Why It's Misleading to Swear to Protect the Poor's Social-Security Benefits

Any plan that maintains one group’s payouts while diminishing others’ risks deflating support for the program as a whole.

Nir Elias / Reuters

In the Democratic debate in Las Vegas last week, presidential candidate Hillary Clinton was asked by CNN’s Dana Bash whether she supported Bernie Sanders’s plan to expand Social Security. She didn’t give the clearest answer: “Well, I fully support Social Security … and the most important fight we’re going to have is defending it against continuing Republican efforts to privatize it,” she responded, in part. She didn’t say yes. Instead, she said that she favored increasing benefits for the poorest people in the program.

That specific phrase, which is similar to Donald Trump’s stated position on the matter, worried some who want to protect Social Security. Their concern is that any deal that increases benefits for the poorest retirees will also involve cutting benefits for the middle class—and they fear the political consequences of doing so.

A plan like that is currently on the table, though Clinton is unlikely to support it. It’s being proposed by Representative Paul Ryan, who chairs the House Ways and Means Committee, and it’s claimed to protect the “poorest recipients” from cuts. Ryan’s proposal is a recycled version of an older plan, originally put forward by George W. Bush’s administration, that would have reduced benefits for the upper 70 percent of earners and maintained them for the bottom 30 percent. In 2010, when Ryan first proposed this plan, the Center for Budget and Policy Priorities concluded that it would produce “a system in which Social Security is very unattractive to affluent people.”

This is a problem for those who want to see Social Security survive. As the old adage, common in policy circles, has it, programs for the poor have poor support: A change that cuts benefits for the middle- and high-income Social-Security recipients could at the same time cause those groups to be less supportive of the program as a whole.

Last week, Douglas Elmendorf, the former director of the Congressional Budget Office and the future dean of Harvard’s Kennedy School of Government, laid out a plan for Social Security in The Washington Post. He focused on two main points. He said that the age at which people can collect full benefits should not be raised—doing so would produce benefits cuts to those who need Social Security the most. And he said that the program needed to raise more revenues. The way to do that would be to raising the salary cap below which all earnings are subjected to Social-Security taxes—it’s currently about $118,500 and is adjusted according to wage inflation year to year. Raising this cap would increase the tax revenues coming into the program, and could make it solvent.

While raising this cap would indeed raise revenues for the program, it has a downside: It could also make the highest earners sour on the system. On average, about 6 percent of workers end up making above the $118,500 cutoff. If the cutoff were to be raised, that group would be paying more but receiving the same benefits from Social Security—something that could strike them as unfair, and which could reduce public support for the program.

That said, raising the cap is a good way to make the system solvent. That, in addition to slightly raising the Social-Security income-tax rate from about 6 to about 7 percent, would help the system survive and allow room for benefits increases for the poorest recipients.

So while Clinton has not yet put forward a plan to keep Social Security solvent and equitable, the choices she has are limited and well defined. Social Security simply needs more revenue to stay solvent, and even more revenue on top of that to raise benefits for the poorest earners, who need it most. In the end, all the candidates face that same math.