IL05 Dems on Social Security

Once again I've taken candidate responses to the IVI-IPO candidate questionnaire. I'm trying to pull out the issues that are the most important from the 140+ questions.

47. What changes, if any, do you support regarding Social Security?

Victor Forys:

I oppose privatizing Social Security. I do not believe we need to make changes at this time. I support a bipartisan commission that will make long term recommendations that will ensure the solvency of Social Security. Social Security is solvent for decades to come and we must continue to ensure its long term viability by getting our financial house in order, regulating financial institutions and keeping the economy strong.

John Fritchey:

To fully fund Social Security I favor a modest raise in the cap on payroll taxes for higher income Americans....

Tom Geoghegan:

I want to expand Social Security, our public pension system, to replace, not overnight but in stages, the private pension system which has collapsed. Social Security now pays 38 to 39 percent of your working income. In other developed countries, it averages 65 percent....

Carlos Monteagudo is skeptical of claims there is a shortfall that threatens Social Security benefits. His advocates studying the issue. His first response will be to see if small adjustments to the “cost of living allowance” (COLA) will address any shortfall.

Mike Quigley:

We have to deal with Medicare first. Social Security is solvent for decades and it is the most successful government program in history. We need to maintain this program, especially now in economically difficult times.

Charlie Wheelan:

The tools for restoring the long-term health of Social Security are straightforward well known.... We must enact some combination of the following four policies to ensure social security's long-term solvency:

1.Reduce benefits of future retirees (most likely by raising the retirement age, or by taxing the benefits of higher income retirees)....

2.Increase the payroll tax, either by raising the tax rate (currently 12.4% split between employers and employees) or raising the cap so that the tax is levied beyond the current cap of $102,000.

3.Allow more young immigrants into the U.S., so they can begin paying taxes into the system.

4.Increase worker productivity so existing tax rates can generate enough new revenue to fund the extra burden of an aging population. This is a lovely solution but we have no direct control over productivity.

I would likely support some combination of these measures. The most logical would be to increase the retirement age (since life expectancy has grown far beyond what it was when the program was designed) and raising the cap so the payroll tax is collected on a higher proportion of the incomes of wealthy Americans.

Wheelan went on to raise concerns about Medicare.


Frank Annunzio:

I would change the taxable income to a much higher level of $500,000 and from $125,000 to $500,000 would be taxed at a 1.5% higher rate.

Paul Bryar:

I believe our Social Security system should remain public. I oppose privatization of Social Security....

Sara Feigenholtz:

Jumpstarting the economy to create jobs will mean more workers paying into the system, which is exactly what Social Security needs right now.

Providing strong protections against any moves to privatize social security is also an immediate priority....

Currently the wages subject to the Social Security tax are capped at approximately the first $100,000 of income. As part of keeping Social Security solvent in the long-term, Congress might consider lifting or adjusting that cap.

While protecting Social Security, we must seek to help Americans save more for retirement. I support proposals to promote employer-sponsored savings plans, such as 401(k)s, as well as tax credits to encourage working families to put more of their income into savings plans.

If you want a more robust Social Security retirement program, Geoghegan is your candidate.

The concensus among the other candidates seems to be that to the extent there is a shortfall it should be covered by raising the cap on FICA withholdings. Currently Americans pay FICA taxes on the first $102,000 of salary, wages and other non-investment compensation. By raising this amount to $202,000 the government would collect an extra $12,400 from each person making $202,000 per year or more. This is arguably a stiff tax increase for people making $150-250,000 per year.

Forys' call for a bipartisan commission is a teachable moment. The Republican Party—the hardcore Republican activists—were opposed to Social Security when it was created and favor dismantling the program. At one event Republican activists were chanting, “Hey, hey, ho, ho, Social Security has to go!” (You can watch it on You Tube.) Part of the GOP opposition is ideological; part of it is practical. Successful government programs make citizens feel more comfortable seeking government solutions to other problems. As Quigley noted, Social Security is the most successful government program in history. If the GOP can radically reduce Social Security than no government program is safe.

So Forys is being naïve about having a bipartisan commission on Social Security. The current Republicans didn't negotiate in good faith when they were in the majority. The aren't negotiating in good faith now that they are in the minority. So, why should anyone expect the GOP to negotiate in good faith as part of a bipartisan commission on Social Security?

Quigley and Wheelan are correct to identify Medicare as being a more imminent problem than Social Security. To the extent Social Security will be a problem the problem will arrive in 30-40 years. Medicare taxes will be insufficient to pay guaranteed benefits in the near future.

Wheelan's response is textbook. You can learn from reading his answer. His comments about productivity reflect his ideological perspective.

Wheelan beliefs in the supply-demand paradigm so completely that he thinks people are paid based on how productive they are. I disagree. U.S. society produces a certain amount of goods and services. And the remuneration for these goods and services are distributed according to a system that values assholes who write bad loans and doesn't value women who care for children.

If we had a system that didn't compensate high-end professionals quite so lavishly we could afford to pay regular folk better.

For another example, unionized auto workers working for American companies get paid more than non-unionized workers working for Japanese companies in the South. If the federal government made it easier for workers to unionize they would make more money. On paper they would seem more productive to people like Wheelan because they would make more money.

So, passsing laws that make it easier to unionize would pushback (or eliminate) the date of reckoning for Social Security. But Wheelan is so committed to his supply-demand ideology that people are paid according to their productivity that he doesn't even consider raising the pay of regular folk.

I'm a little surprised that Feigenholtz favors encouraging employer-sponsored savings plans with tax credits. Low-income families don't pay federal income taxes, so the idea that low-income families can be encouraged to save through tax credits reflects ignorance of the federal tax code or that Feigenholtz has the most facile understanding of policy. Unfortunately, Feigenholtz seems to avoid policy specifics. Her comments about employer-sponsored savings plans make me suspect that Feigenholtz's vague answers on other policy matters means that she just doesn't know much about policy issues.