What the 2020 Candidates are Saying About Social Security – Part 2
Last week I posted about the future of Social Security and what is being said in this 2020 election year. President Trump’s comments have been ambiguous as far as whether he would cut or protect Social Security, although his recent budget proposal includes cuts of $72 billion to the Social Security Disability program. This week we’ll take a look at what the Democratic candidates have said.
As one would expect, none of the candidates has proposed cutting Social Security. Bernie Sanders and Elizabeth Warren support an expansive increase in benefits. Warren has suggested an immediate increase to benefits of $200 per month across the board. Several of the candidates have talked about a more accurate cost of living adjustment which would be reflective of the inflation rate faced by seniors – a CPI index for the elderly. All the Democratic candidates support increasing the minimum Social Security benefit for low income retirees to keep their income at or above 125% of the federal poverty line.
Several of the candidates have talked about increasing benefits for caregivers whose wages are reduced because they must care for family members. Since benefits are based on earnings and how much a retiree paid into the system thru payroll deductions, one proposal is to exclude nonworking years for caregivers. This would have the effect of increasing the benefit. Another option is to give caregivers a wage credit.
Another proposal addresses income of a surviving spouse. Household income can drop by as much as 50% when the first spouse dies. The surviving spouse keeps the greater of the two Social Security benefits but if their benefits are about the same this still results in a 50% loss of household income. Warren proposes a survivor benefit that guarantees income of at least 75% of the combined total of both spouses.
All these proposals, however, would cost more, not less money and we know from most recent reports that Social Security funds will be exhausted by 2035. So where will the money come from? Most candidates propose lifting the cap on wages subject to payroll taxes, which this year is $137,700. Some talk about raising the tax rate as well for high income households. Sanders and Warren, who are the most progressive candidates, also would create a Social Security tax on investment income for high earners. A lot to consider and sort out as we move through the year to determine who will be President for the next four years.