In November 2013, less than a year into Elizabeth Warren’s first Senate term, she gave a floor speech rejecting a persistent push, including from her own party’s president, to cut Social Security benefits. Her outspokenness came out of studying the economy and noting the precarious finances of an aging population. “We don’t build a future for our children by cutting basic retirement benefits for their grandparents,” she argued. “With some modest adjustments, we can keep the system solvent for many more years, and could even increase benefits.”
At the time, a few other liberals—Senators Tom Harkin, Sherrod Brown, and Bernie Sanders—had endorsed expanding Social Security, an important protection for a working class struggling to retire with dignity. By joining the fight, Warren helped stave off the march to cuts. What was once the province of a few has become the dominant philosophy in the party. Earlier this year, a Social Security expansion package launched with the support of over 200 House Democrats. And now, Warren is charging ahead with the biggest expansion package a Democrat has proposed in decades.
“Despite the data staring us in the face, Congress hasn’t increased Social Security benefits in nearly fifty years,” Warren wrote today in her favorite format, a Medium post. “We need to get our priorities straight.”
She’s doing it because the struggles remain evident, and worse for those nearing retirement than those already in it. For too many people, particularly people of color, Social Security has become the main source of retirement income, as fewer employers offer significant retirement benefits and stagnant wages eat up savings. The median annual income of women over 65 in 2016 was a paltry $18,380. And that’s with many working into their golden years.
A Government Accountability Office report released just this week revealed that poorer seniors had a dramatically lower survival rate than their richer counterparts. Those living into their 70s and 80s tend to rely more on Social Security, but by paying in less throughout their working lives, they receive less in benefits than richer counterparts who need the money less. This inequality doom loop is built into the inputs and outputs of the Social Security system, and Warren seeks to arrest this yawning wealth gap that is literally a matter of life and death.
Former Senator Harkin’s long-standing Social Security bill would merely have changed the cost of living adjustment to better reflect senior citizens’ medical costs. It was estimated to increase benefits by about $60 a month on average. The current Social Security 2100 bill, from Representative John Larson (D-CT), included Harkin’s new cost of living index, plus a minimum monthly benefit at 125 percent of the federal poverty level for low lifetime wage-earners, as well as an across-the-board increase (mainly through adjusting the benefit formula) equivalent to about 2 percent of the average benefit. As a presidential candidate, Bernie Sanders is running on a plan that is broadly similar to Larson’s.
Warren’s plan goes quite a bit further. It includes the cost-of-living adjustment, the minimum monthly benefit, and an across-the-board benefit hike. But that across-the-board jump comes to $200 a month immediately for every current and future recipient, along with several other changes focused on women, caregivers, people with disabilities, and people of color. The $2,400 a year extra for everyone is nearly double what the Larson/Sanders plan gives to its poorest beneficiaries.
An independent analysis from Mark Zandi of Moody’s estimates that the Warren Social Security plan would increase average benefits by almost 25 percent for the lower half of income earners. It would lift 4.9 million seniors out of poverty, slashing the senior poverty rate by over two-thirds. And once it kicks in, it would steadily and modestly grow the economy by putting more money in the hands of seniors who are likely to spend it. “The plan results in a much more progressive Social Security system,” Zandi writes.
Like all Social Security plans, which must be financially stable, the proposal is fully paid for, extending the life of the Social Security Trust Fund by 19 years, out to 2054. (Sanders’s plan has a 52-year solvency, putting more money into maintaining benefits than expansion.) To do this, Warren lifts the cap on payroll taxes for those making above $250,000 per year, and increases that tax above $250,000 by 2.4 percent, split between the employee and employer. It would also for the first time ever add a payroll tax for net investment income, for individuals making $250,000 or more, and families making $400,000.
In effect, this shifts the Social Security system closer to where it was before inequality took off. The payroll tax used to capture 90 percent of wage earnings, and today, because of the cap on earnings above $132,900, it captures only 83 percent. That’s actually far worse, because of the growing shift to capital income, where the wealthy make money by having money. All those earnings normally escape the payroll tax. Inequality is robbing Social Security’s solvency, and the Warren plan rebalances it.
The plan includes a number of smaller tweaks targeted at vulnerable communities. Disability recipients get the $200 per month increase. It gives credit toward lifetime earnings to caregivers assisting a relative, increasing their benefit calculation. Widowers get to choose higher benefits when a spouse dies. State and local public employees who often lose all or most of their Social Security benefits would have them restored. Full-time students and apprentices get enhancements as well.
And all beneficiaries will find it easier to apply for and receive Social Security, because Warren vows to restore funding to Social Security Administration offices nationwide. Hundreds of field and mobile offices have closed and wait times have increased immensely, amid drastic funding cuts as the country ages.
Nancy Altman of the progressive group Social Security Works praised the proposal in a letter. “Her bold new plan tackles the nation’s looming retirement income crisis head-on, as well as rising income and wealth inequality and the squeeze on working families,” Altman said. “It is a solution for all generations.”
It’s easy to look at Warren’s plans and wonder why Mitch McConnell or Joe Manchin would do anything with them but toss them in the trash. But Social Security has a ticking clock. If nothing is done to shore up its finances, the $3 trillion currently in the Trust Fund will run out by 2035, forcing an immediate 20 percent benefit cut. Given that no politician would want to stick the most reliable voting bloc in America with such a hardship, talks will eventually have to proceed. And the Warren plan sets a yardstick for that negotiation, a left edge of the possible.
What politician wouldn’t like to give their constituents $200 a month while curtailing elderly poverty and extending the life of Social Security by almost two decades? Those shielding the rich, of course. But that’s a clarifying debate to have in an election year.
The proposal serves a similar function as Warren’s speech in 2013, moving the debate to higher ground and changing the politics of the issue bit by bit. Sanders has also played this role on Social Security and many other issues throughout his career, and in the pivotal primary of 2016. Sniping between candidate supporters is now ubiquitous in our social media age. But if you care about the policy—and I would argue that’s all you should care about—you should welcome this game of one-upmanship.
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