The Philosophy Behind Democratic Economic Policy
Democrats gear their economic policies to benefit low-income and middle-income families. They argue that reducing income inequality is the best way to foster economic growth. Low-income families are more likely to spend any extra money on necessities instead of saving or investing it. That directly increases demand and spurs economic growth. Democrats also support a Keynesian economic theory, which says that the government should spend its way out of a recession.
One dollar spent on increased food stamp benefits generates $1.73 in economic output.
President Franklin D. Roosevelt first outlined the Economic Bill of Rights in his 1944 State of the Union address. It included taxes on war profiteering and price controls on food costs. President Harry Trumans 1949 Fair Deal proposed an increase in the minimum wage, civil rights legislation, and national health care. President Barack Obama expanded Medicaid with the 2010 Affordable Care Act.
Social Security Fixes That Democrats And Republicans Agree On
This article originally appeared on The Motley Fool.
Social Security income is vital to the well-being of our nation’s retireesdata from the Social Security Administration shows that 61 percent of retirees currently receiving Social Security rely on their benefits for at least half of their monthly income. But seniors’ benefits could be in trouble less than a generation from now.
According to the Social Security Trustees Report from 2016, the program is on track to deplete its more than $2.8 trillion in spare cash by the year 2034. If this cash is exhausted and Congress passes no new laws to boost revenue collection, benefit cuts of up to 21 percent could be needed across the board to sustain benefit payouts through 2090. This isn’t a comforting outlook for those seniors counting on Social Security income to make ends meet.
The unanswered question at this time is how best to fix Social Security. Lawmakers have no less than 15 solutions on the table, but political gridlock in Congress has halted any progress. However, the American public has a pretty clear picture of what it’d like to see happen.
Based on responses from nearly 8,700 registered voters across eight states, the Voice of the People Citizens Cabinet Survey conducted by the Program for Public Consultation, School of Public Policy, University of Maryland, found that Americans from both the Democratic and Republican parties agree on a four-step solution to fix Social Security.
Two additional observations
The Reach Of Entitlement Programs
More than half of Americans have personally received benefits from at least one of the six major entitlement programs tested in the survey.
The survey finds that 16% of those who have not personally received benefits also say a member of their household has gotten help. Taken together, these results indicate that about seven-in-ten households contain at least one member who has benefited at some point in his or her life from an entitlement program.
If veteran benefits and federal college loans and grants are added to the mix, the proportion of Americans who personally have ever received entitlement benefits rises to 70% and the share of households with at least one recipient grows to 86%.
A Bipartisan Nation Of Beneficiaries
As President Barack Obama negotiates with Republicans in Congress over federal entitlement spending, a new national survey by the Pew Research Center finds that a majority of Americans have received government benefits from at least one of the six best-known federal entitlement programs.
The survey also finds that most Democrats and Republicans say they have benefited from a major entitlement program at some point in their lives. So have nearly equal shares of self-identifying conservatives , liberals and moderates .
The issue of entitlements moved to center stage during the 2012 presidential campaign. The survey finds that among those who voted for President Obama last month, 59% say theyve benefited from a major entitlement program. It also finds that 53% of those who supported Mitt Romney have benefited from a major entitlement program.
The survey, which was conducted by telephone from Nov. 28 to Dec. 5, 2012, among a nationally representative sample of 2,511 adults, asked respondents if they or a member of their household had ever received Social Security, Medicare, Medicaid, food stamps, welfare or unemployment benefits. Margin of sampling error for the overall results is plus or minus 2.2 percentage points.
The use of entitlement begins at an early age for many Americans, the survey finds. A third of all adults ages 18 to 29 say they have received at least one major entitlement payment or service in their lives.2
Social Security Is 15 Years Away From Kissing Its Asset Reserves Goodbye
This past June, the Social Security Board of Trustees released its newest annual report detailing the short-term and long-term outlook for the program. Arguably the biggest change in the recent forecast from previous years is that Social Security was expected to expend more than it collects in 2018 for the first time since 1982. Mind you, the net cash outflow created from this event will be very small compared to the nearly $2.9 trillion currently in Social Security’s asset reserves. The problem is that this net cash outflow is indicative of the payout schedule being unsustainable.
According to the report, as ongoing demographic changes weigh on the program, it’ll quickly diminish its excess cash. By the year 2034, Social Security’s asset reserves are projected to be completely exhausted. Should this happen, Social Security wouldn’t be bankrupt or insolvent. However, it would pave the way for an across-the-board cut in benefits of up to 21% in order to sustain payouts through the year 2092, without the need for any further cuts. Considering that more than three out of five retired workers is reliant on Social Security for at least half of their monthly income, such a cut could prove devastating.
The only resolution to the estimated $13.2 trillion shortfall Social Security is facing between 2034 and 2092 is to either raise additional revenue, cut expenditures, or implement some combination of the two. And the only way that’s happening is if Congress tackles the problem.
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Democrats And The Gop Are Polar Opposites When It Comes To Fixing Social Security
Now, the question you’re probably asking yourself is this: “Why the heck isn’t Congress doing anything about Social Security’s issues?” And the answer is also simple: Democrats and Republicans can’t agree on much when it comes to fixing Social Security.
Democrats have long favored raising additional revenue for the program by raising or eliminating the cap associated with the payroll tax . The Social Security Administration found that $1.2 trillion in earnings escaped the payroll tax in 2016 because the well-to-do had earned income above the maximum cap. Democrats believe that raising or eliminating this cap, and requiring the wealthy to pay more, will resolve the program’s problems.
Meanwhile, Republicans have often approached a fix by suggesting an increase in the full retirement age — i.e., the age at which you become eligible to receive 100 percent of your retirement benefit. Since longevity has increased at a much faster pace than the full retirement age, increasing the full retirement age would coerce workers to wait longer to receive their full payout, or to accept a steeper permanent reduction if claiming early. In easy-to-understand terms, it would reduce long-term expenditures by cutting lifetime payouts.
To be clear, both of these fixes work to resolve Social Security’s cash shortfall between 2034 and 2092, albeit they achieve their goal from opposite ends of the spectrum.
Mitt Romney On Social Security
Mitt Romney sees a need to reform Social Security in order to make it functional long-term. He supports price indexing that is tied to a lower inflation growth model, as well as reducing Social Security benefits for top bracket earners. In terms of what his plans would be for the system, he stated Now, my own view is, that we have to make it very, very clear that Social Security is a responsibility of the federal government, not the state governments, that were going to have one plan, and were going to make sure that its fiscally sound and stable. And Im absolutely committed to keeping Social Security working. I put in my book that I wrote a couple of years ago a plan for how we can do that and to make sure Social Security stable not just for the next 25 years, but for the next 75.
Mitt Romney is a strong supporter of the idea to partially privatize Social Security, by giving individual workers the choice to divert part of their benefits into a private account. During his campaign for President, Romney said One thing that President Bush proposed, and its a good idea, is to take some of that money, or all of that surplus money and allow people to have a personal account, so they can invest in things that have a higher rate of return than just government debt. They can invest in things like our stock market or the worlds stock marketso that they can get a better return, and maybe that would make up for some of the shortfall. Thats a good idea.
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They Haven’t Taken A Dime From The Social Security Program That Isn’t Accounted For
Another misconception is that the Republican Party stole money from the Social Security Trust and used it to fund wars. More specifically, Ronald Reagan, George H.W. Bush, and George W. Bush have come under intense scrutiny for borrowing from Social Security and “not putting the money back.”
However, the truth of the matter is that Congress has been able to “borrow” Social Security’s excess cash for five decades, and it’s happened under every single president over that stretch. In fact, the Social Security Administration is required by law to purchase special-issue bonds and certificates of indebtedness with this excess cash. Please note the emphasis on “required by law” that I’ve added above. The federal government isn’t simply going to sit on this excess cash it borrows from Social Security. It’s spending this cash on various line items, which may be wars and the defense budget, as well as education, healthcare, and pretty much any other expenditure you can think of.
This setup is actually a win-win for both parties. The federal government has a relatively liquid source of borrowing with the Social Security Trust, and the Trust is able to generate significant annual income from the interest it earns on its loans. Last year, $85.1 billion of the $996.6 billion that was generated by the program came from interest income.
Democratic Views On Social Security
May 31, 2015 By RepublicanViews.org
Social security is a tremulous issue. As Americans live longer and longer, the sustainability of social security as a system is being questioned. Democratic views on social security revive around reinstating the systems sustainability without privatizing or cutting back benefits, stating Democrats believe that after a life of hard work, you earn a secure retirement. Our commitment to protecting the promise of Social Security is absolute. Democrats believe that maintaining an income after retirement is the fundamental right of any American that paid into Social Security during their working years. Democrats strongly oppose Republican efforts to privatize social security, believing that this puts peoples retirement income at the mercy of the stock market. In fact, they wish to forbid employers from locking retirement savings into a companys stock. They also oppose reducing social security benefits for those that are part of other retirement plan options. Democrats do not believe that raising retirement age is a reasonable solution to the problem. They believe that the institution of social security is one that needs protecting, stating, In 1935, Democrats and President Franklin Roosevelt created Social Security. In 1965, Democrats and President Lyndon Johnson created Medicare. Ever since, Democrats have continually fought to defend these cornerstones of the American Dream in the face of attempts to dismantle or undermine both.
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Democrats Oppose Relief For Essential Workers Just Because Of Politics
Payroll taxes are the largest taxes most workers pay, and during the economic lockdown, many families have gone from earning two incomes to earning just one. Thats why Congress ought to provide an instant payraise for the frontline workers who are keeping this economy running by supporting Rep. Kevin Bradys Support for Workers, Families, and Social Security Act. The bill forgives employee …
Republicans Aren’t Going To Take Away Social Security
Without beating around the bush, the Republican Party is often associated as being the party of the well-to-do — and the rich typically aren’t reliant in any way on Social Security income. There’s, therefore, been a long-running belief that Republicans would aim to do away with Social Security sometime in the future. This is nothing more than another in a long line of pervasive Social Security myths.
Both Democrat and Republican lawmakers on Capitol Hill have an understanding of the importance that Social Security plays in keeping some 22 million people currently receiving benefits above the federal poverty line. Though both parties may have suggested tweaking how revenue is generated for the program, neither party would remove or replace any of the three funding sources: the payroll tax on earned income, the taxation of benefits, and interest income on the program’s asset reserves.
In other words, no Republican is going to advocate scraping Social Security. And even if they did, the idea would have no chance of gaining traction in Congress.
The Primary Funding Mechanisms For Social Security Should Remain Intact
Americans can collectively breathe a sigh of relief in knowing that neither Democrats nor Republicans have any intention of changing how the Social Security program generates income. That means less uncertainty about the future.
Social Security is currently funded three ways:
In 2017, a GOP lobbyist tossed around the idea of eliminating the payroll tax and replacing it with a value-added tax on consumption. The idea didn’t get anywhere near the legislative floor, confirming Republicans’ and Democrats’ steadfastness in leaving these funding mechanisms as is.
Happy 86th Birthday Social Security It’s Time To Expand Benefits
This year, Social Securitys birthday, Aug. 14, comes at an exciting time. Congress is on the verge of greatly expanding our economic security through its upcoming reconciliation bill.;
Because Social Security cannot be addressed through budget reconciliation, it is not part of that legislation. But given the overwhelming consensus among the American people in support of expanding Social Securitys modest benefits, Congress should make it the next priority immediately after the Build Back Better legislation passes. ;
Enacting legislation that expands Social Security builds on the strong foundation laid down by President Franklin D. Roosevelt and his colleagues eighty-six years ago, on Aug. 14, 1935. On that August day, when President Roosevelt signed Social Security into law, he described the new law as a cornerstone in a structure which is being built but is by no means complete.;
President Roosevelt was determined that Social Security would be a success. In his Jan. 17, 1935 message transmitting the proposed legislation to Congress, he cautioned:
A further expansion of Social Security is long overdue. This year, President Joe BidenJoe BidenMilley says civil war ‘likely’ in AfghanistanSoutheastern parts of Louisiana could have power restored as late as Sept. 29It’s time to transform our unemployment systemMORE and Congress have the opportunity to follow President Roosevelts directive and take a large step forward.
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Type Of Entitlement And Demographics
The survey finds that, overall, more Americans have received entitlements from programs primarily designed for the poor orunemployed than from those that mainly target older adults , while 17% have received benefits from both program types. Not surprisingly, the biggest difference in the demographic profiles of the two groups is the age of recipients.
Adults 65 and older are nearly eight times as likely as adults younger than 30 to receive assistance targeting older Americans .4 But among those who received poverty entitlements, the generation gap narrows to 13 percentage points . While adults 65 and older are still more likely than young people to have benefited from these programs, those 30 to 49 are about as likely as those 65 and older to have received this type of entitlement. Fully half of all 50- to 64-year-olds, the largest share of any age group, have received a poverty entitlement.
On other demographic comparisons, the differences are less dramatic and the patterns less consistent. In fact, despite the very different goals of these two classes of entitlement programs, the demographic patterns in one class of entitlement programs often are roughly mirrored in the other. For example, women are more likely than men to say they have received help from programs that benefited the poor as well as from those that target older adults .