Republican senators compete for leadership of “Department of Bad Ideas” with new plans to cut Social Security to finance paid parental leave

[CBPP] At some point in their lives, most workers in the United States will experience a major life event or emergency requiring them to take time off work, such as a serious illness, the birth of a child, or caregiving responsibilities for an aging parent.[1] A national, comprehensive paid family leave policy that is responsibly financed would provide much-needed economic support to workers during these times and ensure equitable access to paid leave for low-income people and people of color, who often do not have significant paid leave from their employers.

However, two recent paid leave proposals — the New Parents Act from Senators Marco Rubio and Mitt Romney[2] and the CRADLE Act from Senators Joni Ernst and Mike Lee — fall short of this standard in important ways:

  • Unlike the paid leave programs of several pioneering states (and the federal Family and Medical Leave Act, which provides for unpaid leave), both bills would provide paid leave only to parents caring for newborn or newly adopted children, leaving out workers who need to care for their own serious health issues or those of a family member.
  • Instead of pooling risks and resources across the entire workforce, as the rest of Social Security and the state paid family and medical leave programs do, these bills would ask individual parents to bear the cost of their parental leave benefits by cutting the Social Security retirement benefits they would receive decades later. This would weaken Social Security’s near-universal social insurance protection by treating the program’s guaranteed benefits like a private account from which individuals could draw. Essentially, both bills ask parents to choose between their current caregiving needs and their future retirement security.

Using Social Security partly as a piggy bank rather than an insurance policy is central to the design of these proposals. Carrie Lukas, president of the Independent Women’s Forum — which first developed this approach — has written that getting workers to see Social Security as assets “to be used now or at retirement” is a first step toward partially privatizing Social Security.[3]

Moreover, under the two bills, parents opting for parental leave would face permanent cuts to their Social Security retirement benefits that would ultimately exceed their parental leave benefits. The cuts would amount to their parental leave benefits plus interest, as well as an additional reduction to cover the cost of the parental benefits provided to other parents who die or become disabled before they reach retirement and can’t repay their own leave benefits. Leave-taking parents with moderate incomes, for example, would receive about $5,300 in benefits for each three months of parental leave, on average — and then lose about $15,100 in lifetime retirement benefits for each three months of leave, after adjusting for inflation, according to the Urban Institute.[4] All told, this amounts to losing about 3 to 4 percent of lifetime Social Security retirement benefits for each three months of leave, meaning that parents who take three periods of parental leave (after three births or adoptions) would lose roughly one-tenth of their lifetime Social Security retirement benefits.

Under both bills, parental leave benefits would essentially be treated like loans that accrue interest. For a typical worker who has her first child at age 26 and claims Social Security retirement benefits at about 65, interest would accrue for about 40 years.[5] Over such a long period, the amount of interest would ultimately exceed the amount of the benefit; in fact, the Urban Institute estimates that leave-takers would eventually pay back nearly four times as much as they received in leave benefits, on average.[6] These cuts would weaken retirement security and impose the greatest hardship on women and workers of color, as they already face less secure retirement than others.

At a time when many workers face shaky finances in retirement, policymakers shouldn’t weaken Social Security, which is most workers’ only source of guaranteed retirement income. Policymakers can provide paid leave without asking parents to sacrifice some of their retirement security. In fact, that’s what every existing state program does, by financing benefits with modest payroll tax contributions. It’s also what the overwhelming majority of workers prefer: when polled about the best funding mechanism for a national paid family and medical leave policy, just 3 percent of voters preferred drawing from the Social Security trust funds.[7]

Future proposals should not force workers to choose between the paid leave they need and their hard-earned retirement security, but should instead finance a national paid family and medical leave program through modest payroll tax contributions or other sources of revenue. A broad-based financing mechanism would recognize that paid leave programs are an asset not only to those taking leave, but also to society at large.

Full analysis continues at CBPP.org »

How do the leading plans to expand and improve Social Security stack up?

Comparing three different plans to expand benefits and improve the system’s finances.

Sen. Elizabeth Warren (D-Mass.), Rep. John Larson (D-Conn.), and Sen. Bernie Sanders (I-Vt.) have each introduced plans to expand Social Security benefits and improve the system’s finances.

The Los Angeles Times’ Michael Hiltzik takes a look the just-released plan from Sen. Elizabeth Warren (D-Mass.) and how it differs from two proposals introduced in Congress, the Social Security 2100 Act, introduced by Rep. John B. Larson (D-Conn.), and the Social Security Expansion Act, filed by Sen. Bernie Sanders (I-Vt.) — one of Warren’s rivals for the presidential nomination — and Rep. Peter A. DeFazio (D-Ore).

Hiltzik correctly notes that “all three proposals take aim at some of the same issues, such as the chronic shortchanging of women who spend their career years caring for dependents at home and the need to extract more tax support from the wealthiest Americans, but offer somewhat different solutions.”

Even with their differences, all three plans are “a solid rebuff to Republicans and conservatives whose hand-wringing about Social Security leads to proposals to cut benefits. Warren’s entry into the lists as a presidential candidate ensures that the debate will take place in the public sphere — not, as Sen. Joni Ernst (R-Iowa) advocated recently, ‘behind closed doors.'”

Full story: Los Angeles Times

Republicans Are Pushing Myths About Social Security – To Justify Their Demands For Benefit Cuts

[Column by Nancy Altman, Forbes.com] Republican politicians want to cut Social Security. They never say so out loud, but their 2016 platform reveals the truth. In the section labeled, “Saving Social Security,” it proclaims, “As Republicans, we oppose tax increases…” Since Social Security cannot deficit spend and is projecting a shortfall in 2035 if Congress doesn’t act, that only leaves benefit cuts.

Representative John Larson (D-CT), the Chairman of the House of Representatives’ Subcommittee on Social Security, is trying to force his Republican colleagues into the open. Larson is the sponsor of the Social Security 2100 Act, which increases Social Security’s modest benefits. Additionally, it raises enough revenue to ensure that all benefits can be paid in full and on time through the year 2100 and beyond. Ninety percent of the Democrats in the House of Representatives are co-sponsors, but not a single Republican. Given their refusal to back his bill, Rep. Larson has urged Republicans to offer an alternative proposal — to no avail.

Non-action is not an option, unless your goal is to cut Social Security. The most recent Social Security Trustees’ Report projects that with no action, benefits will be automatically reduced by 20 percent in 2035. As Chairman Larson has plainly stated, “The hard truth of the matter is that Republicans want to cut Social Security, and doing nothing achieves their goal.”

Deflecting from their desire to cut Social Security, Republican politicians and their outside advocates have unleashed a barrage of misleading attacks about the 2100 Act and Social Security itself. A recent Heritage Foundation report, for example, attacked the 2100 Act and called for “significantly reducing” benefits of everyone but “those with the greatest need,” falsely claiming that doing so would “return Social Security to its goal of poverty prevention.” (Emphasis added.)

Since this focus on need is a common tactic in today’s debate, it is important to confront it with the truth. The Heritage Foundation is utterly wrong about Social Security’s original goal. What it’s actually describing is the program that Social Security’s conservative opponents have tried to repeal and replace it with from the beginning.

Social Security was designed as wage insurance. Its goal has always been much more expansive than the alleviation of poverty, or even its prevention. The system’s purpose is, and always has been, to replace wages so that people are able to maintain their standards of living in the event of retirement, disability or death.

Read full column: Forbes.com

Republicans’ rendezvous with reality — their plan is to cut Social Security

Senate Majority Leader Mitch McConnell (R-KY) has called for cuts to Social Security, Medicare and Medicaid.

[The Hill] Let’s be real. Social Security benefits will be cut by 20 percent in 2035 unless Congress acts, according to Social Security Chief Actuary Steve Goss. The Social Security 2100 Act, co-sponsored by 210 Members of the House of Representatives, not only prevents those devastating cuts but also expands benefits across the board, improves the cost-of-living adjustment (COLA) and cuts taxes for millions of workers.

Last week, House Ways and Means Committee ranking members Kevin Brady (R-Texas) and Tom Reed (R-N.Y.) criticized the Social Security 2100 Act, claiming it is too expensive. They also declared that they would like to work with Democrats on a long-term solution to Social Security. However, for the eight years the Republicans controlled both chambers of Congress, they did nothing to address the looming 20 percent across-the-board benefits cut in 2035. For those eight years, not only did they never work with us, but they would not even hold a hearing on legislative proposals to improve Social Security’s solvency. The hard truth of the matter is that Republicans want to cut Social Security, and doing nothing achieves their goal.

With 10,000 baby boomers becoming eligible for Social Security every day, we must act now. Rep. Tom Suozzi (D-N.Y.) laid it out very well during last week’s Ways and Means Committee hearing: To make Social Security sustainably solvent, we can either raise revenue (as the Social Security 2100 Act does gradually over time in a commonsense way) or cut benefits.

Read more: The Hill

Social Security: A Vital Protection for African American People of All Ages

[Via CBPP] Social Security is a critical source of income for African American people of all ages and has reduced economic disparities between African American and white families. That’s especially important given recent findings from an Urban Institute study that we commissioned on African American economic security and the role of Social Security, which details the economic barriers that African American workers face.

African American seniors are likelier than other seniors to face financial insecurity in retirement, the study found. (That’s consistent with other research that has found a significant racial retirement wealth gap.) They are less likely to have financial assets, retirement accounts, and home equity than white seniors — and, when they do, their value is substantially less, the Urban study found. When workers of color and white workers have similar circumstances, they make similar choices about participation in a retirement plan and contribution levels. But African American workers are less likely to be offered workplace retirement plans and likelier to work in low-wage jobs with little margin for savings.

Read more: Center on Budget and Policy Priorities

Trump considering slashing Medicare and Social Security — after $1.5 trillion tax cut for the rich

Image: photosteve101 via Flickr Creative Commons: https://flic.kr/p/95gMni

[Salon.com] After exploding the federal budget deficit with over a trillion dollars in tax cuts for the rich and massive corporations, President Donald Trump is reportedly considering using his possible second term in the White House to slash Medicare and Social Security — the final part of a two-step plan progressives have been warning about since before the GOP tax bill passed Congress in 2017.

The New York Times reported this week that, with the budget deficit set to surpass $1 trillion in 2020 thanks in large part to Trump’s tax cuts and trade war, Republicans and right-wing groups are pressuring the president to take a sledgehammer to Social Security and Medicare, widely popular programs Trump vowed not to touch during his 2016 campaign.

Sen. John Barrasso (R-Wyo.) told the Times that his party has discussed cutting Medicare and Social Security with Trump and said the president has expressed openness to the idea.

“We’ve brought it up with President Trump, who has talked about it being a second-term project,” said Barrasso.

Senator John Thune (R-S.D.), the number two Republican in the Senate, echoed Barrasso, saying it is “going to take presidential leadership to [cut Social Security and Medicare], and it’s going to take courage by the Congress to make some hard votes. We can’t keep kicking the can down the road.”

“The Trump/GOP tax cuts for the wealthy will add over $1.5 trillion in debt,” said the National Committee to Preserve Social Security and Medicare. “Now we know how they’ll pay for those tax cuts, by cutting Social Security and Medicare.”

According to the Washington Post, Trump has already “instructed aides to prepare for sweeping budget cuts if he wins a second term in the White House.”

Full story (Salon.com) »

Wall Street will never beat Social Security’s guarantee

Image: Thomas Hawk via Flickr Creative Commons, https://flic.kr/p/oNBLtS

[Pension Rights Center] During a week of volatility in the stock market, retirees are happily celebrating the 84th birthday of the Social Security System—a universal social insurance program that guarantees their benefits no matter what direction their 401(k) or personal investments are heading. Since 1935, Social Security has been the cornerstone of the retirement income system in this country, providing secure benefits that never quit, keeping millions of people out of poverty and helping them to maintain a basic standard of living once wages are gone.

Social Security provides unceasing stability. It not only provides a foundation of income for 47 million retired working Americans, widows, and spouses, but also provides disability benefits for people who have gotten sick or injured and can no longer work, and it provides survivors benefits to children when a working parent dies or becomes too disabled to work. Altogether, 63 million Americans receive monthly Social Security benefits they have earned. It’s the most successful social program in the country, and it shows that the government can work.

We often hear that Social Security is severely underfunded, and that it won’t be around by the time my generation retires. However, this is not true. Social Security has enough money to pay 100% of benefits for another 16 years, and even without any changes, can pay 87% of benefits for another 50.

As Nancy Altman, President of Social Security Works (and Chairman of PRC’s Board of Directors!), wrote in an op-ed for the Los Angeles Times this week, this supposed “crisis” is not a crisis. Social Security has a “modest shortfall—projected to begin in 2035.” She points out in the article that “a majority of voters, regardless of political party, are willing to pay more to protect and expand Social Security” yet, despite the overwhelming support for this program, it has been over four decades since Congress last expanded the system.

We face many complicated issues related to retirement security in this country, but this is one of the easiest ones to fix! There is still plenty of time for Congress to pass legislation ensuring that my generation and those that come after will receive every penny of benefits we earn.

As Nancy says in the article, there is a looming retirement income crisis in this country – she points out that only 22% of today’s workers have traditional pensions, and nearly half of those 55 and older have no retirement savings. For this reason, Social Security is only becoming more important. Fewer and fewer people are participants in workplace retirement plans, and fewer and fewer people have any retirement savings at all. For a birthday present to Social Security – and to my generation and beyond – Congress should enact legislation that restores Social Security to balance the right way, by gradually increasing revenue and increasing benefits to make it adequate for those who depend on it the most.