Although Social Security is like a big black hole never satisfied with the current federal funding, 42 Democrats planned in March to beef up benefits.
Luckily, the Republicans stepped in and didn’t allow the Democratic senators to pass a resolution that would have thrown America’s Social Security system into an even deeper crisis.
But the late-March proposal shows a mind shift of the Democratic liberal wing. Seemingly, liberals now prefer to become more offensive on the issue than sitting back on the sidelines as they did for years.
Still, they have a point since pension plans have disappeared from the private sector, Americans aren’t good savers especially for their pensions, while America’s retirement system struggles with a $4.1 trillion savings deficit.
So, making a savior out of Social Security may seem the best solution to these problems. Yet, politicians know that that would be only a short-term fix since Social Security is slowly but steadily going down the drain. If the situation persists, estimates show that by 2033 people contributing to the system will face a 23 percent benefit cut.
Although that gap could be fixed through a well-chosen mix pf benefit cuts, tax increases and a belated retirement age, Senate Democrats seem to be sick and tired of this pain stacking planning. They currently plan to raise social security benefits in the old fashion way by increasing the payroll-tax and expand it to incomes above $118,500.
Congress current strategy is to get people paying more taxes if they want higher benefits. This strategy also prevents the emergence of wealthy retirees, although it bites into Social Security’s political support.
Moreover, increasing payroll-tax does not fill the deficit gap since people will be entitled to higher benefits. So, we would not solve the problem in the next decade.
Edward Lorenzen from the Committee for a Responsible Federal Budget criticized the Democratic senators’ resolution. He said that the move neither made the program sustainable nor protected “vulnerable retirees,” as it was supposed to.
But increasing taxes for higher-income employees and granting them higher benefits should not be a priority to education, pediatric health care, or scientific research, Mr. Lorenzen argued. It’s all about priorities, he added.
And Democrats usually agree with these points, but Sen. Elizabeth Warren, who sponsored the resolution, said that Social Security was a crucial issue for her party.
“What we’re seeing is a product of years of frustration on the part of liberals, who have been sitting on the sidelines when the issue of entitlements has been discussed,”
argued Steven Smith a political science expert and professor at Washington University.
Prof. Smith also said that Democrats’ current offensive targeted Republicans, but also moderate Democrats, such as Hilary Clinton, that had turned to several compromises when entitlements were discussed.
Also, Prof. Smith thinks that hot issues such as social inequality and retirement income gap will be used by the Democrats in the primary. However, good politics does not equate good policy since we must make sure that we can sustain the current benefits before even thinking about raising them.
Image Source: Rutter Mills