Bill Arnone, CEO, National Academy of Social Insurance
Significant proposals to enhance Social Security’s long-range financial stability are emerging from a variety of sources. Although there was only one mention of Social Security during the first round of Democratic Presidential debates in June, it is likely to get much more attention from candidates in the coming months.
Recently, I attended the annual Peter G. Peterson Foundation’s Fiscal Summit in DC. (The Peterson Foundation has been a long-time supporter of the Academy’s work.)
The Summit featured a “Solutions Initiative,” in which seven policy organizations from across the political spectrum put forward plans “to set America on a stronger, more sustainable fiscal path.” In keeping with Peterson’s priorities, the overriding goal of each plan was to reduce the federal debt over the next 30 years. Each organization’s plans include proposals that would change elements of Social Security, which the Peterson Foundation notes is “currently the largest program in the federal budget and represents an essential part of Americans’ retirement.”
Given this range of political perspectives, it should be no surprise that the seven organizations – American Action Forum (AAF), American Enterprise Institute (AEI), Bipartisan Policy Center (BPC), Center for American Progress (CAP), Economic Policy Institute (EPI), Manhattan Institute (MI), and Progressive Policy Institute (PPI) – address Social Security’s challenges in different ways. Five of the seven propose some reduction in benefits for some beneficiaries, and all but one propose raising additional revenues.
Of the seven organizations, four identify Social Security as one of their top three priorities.
The following is a summary of each organization’s Social Security proposals.
American Action Forum (AAF)
Move to price indexing in the calculation of benefits
Means-test benefits for higher-earnings beneficiaries
Incorporate the chained Consumer Price Index (CPI) to calculate Cost-of-Living Adjustments (COLAs)
Reform the Disability Insurance (DI) formula for the calculation of work history
(Douglas Holtz-Eakin, AAF’s President, serves on the Academy’s Board of Directors.)
American Enterprise Institute (AEI)
Institute a flat-dollar benefit paid to all retirees and widow(er)s, regardless of their earnings history or labor force attachment
Supplement this benefit with automatic enrollment of workers in employer-sponsored retirement plans with a default contribution of 3 percent of earnings split evenly between the worker and the employer
Increase the early retirement age gradually from 62 to 65
Eliminate Social Security contributions for all workers age 62 and older
Institute experience rating for the employer share of the DI payroll tax
Bipartisan Policy Center (BPC)
Establish a Basic Minimum Benefit and replace Supplemental Security Income (SSI) for beneficiaries with low incomes
Index the full retirement age to account for ongoing increases in longevity, gradually raising the age over decades
Allow surviving spouses to receive 75 percent of their deceased spouse’s benefit in addition to their own
Base COLAs on the Chained CPI
Make the benefit formula more progressive
Limit the spousal benefit
Calculate benefits using annual, rather than averaged, income, and count more years in the benefit formula
(Bill Hoagland, BPC’s Sr. Vice President, is a former member of the Academy’s Board of Directors. Jason Fichtner, who helped in the development of BPC’s plan, serves on the Academy’s Board of Directors.)
Center for American Progress (CAP)
Eliminate the taxable maximum wage base
Improve Social Security benefits
In a memorandum accompanying its plan, CAP noted that: “Public investments in areas like infrastructure, education, and social insurance make workers more productive, help sustain employment, and reduce inequality.”
(Rebecca Vallas, a CAP Senior Fellow, serves on the Academy’s Board of Directors.)
Our “outside the Beltway” forums over the past year have featured Academy Founding Board Member Henry Aaron’s Social Security plan as a framework for discussing policy options to restore the program to financial soundness.
Our Concept Paper, Assured Income, published in April, includes a section on how Social Security might provide a vehicle for delivering some form of assured income to all Americans.
In collaboration with AARP, we are conducting a Social Security Policy Innovations Challenge. The Challenge is focused on workers with limited employment opportunities who lack the financial security to postpone claiming Social Security benefits until they reach full retirement age. Awardees will be announced soon.