Democratic presidential contender Mike Bloomberg rolled out a vague plan Sunday that calls for shoring up Social Security’s finances, expanding benefits for the poorest and creating a government-backed “public option” retirement savings plans.
Bloomberg’s blueprint is his first campaign proposal addressing the future of Social Security — and while it echoes some other Democratic proposals in calling for expansion of the safety net program, it lacks the level of detail that many of his rivals have laid out in their plans. It doesn’t specify, for example, how Bloomberg would shore up Social Security’s finances or pay for the expanded benefits he proposes. What’s left is a broad statement of general principles with some vague policy proposals attached.
Here are the main points:
“Consider options” for fixing the program: While Bloomberg has in the past called for Congress to adopt bipartisan changes to Social Security that would have, among other things, gradually raised the retirement age, his latest plan strikes a different note. It pointedly starts out by saying that, while Social Security faces demographic pressure and “needs shoring up for the long-term,” the program “faces no imminent crisis.” It notes that Social Security is projected to be able to pay out full benefits until 2035. After that, payroll taxes will still cover 75% of benefits. Bloomberg promises to “explore ways to put the system on sound financial footing for the long-term” and to “consider options” for strengthening Social Security’s finances “while maintaining and enhancing benefits for the neediest recipients.”
Critics on the left say that falls far short of other Democrats’ promises to avoid benefit cuts. “It wouldn’t have been difficult for Bloomberg to release a plan that unequivocally rules out cuts,” Nancy J. Altman and Linda Benesch of Social Security Works, an advocacy group, write at Common Dreams. “To get right on Social Security, Bloomberg must repudiate his past support for cuts. He must pledge that he will never support cutting a single penny of current or future benefits.”
New benefits for low-income retirees: Bloomberg’s plan calls for “a more effective minimum benefit to prevent low-income seniors from falling into poverty” and notes that the new minimum would help about 10% of current beneficiaries. Unlike other candidates, Bloomberg does not specify what the minimum benefit would be. Sanders has proposed increasing benefits by $1,300 a year for seniors with incomes of $16,000 or less, while Warren has called for raising benefits by $200 per month, or $2,400 a year, for all beneficiaries.
A new retirement savings plan: Bloomberg also proposes a “public option” retirement savings plan similar to those floated by Pete Buttigieg and Sen. Amy Klobuchar. Bloomberg’s plan would create “automatic employer and employee contributions for all income earners who do not participate in a defined contribution or benefit plan at work.” It would provide low-income workers with an unspecified government match on their savings, paid for by reducing the tax break for high-income retirement contributions. The new retirement accounts would automatically invest in target-date investment funds, with other options available. Once enrollees reach retirement age, their savings would automatically be switched over to an annuity that provides steady income.
Change the way cost-of-living adjustments are calculated: Social Security’s annual cost-of-living adjustments are currently based on a measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W for short. Bloomberg calls for using a different formula, one that reflects the inflation that affects seniors. “The elderly’s living costs – especially for health care – tend to rise faster than overall inflation,” his plan says. “Mike will adjust the COLA to take account of this.” Bloomberg’s plan doesn’t specifically call for using an alternative measure of inflation known as CPI-E, the Consumer Price Index for the Elderly, but other candidates and Social Security advocates have pushed for such a switch. That alternative index is still considered experimental, and some experts say it is seriously flawed. “The trouble is this change tends to reward those seniors with the largest checks, most of whom aren’t at risk of poverty,” writes Brenton Smith at FedSmith.