Now that Obama has taken this position, it makes it much more likely that most or all Democrats will adopt it as well, which could truly change a debate that up until now has been dominated by an alliance of Republicans and supposedly centrist advocates whose mission is to scale back the most successful social programs America ever created.
Here’s what Obama said in his speech:
But look, let’s face it — a lot of Americans don’t have retirement savings. Even if they’ve got an account set up, they just don’t have enough money at the end of the month to save as much as they’d like because they’re just barely paying the bills. Fewer and fewer people have pensions they can really count on, which is why Social Security is more important than ever. We can’t afford to weaken Social Security. We should be strengthening Social Security. And not only do we need to strengthen its long-term health, it’s time we finally made Social Security more generous, and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned. And we could start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it.
Here’s why this is important. For a long time now, the way you’ve shown you’re a Very Serious Person about fiscal matters is to gravely intone that Social Security is “going broke” and say that we must cut back benefits, either by reducing retirees’ payments or raising the retirement age. There’s an entire industry of think tanks and advocacy groups whose mission is to create the intellectual and political environment that will make such cuts possible.
Liberals have only been pushing back against that coalition in a serious way for a few years now. There are some high-profile voices debunking the myth that Social Security is “going broke,” most notably Paul Krugman’s (I won’t bother to go over again why it’s a myth, but if you’re interested I explained it here). But they’ve been hampered by the fact that so many Democratic politicians want to communicate that they too are Very Serious, so they accept some of the premises of the other side’s argument, ceding half the battle over the existence of the program.
And make no mistake: it is a battle over the existence of the program. Despite their assurances that they only want to “strengthen” Social Security, many Republicans would like nothing more than to see it disappear, for two reasons. The first is that they’re simply opposed to large social programs on ideological grounds. The second is that by virtue of its success and popularity, Social Security is an ongoing rebuke to conservative arguments about government. It’s awkward to say, “Government can’t do anything right and should be cut back as much as possible” to a voter who has health care because of Medicare and isn’t eating cat food because of Social Security — and thinks both programs are terrific.
So the political situation is this. Republicans can’t mount a direct assault on the program because it’s spectacularly popular, particularly with those who get checks every month (and who vote in large numbers). At the same time, their campaign against it has been extremely successful in shaping public opinion. Large portions of the public have been convinced that the program is in crisis and is about to go broke, and young people in particular think Social Security won’t exist by the time they retire. The hope of the anti-entitlement forces is that if they can convince enough people of that, when they propose a specific plan to cut back the program, people will say, “Sure, whatever — it’s going broke anyway, so we might as well.”
Until recently, the debate around Social Security consisted of one side saying it was going broke and needed to be slashed, and the other side not disputing those basic assertions too strongly, but saying that we shouldn’t do anything rash. What we are moving toward, however, is the Democratic side saying not only that the program is essentially healthy, but that instead of cutting it we should be expanding it. That’s a profoundly different debate, one that produces an entirely different set of policy options.
Right now you have the president of the United States taking that position, as well as the two leading Democratic presidential candidates. Hillary Clinton has proposed some targeted expansions of Social Security benefits, for widow/ers facing a benefit cut when a spouse dies and for those whose benefits are smaller because they spent time out of the workforce raising children or caring for other family members. Bernie Sanders advocates an increase for all recipients: “expand benefits by an average of $65 a month; increase cost-of-living-adjustments; and lift more seniors out of poverty by increasing the minimum benefits paid to low-income seniors.”
With the exception of Donald Trump, all the Republican presidential candidates this year signed on to some form of Social Security cuts, either through increasing the retirement age or cutting benefits. Trump, however, said we just shouldn’t touch it. In one debate, he said, “It’s my absolute intention to leave Social Security the way it is. Not increase the age and to leave it as is.” Trump doesn’t say how he’d pay for the program, which should undercut the idea that his position somehow challenges conservative orthodoxy; in reality, all Trump is saying is that he’ll make everyone so rich that we won’t have to make tough choices about such things.
By contrast, Democrats feel an obligation to explain how they’re going to pay for the benefits they propose. Obama described “asking the wealthiest Americans to contribute a little more.” That isn’t very specific, but there are a couple of ways you could do that, the most obvious of which is to raise the payroll tax cap. Right now you pay Social Security taxes only on the first $118,500 of your income, which means that beyond that level the wealthy pay a lower portion of their income than poor and middle-class people do.
Hillary Clinton says she would pay for increased benefits by “asking the highest-income Americans to pay more, including options to tax some of their income above the current Social Security cap, and taxing some of their income not currently taken into account by the Social Security system.” That would probably mean applying payroll taxes to investment income and not just wage income as it is now. Sanders wants to do that too, and is more specific about the cap: he would remove it entirely, though he would include a doughnut hole between the current cap of $118,500 and $250,000; you wouldn’t start to pay more payroll taxes until you reached that higher income.
Unfortunately, it’s a little hard to tell exactly how much in greater benefits we could afford with these kinds of measures, because how much the system takes in is heavily dependent on things we can only guess at, like what income growth, inflation, and immigration levels are going to be 10 or 20 or 50 years from now. But now that the most prominent Democrats in the country all agree that we should be expanding Social Security and not cutting it back, we could have a whole new debate on the issue.