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Now, as the 2024 presidential election approaches and Republican candidates name their party’s nominees, they face new pressure to decide where they stand, especially on Social Security.
Former President Donald Trump and Florida Governor Ron DeSantis, who currently lead in Republican polls, have so far vowed not to touch on the plan.
“Under no circumstances should Republicans vote to cut Medicare or Social Security a penny to make up for Joe Biden’s reckless spending,” President Trump said in January.
“As Republicans, we’re not going to interfere with Social Security,” DeSantis told Fox News in March.
Their position aligns with that of President Joe Biden, who during his State of the Union address urged both sides of the aisle to agree the plan was “off the books.”
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Although this stance is popular with the public, some experts say it is unwise.
“Anyone who has looked at the program’s finances recognizes that the program is going bankrupt,” said Whit Ayers, president of North Star Opinion Research, a center-right political polling firm. It’s fundamentally irresponsible to say we won’t do something about it, even though there are.” .
This situation is an opportunity for a hero to emerge who can put the program on sound financial footing, Ayers said.
One of the top Republican candidates, former Mayor of Cranston, Rhode Island, Steve Laffey, plans to campaign with his own bold plan to restructure Social Security at the top of his agenda.
“Our biggest problem is this: We Americans are not facing our problems directly,” Laffey said.
Social Security is “the ultimate example,” he said.
According to the program’s trustees, we are at a critical turning point, especially when it comes to Social Security.
Full Social Security funds will be available until 2034. At that point, if you don’t do something sooner, you’ll only get paid 80% of your benefits.
Lawmakers on both sides of the aisle need to agree on fixes to the program. These could include benefit cuts such as raising the retirement age, increasing taxes, or a combination of both.
But so far, there is little room for compromise, with Democrats vowing to protect benefits and Republicans pledging to hold off on raising taxes.
Leaders in Washington recently struck a deal to raise the nation’s debt ceiling for two years, but the costs of Social Security and Medicare have come under scrutiny.
According to the Tax Foundation, Social Security and Medicare both fall under the category of mandatory spending, and together they account for more than two-thirds of the national budget.
So it’s impossible to address state spending without addressing these programs, according to Tax Foundation economist Alex Durante.
“The longer we push this policy forward, the harder it will be to protect everyone who benefits,” Durante said. “It’s important to address this issue sooner rather than later.”
Mr. Laffey’s Social Security plan breaks with the traditional approach of raising taxes and cutting benefits.
Instead, he wants to phase out the FICA tax completely. Currently, workers and employers each pay 6.2% of wages up to $160,200 in social security.
This will be replaced by a new personal security system account to which workers will contribute 10% of their salary. These balances will be invested in weighted indices of global stocks, bonds, and other securities.
The plan comes from Lawrence Kotlikoff, an economics professor at Boston University who has devoted much of his career to helping people get the most out of Social Security and figuring out the program’s many rules.
Kotlikoff himself ran for president as a third-party candidate in 2012 and 2016. He also encouraged Mr. Raffey to run in subsequent election cycles.
The two met while Raffey was working on the 2012 documentary “Fixing America,” about Americans’ perspectives on solving the country’s problems after the financial crisis. Raffey wrote and co-produced the documentary and interviewed Kotlikoff for it.
Laffey, a former Morgan Keegan executive, has largely stayed away from politics after serving two terms as mayor of Cranston, Rhode Island.
He ran for the Rhode Island Senate in 2006. In 2014, he ran for the Republican nomination to represent Colorado in the U.S. House of Representatives, where he currently resides. He failed in both races.
Steve Laffey, Republican candidate for the 2024 presidential election, arrives for an interview at a local television station in Cranston, Rhode Island, on March 17, 2023.
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Laffey began his mayoral campaign at a time when Cranston’s bond rating was among the lowest in the nation, he said. His major accomplishment as mayor of Cranston is raising the city’s bond rating. The city’s S&P rating rose from B in 2002 to A- in 2006, according to a spokesperson for the city.
Kotlikoff said Social Security would be a fully funded system, with money coming back in the form of inflation-linked pensions.
“This is a modern version of Social Security,” Kotlikoff said.
The goal would be to give beneficiaries greater benefits than they currently have.
It also aims to address current inequalities in the program. The government will make matching contributions on behalf of low-income, disabled and unemployed people. Spouses share equally in their contributions to the program.
Investment strategies would be computerized and controlled by the federal government rather than Wall Street. Kotlikoff pointed out that everyone can earn the same rate of return.
Over a 40-year period, the account is expected to make up for the down years and ultimately provide more money to workers than today’s Social Security program.
The hope is that in 2025, a 20-year-old worker could finally be paid $10,000 a month instead of $2,000, which would be “much better,” Laffey said.
The plan is Mr. Laffey’s plan to overhaul government spending, including changing the Federal Reserve’s inflation target to zero instead of its current 2% target to force Congress to work within the budget. is consistent with
Changes to Social Security come with tough emotions, so the big question is whether lawmakers and the American public are ready for a new direction for the program.
The idea of ​​rethinking how Social Security funds are invested has been floated before.
During his time in office, President George W. Bush proposed making Americans save a portion of their Social Security taxes in individual retirement accounts, a move known as “partial privatization.”
Andrew Biggs, who worked on Social Security reform in the White House at the time and is now a senior fellow at the American Enterprise Institute, said Social Security still had surpluses, even though Republicans controlled both. He recalls that this proposal did not come close to success. Houses of Parliament.
So privatization, where individual accounts are funded with a portion of existing payroll taxes, would go a long way, he said.
“If President Bush couldn’t do it, that means it’s not happening now, despite a lot of effort,” Biggs said.
However, he said it could be “more likely” to fund individual accounts on top of the existing Social Security system, such as allowing everyone to participate in a retirement plan at work. said.
Another challenge may be getting Americans to accept the idea.
Selinda Lake, a Democratic pollster and president of Lake Research Partners who has conducted focus groups with couples on the topic, says only wealthy, college-educated white men prefer personal accounts. says.
Women of all ages are unlikely to accept the idea because they are very concerned about the future of the program for their own financial security, she said.
Biden and Trump campaign signs are held up as voters line up during early voting at the Alafaya Branch Library in Orlando, Florida, on October 30, 2020.
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Lake said that for a candidate to take such a position, it could jeopardize the survival of the primary or general election.
But North Star Opinion Research’s Ayers sees an opportunity for reforms similar to those that President Ronald Reagan helped introduce and put Social Security on sound financial footing for half a century. said.
Ayers said that likely won’t come through an “unworkable” overhaul of the program, but rather through more modest changes, such as raising the retirement age by a few months or raising the Social Security income limit. Ta.
A bipartisan commission, similar to President Reagan’s efforts, would also be needed, he said.
As with the newly signed debt ceiling agreement, “both sides are going to have to make some concessions,” Ayers said.
“Just sitting back and waiting for the company to go bankrupt is a fundamentally irresponsible position,” he said.