Hillary Clinton made history last week in Philadelphia when she became the first woman ever nominated for the presidency by a major political party. But she also broke new ground by becoming the first presidential nominee in 68 years to use her acceptance speech to call for expanding Social Security.
Her comments signal a remarkable reversal in the Social Security policy debate, especially within the Democratic Party. After focusing for years on raising program revenues to preserve existing benefits, many party leaders, including Clinton, are now trying to boost benefits.
For a program that paid nearly $890 billion to 60 million beneficiaries last year, Social Security is barely discussed when presidential candidates accept their party’s nomination. More than half of the 42 acceptance speeches delivered since the Social Security Act was signed in 1935 didn’t reference Social Security at all, and most of those that mentioned the program did so just once, often only in passing.
The exception occurred in 2000. As George W. Bush accepted the Republican nomination that year, he mentioned Social Security five times—more than any other Republican—vowing to “strengthen” the program. Al Gore named Social Security a record 12 times when he became the Democratic nominee a few weeks later. He stressed the need to protect Social Security and shore up its financing but rejected Republican proposals to divert part of the program’s taxes to personal accounts. Neither candidate advocated raising benefits.
Clinton is only the second nominee of a major political party to call for expanding Social Security. The first was Harry Truman, who declared support for extending coverage and raising benefits in his 1948 nomination acceptance speech, when Social Security was much smaller than it is today.
If elected, how would Clinton expand Social Security? She didn’t give details at the Philadelphia convention, but the Democratic Party platform and her campaign website call for boosting survivor benefits and providing Social Security credits to people who interrupt their careers to care for family members and friends. They also advocate raising taxes on high-income workers to pay for these benefit sweeteners and close Social Security’s long-range financing gap.
Although relatively modest, these reforms could improve financial security for older women, especially widows who are now more than three times as likely to live in poverty as married older adults. But as our colleague Melissa Favreault has pointed out, improving survivor benefits won’t help the growing ranks of low-income older women who never marry or who divorce before qualifying for Social Security spouse and survivor benefits, and providing caregiver credits could raise benefits for many higher-income women who don’t need more support.
Clinton could choose to pursue Bernie Sanders’s much more ambitious goals for Social Security. He has proposed creating a minimum Social Security benefit equal to 125 percent of the federal poverty level for retirees with at least 30 years of covered employment, raising cost-of-living adjustments, and reworking the benefit formula to increase payouts to all retirees but disproportionately to beneficiaries with low lifetime earnings. To pay for this expansion and improve the program’s financing, Sanders would subject all earnings above $250,000 a year to the Social Security payroll tax, which now applies only to the first $118,500 earned each year. He would also impose an additional 6.2 percent tax on investment income for high-income people.
One of us (Smith) recently used DYNASIM, Urban’s dynamic microsimulation model, to evaluate Sanders’s proposal. Once fully phased in, these expansions would significantly raise after-tax incomes for lower and middle-income retirees. Very high income older adults would fare somewhat worse under the plan because the analysis assumes that employers would trim wages to offset the additional payroll taxes imposed by the plan.
Sanders’s plan would also improve Social Security’s deteriorating financial situation. The program’s trustees now project that system costs will exceed total revenues beginning in 2019, and the deficit will grow until the trust fund is depleted in 2034. Thereafter, Social Security would be able to pay only about three-quarters of scheduled benefits. The additional tax revenue in the Sanders plan would extend solvency until 2073, nearly 40 years longer.
Although Clinton mentioned Social Security only once in her acceptance speech last week, her comments could mark a turning point in the Social Security reform debate. As stagnant wages, disappearing defined benefit pension plans, and rising out-of-pocket health care costs stoke concern about retirement security, the debate may be shifting from a focus on containing costs to expanding the system.
But Clinton’s shift in tone doesn’t end the debate. The Republican Party platform remains firmly opposed to any Social Security tax hikes. And devoting more money to Social Security leaves less for other policy goals, like trimming the national debt, helping low-income children, and rebuilding our crumbling infrastructure. At a minimum, perhaps the next president and Congress can begin serious discussions about how to fix Social Security’s long-term financing problems to safeguard this crucial program for future generations.