Social Security Under President Trump Or Clinton

Donald vs Hillary on Social Security

Social Security Under President Trump Or Clinton
November 1, 2016

Social Security finally appeared in the Presidential debates, but its arrival was too little and far too late. It makes no difference which candidate wins in November, as it seems clear that Social Security and those who depend upon it will lose.

Moderator Chris Wallace did a very good job overall, but in the case of Social Security, his question was answered with responses that do not add up. Neither candidate has a plan for the future of this program.

Clinton's response, "I am on record as saying that we need to put more money into [the] Social Security Trust Fund," reflects the problem. No one can find this record. No tax analysis that I saw -- including Committee for a Responsible Federal Budget, Politifact, CNN, Tax Foundation, and Tax Policy Center – could find any incremental payroll tax revenue specifically targeted to stabilizing the existing system, much less expanding it. There is no mention of large-scale increases in payroll tax revenue geared to Social Security in her speeches, interviews, or the tax plan on her campaign website.

By the time that Hillary Clinton takes office, the changes she has proposed would need to raise nearly $12 trillion just to stabilize Social Security, and more if she wants to expand it. In total, her tax proposal raises roughly $1.1 trillion of incremental taxes - not a penny of which will go to Social Security.

Trump's response, "I'm cutting taxes. We're going to grow the economy. It's going to grow at a record rate," is a little more complicated because no one really knows how the overall economy interacts with Social Security. As a consequence, Trump and the moderator were reduced to an exchange of "does-not, does-so" that doesn't help anyone understand how Trump's ideas fit into a solution.

The short answer is they are both wrong. Wallace was wrong: a growing economy does help Social Security. Trump was wrong about the degree to which it may help.

It all sounds great. Conceptually, a growing economy creates jobs that produce payroll taxes that help reduce the pressure of solvency. In reality, more workers generate cash flow for the system in the near term, but higher benefit levels tend to overwhelm the incremental revenue as time passes.

To illustrate this seeming contradiction, the Social Security Administration projects that expanding Social Security to cover all new state and local employees would reduce the solvency pressure over 75 years by 6 percent. As those new employees become new retirees, however, the system would start losing money.

The question should have been: "How much record growth is necessary to fulfill your goals?" Trump's vision depends upon economic progress that must exceed the benchmark already included in the Trustees' forecast, which carries an optimistic outlook for economic growth as it is. Their numbers are based on economic growth for 75 years without a single recession. That is Trump's working baseline.

There are working models that suggest that increasing growth rates to levels we have never seen before will generate sufficient revenue for the program. That success, however, does not depend on Donald Trump's vision. That possibility is dependent upon the success of the next 19 presidents.

For example, if the economy were larger than it is now ($20 trillion), and it grew at record rates (5%) next year, the system would only collect less than $20 billion in revenue above what is already projected. By comparison, the system needs to generate about $171 billion next year just to maintain a pathway to solvency.

For those of you interested in numbers. $20 trillion * 0.05 (the growth rate) * 0.44 (wages' portion of GDP) * 0.8 (Social Security's portion of wages) * 0.124 = roughly $44 billion.

In short, we are getting questions and answers that largely reflect an indifference to a system on which neither of these candidates will ever need to depend.

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Crystal | 11.01.16 @ 17:00
Regardless of who is elected, this is going to be a real challenge for the President. I do believe Clinton has a more realistic view of what needs to happen. But either way, this is a scary time for those retiring or reaching retirement age.
Alec | 11.01.16 @ 17:03
My husband and I are pretty young and we've been wondering about the future for social security for a while now, wondering whether or not the program we've been paying in to all our working years will even still be around when we need it. It's scary to think that something so many people depend on has fallen to the wayside to the point where even with "record growth" it would take so many years to fix it! Something needs to be done now to make sure our older generation, as well as the younger ones that are working now, will be taken care of after working their whole lives!
Zanna | 11.01.16 @ 17:13
It's pretty clear that most career politicians are wealthy, and have no need to worry about Social Security. They don't rely on it, don't consider it important. Unless something changes drastically, none of us will need to worry about collecting social security - there won't be any.
Daniel | 11.01.16 @ 17:22
SS has been and will remain a major issue it seems. It won;t matter who is elected now or in the future if nothing is done to really look into it and make it work again
Chrisitna | 11.01.16 @ 17:42
It sounds as though there isn't going to be any resolution for a lot of things, no matter who wins the election, and that the answers both candidates have given are basically bs.
Steffanie | 11.01.16 @ 18:22
I can't see either one of them making Social Security any better. The whole system needs to be revamped.
Nancy | 11.01.16 @ 19:57
As far as social security goes it seems that either way we go we are going to lose. Not to get political but that sounds like the entire election.
Jane | 11.01.16 @ 21:39
No matter who wins, I feel that the win-win way to at least get more money for Social Security (and Medicare) is to increase by at least $200,000 the wages that are subject to Social Security and Medicare taxes. As things stand now, people who pass the limit now, which is $118,500, continue to receive their wages with no deductions for Social Security or Medicare. That amount, in my opinion, should be much higher.
Brenton | 11.02.16 @ 00:10
I appreciate your taking the time to read the article, and contributing comments. I will try to answer them if you include @Brenton in the comment. Jane - I believe that Medicare has no cap. Alec - We as a nation need to ask harder questions. The questions raised in the 3rd debate needed to put the answers of the politicians into terms of reality.
$commenter.renderDisplayableName() | 11.24.20 @ 05:56