social Security to meet their consumption needs after the age of 85, which is why their benefits would increase by a fixed dollar amount equal to an average benefit of 5 percent.
– Improve survivorship and divorce benefits and introduce family caregiving benefits.
– Expand spousal benefits to married same-sex couples.
– Gradually phase in progressive changes to the benefit formula: The initial benefit amount for the top one-third of income earners will grow more slowly than is currently the case.
– Eliminate the cap on the employer share of the payroll tax: Eliminating the cap on the employer portion of the payroll cap counters the growing earnings inequality in our country among retirees and future retirees.
– Use a more accurate inflation measure.
The most contentious part of this proposal is the progressive indexing of benefits. But as CAP’s Vice-President for Economic Policy Michael Ettlinger explained, the hope is that this move frees up money that otherwise would have gone to Social Security for pressing and much-needed investments elsewhere:
Those who resist any modification to future Social Security benefit calculations argue that the long-term shortfall isn’t that great and that it can be plugged with reasonable tax increases. That’s absolutely true. But over the coming years the country has many spending and investment needs that will be needed to be funded by taxes. And there’s a limit to how high taxes will go. The more additional revenue that goes to Social Security the less that will be available for other priorities.