Sanders and Biden Clash Over Social Security

Sanders and Biden Clash Over Social Security

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Plus, Trump again promises a middle-class tax cut
Tuesday, January 21, 2020

Sanders and Biden Clash Over Social Security

With less than two weeks to go before the Iowa caucuses, Social Security has emerged as a major point of contention in the Democratic presidential primary.

The fight: Sen. Bernie Sanders recently amped up his criticism of Joe Biden’s record on protecting the safety net program, criticizing the former vice president for what he described as a decades-long record of openness to bipartisan reforms that would cut Social Security benefits or raise the retirement age. The Sanders campaign pointed to Biden statements related to Social Security dating back to 1984 and to Biden’s support in 1995 for a balanced budget amendment.

Biden’s camp hit back — and brought more media attention to Sanders’s criticism in the process. Biden on Saturday demanded an apology from the Sanders campaign for circulating what he called a “doctored” video that suggested he agreed with Paul Ryan in 2018 regarding the need to cut Social Security benefits. The video wasn’t altered, but Biden’s camp claims his remarks were sarcastic and taken out of context. (Biden, in those 2018 comments, did go on to say that Social Security “still needs adjustments.”)

Biden’s camp insists that the former vice president is “a champion of Social Security” and points out that he’s now pushing for the program’s expansion. “He’s running on a plan to significantly grow its benefits, paid for with new taxes on the wealthiest Americans,” a campaign spokesperson told Reuters.

Sanders reportedly acknowledged that the one video in question didn’t provide the whole context of Biden’s remarks, but he continued to hammer away at his broader point. “I think anyone who looks at the vice president’s record understands that, time after time after time, Joe has talked about the need to cut Social Security,” Sanders told reporters Sunday at a campaign stop in Concord, New Hampshire. Sanders’ campaign manager, Faiz Shakir, said Biden “should be honest with voters and stop trying to doctor his own public record of consistently and repeatedly trying to cut Social Security.”

Sen. Elizabeth Warren on Sunday joined in on the attack on Biden. “Bernie Sanders and I established the ‘Expand Social Security Caucus’ in the Senate,” she told Politico. “As a senator, Joe Biden had a very different position on Social Security, and I think everyone's records on Social Security are important in this election.”

The context: Biden now calls for preserving and expanding Social Security, including scrapping the payroll tax cap and increasing benefits for older Americans. “There will be no compromise on cutting Medicare & Social Security, period. That’s a promise,” Biden said Monday at the 2020 Iowa Brown & Black Presidential Forum.

But, as the Sanders camp says, he has previously been willing to negotiate with Republicans over deals that would have slowed the growth of Social Security benefits or raised the retirement age.

“Biden during his time in the Senate publicly expressed an openness to either freezing year-over-year cost-of-living increases, as part of a bipartisan plan to slow federal spending, or raising the retirement age in order to preserve the program while managing the federal budget,” CNN’s Gregory Krieg reports.

The Obama administration also negotiated a debt-reduction “grand bargain” with Republicans that, had it not collapsed, would have slowed Social Security cost-of-living increases and raised the Medicare eligibility age in exchange for new taxes.

Sanders, meanwhile, has been a consistent advocate for expanding Social Security and opposed cuts proposed during the Obama administration. Last year, he reintroduced legislation to shore up the program’s finances and raise benefits by increasing payroll taxes on incomes above $250,000 and imposing a new tax on investment income.

Why it matters: The latest battle, and Biden’s current position, highlights a shift in the Democratic Party. “In proposing a Social Security plan during the primary with none of the cuts or changes he once countenanced, Biden has moved more toward Sanders — a triumph for a progressive movement that fought for years to ensure Democratic politicians would only consider growing the program, instead of raising age eligibility requirements or freezing cost-of-living adjustments to make it pay out less,” Politico’s Marc Caputo and Holly Otterbein wrote recently. The political question now is just how vulnerable Biden might be with the Democratic electorate, or facing off against Trump, given his past positions.

So is the idea of a grand bargain dead? “[T]he Sanders campaign is doctoring fiscal reality, which is that Social Security can’t continue in its present form. As early as this year Social Security benefits will exceed the amount collected in payroll taxes. This means benefits will have to be paid out of trust-fund asset reserves set to run out in 2035,” The Wall Street Journal Editorial Board argued. “It’s possible the Social Security attack will hurt Mr. Biden in Iowa, which has an older population than most states. But the larger damage will be to the cause of fiscal compromise if a Democrat wins the White House. Mr. Trump has little interest in reforming entitlements, and House Democrats would block him anyway. The best chance at a bipartisan reform would be a Democrat like Mr. Biden or Michael Bloomberg working with a GOP Congress.”

Given Biden’s latest pledge to protect Social Security, any bipartisan “grand bargain” might have to take a very different form than the last one.

Where the Democratic Candidates Currently Stand on Social Security

Joe Biden: Reversing a long-held belief that Social Security requires adjustments that include possible reductions in benefits, the former vice president now says that he opposes cuts to the program. In a recent campaign statement, Biden said he would improve Social Security’s finances by increasing taxes on high earners; oppose privatization and means-testing; increase benefits for older beneficiaries; implement a new minimum benefit equal to 125% of the poverty line for workers with 30 years of experience; change the rules to provide surviving spouses with higher payments; and eliminate penalties on teachers and other public workers who have multiple retirement benefits.

Bernie Sanders: The independent senator from Vermont has long supported the expansion of Social Security. Sanders’ plan calls for applying the payroll tax to all income over $250,000, which he says will fully fund the Social Security trust fund for 52 years; boost benefits by $1,300 annually for seniors with incomes below $16,000 a year; increase the minimum benefit; and boost cost-of-living adjustments by using a more favorable inflation price index.

Elizabeth Warren: Sanders’ main rival on the left also supports the expansion of Social Security. Her plan calls for a $200 monthly increase for all beneficiaries, with the roughly $150 billion cost in the first year to be paid for by higher taxes on the rich. The taxes include a 14.8% payroll tax on incomes over $250,000 and a 14.8% tax on investment income for the top 2% of earners. The taxes would reduce the deficit by $1 trillion over 10 years and extend the life of the Social Security trust fund by nearly 20 years, according to an analysis by Moody’s Analytics. Warren also wants to use a more generous inflation measure for annual cost-of-living adjustments.

Amy Klobuchar: The Midwestern centrist wants to apply the payroll tax to incomes over $250,000 to shore up the Social Security trust fund. Klobuchar has also proposed new retirement savings accounts for workers, to be funded by a 50-cents-per-hour tax paid by employers.

Pete Buttigieg: Buttigieg has proposed raising the current payroll income cap from the current $137,700 to $250,000. The former mayor has also called for raising benefit levels and counting hours spent caring for family members as employment. Beyond Social Security, Buttigieg has proposed new types of accounts to help workers build up their own retirement savings.

Andrew Yang: The tech entrepreneur’s signature “freedom dividend” would pay all Americans $1,000 a month, and for those over 65 the payments would come on top of existing Social Security payments — “making it the largest increase seniors will receive in history,” Yang said. The cost of the program would be covered by a new value added tax of 10%.

Tom Steyer: The former hedge fund manager wants to replace the Social Security system with a Personal Security Account System in which workers put 10% of their income into a global investment fund run at no cost by a computer. The government would pay the contributions “on behalf of the poor, the disabled and the unemployed,” Steyer said last fall. Upon retirement, shares would be sold with the proceeds used to purchase government bonds. “The income and principal from these bonds would pay you and all others your age an inflation-indexed pension that is proportional to what you accumulated and that continues until you die,” Steyer said.

Trump Says He’ll Soon Unveil a Middle-Class Tax Cut

In an interview with The Wall Street Journal, President Trump said Tuesday that his administration is working on a middle-class tax cut proposal that would take effect if he is re-elected and Republicans win total control of Congress.

“We’re talking a fairly substantial…middle-class tax cut that’ll be subject to taking back the House and obviously keeping the Senate and keeping the White House,” he said.

Trump declined to offer any details but said the plan will be unveiled in 90 days.

Trump floated a similar promise of a 10% middle-class tax cut shortly before the 2018 midterm elections, but it was clear those cuts were never going to happen and talk of them died out quickly.

Holy $#!& Quote of the Day: Mnuchin’s Wild Tax Cut Claim

"I’ll stay on the record that I think tax cuts will pay for themselves."

– Treasury Secretary Steven Mnuchin at the World Economic Forum at Davos, as reported by Heather Long of The Washington Post. Mnuchin reportedly said that deficit growth of nearly 50% over the last two years has been “right in line” with projections and that revenues are likely to grow in the future.

Washington Post columnist Catherine Rampell responded with a useful reminder: “Literally no independent forecaster agrees with this.” And Ian Shepherdson, chief economist at Pantheon Macroeconomics, speculated about Mnuchin’s motivation for making such an extraordinary claim: “He can say this, presumably knowing that it's first order garbage, because there will be no adverse consequences for him when it is proved not to be true. Whereas if he says the opposite, he's out of a job.”

Supreme Court Won’t Fast-Track Obamacare Case

The Supreme Court on Tuesday declined to expedite consideration of a legal challenge to the Affordable Care Act, dealing a blow to Democrats. Politico’s Susannah Luthi reports:

“In deciding to immediately stay out of the fray, the justices sided with the Trump administration and group of red states leading the challenge to Obamacare. They opposed an immediate Supreme Court review of the case, arguing that there was no ‘emergency,’ even as Democrats argued that prolonging uncertainty around Obamacare harms the millions of people who rely on the law for insurance. It could take years for lower courts to resolve the lawsuit.

“A spokesperson for California Attorney General Xavier Becerra, who's leading the defense of the health care law, said Democrats are ‘cautiously optimistic’ the Supreme Court will still agree to review the case by next term, which starts in October.

“The outcome means Trump will face less pressure to articulate an Obamacare replacement plan during the campaign. Republicans failed to agree on an Obamacare replacement when they had complete control of the federal government in the first two years of Trump's presidency, and they haven’t come up with a new plan since then. …

“The lawsuit's lingering threat to Obamacare exposes Trump to attacks that he is still trying to gut the law's popular protections for people with preexisting conditions. Democrats leveraged the lawsuit and voters’ worries about health coverage to secure huge gains in the 2018 midterms, retaking the House majority. Still, they worry that Republicans could dodge political consequences if Obamacare is ultimately struck down after the November election.”

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