With the Republican and Democratic presidential nominating conventions drawing near, AARP recently asked both the Hillary Clinton and Donald Trump campaigns to prepare 600-word summaries of their positions on Social Security. Let's look at these position statements, taking them in alphabetical order, and then review some analyses prepared by respected nonpartisan organizations that can provide insights into the viability of each one.
Hillary Clinton's response
"Social Security must continue to guarantee dignity in retirement for future generations" is how the Clinton campaign's response begins. It makes clear that higher-income workers should pay more through higher payroll taxes to help the system, and higher-income beneficiaries should pay more income tax on Social Security benefits.
As president, Clinton says she would:
- "Fight any attempts to gamble seniors' retirement security on the stock market through privatization."
- "Oppose reducing annual cost-of-living adjustments."
- "Oppose Republican efforts to raise the retirement age -- an unfair idea that will particularly hurt the seniors who have worked the hardest throughout their lives."
- "Oppose closing the long-term shortfall on the backs of the middle class, whether through benefits cuts or tax increases."
Furthermore, Clinton would enhance benefits for women who are widows and those who took significant time out of the paid workforce to take care of their children, aging parents or ailing family members.
These statements are consistent with the positions described on Clinton's website, which contains more details.
Donald Trump's response
"The key to preserving Social Security and other programs that benefit AARP members is to have an economy that is robust and growing" is how the Trump campaign's response begins. It contains no recommendations that are specific to Social Security, relying on economic growth to boost revenues to Social Security.
The Trump statement to AARP reiterates several well-publicized positions including:
- Tax reform that streamlines tax brackets, removing carve-outs for special interests and eliminating the alternative minimum tax and death tax.
- Reforming corporate taxes, including a reduction in the corporate income tax rate.
- Renegotiating trade agreements.
- Repealing the Dodd-Frank Act and the Affordable Care Act.
- Attacking fraud and waste in the federal government and reducing the size of the federal workforce.
- Reforming immigration policies that will "save hundreds of billions of dollars a year in education, health care and public safety costs."
The Committee for a Responsible Federal Budget (CRFP) estimates that Trump's various economic proposals would add $11.3 trillion to the federal debt by 2026, while Clinton's would increase the debt by $250 billion. A growing federal deficit could potentially increase the strain on the Social Security trust fund by competing for the federal revenues necessary to redeem U.S. government bonds held in the trust fund.
The CRFP is a nonpartisan, nonprofit research organization co-founded by Robert Giaimo, a Democrat who served in the House of Representatives for 20 years, including four as chairman of the House Budget Committee, and Henry Bellmon, who served 12 years as a senator and was the ranking Republican on the Senate Budget Committee from its inception in 1975.
Clinton's position on Social Security has several points in common with recent recommendations to shore up Social Security from the Bipartisan Policy Center (BPC), including increasing payroll taxes on high-income workers, increasing income taxes on high-income beneficiaries and improving benefits for widows and widowers. The BPC was founded by two former Republican Senators (Howard Baker and Robert Dole) and two former Democratic Senators (Tom Daschle and George Mitchell).
Unlike Clinton, however, the BPC recommends gradually increasing the full retirement age from 67 to 69 and increasing the maximum retirement age from 70 to 72, but keeping age 62 as the earliest retirement age. The BPC also recommends constraining future cost-of-living adjustments by using an alternative measure of inflation known as the "chained consumer price index" rather than the standard CPI because the chained version tends to show lower overall price increases.
The BPC says its recommended changes would put the system into long-term financial balance, with 54 percent of the long-term deficit closed by increasing revenue and 46 percent closed by restraining benefits. Much of the revenue increase would come by increasing the maximum taxable wage from the current level of $118,500 in 2016 to $195,000 in 2020, and by gradually increasing the payroll tax rate by 1 percent from 2017 to 2026.
Clinton's published proposals don't provide the same level of detail on enhancing the system's revenues as the BPC, but presumably she would need to rely on higher revenue increases than the BPC recommendations because her benefit proposals are more generous than the BPC proposals. This could entail increasing the taxable wage base beyond $195,000 and/or increasing the payroll tax by more than 1 percent.
You'll want to see how Clinton's and Trump's positions on Social Security evolve as the campaign heats up and look for thoughtful analyses of their positions that include details on their proposals' financial consequences. You'll also want to weigh the importance of their positions on Social Security against the many other vital issues facing voters this fall.
After all, voting responsibly is part of your retirement plan.