Tomorrow, voters in New Hampshire will make their choices for the Democratic presidential primary. Here’s CNN’s latest polling data:
“In the final numbers, 29% of likely primary voters say they back [Vermont Sen. Bernie] Sanders, 22% back former South Bend, Indiana, Mayor Pete Buttigieg, 11% support former Vice President Joe Biden, 10% support Massachusetts Sen. Elizabeth Warren and 7% back Minnesota Sen. Amy Klobuchar. The rest of the field falls at 5% or less.”
Back in September, I dug into the Social Security/retirement platforms of Warren, Sanders and Biden, but not Buttigieg and Klobuchar. Since the field has narrowed, it seems appropriate to revisit and update with the latter two.
Bernie Sanders, first and foremost, promises to expand Social Security, by applying the payroll tax on income above $250,000 (in other iterations of this proposal, the amount is not indexed, so that eventually all income is taxed), and using the revenue to boost Social Security benefits, both across-the-board and with in increase in benefits specifically for the poor, both via a boosted minimum benefit and a flat-dollar increase for low-income retirees.
What’s more, parsing his speeches about retirement more generally, his overall philosophy is that the state — and one’s employer — should be providing retirement benefits, and that the notion of individual savings is a crock. In fact, in 2001, he took on the mantle of a crusader against “cash balance” pension plans and sponsored legislation which would have prohibited employers from reducing future acruals for pension plans for those over age 40, and a separate bill which would have prohibited employers from reducing retiree medical benefits for retirees (including prohibitions against implementing HMOs).
Elizabeth Warren similarly promises substantial boosts in Social Security, even more extensive than Sanders’ proposals, with the elimination of the Windfall Elimination Provision (which, if accomplished, would give non-Social Security-particiapting teachers unreasonably-high benefits for their non-teaching work), caregiver credits, surviving spouse benefit boosts, and more — again paid for by a tax on earners above $250,000, in this case not on wage income but all income. And like Sanders, she insists (however much in 2003 she wrote the opposite) that middle-class families simply can’t reasonably save for retirement, and considered the demise of traditional employer pensions to have been the result of bad actors.
What about Joe Biden? He promises, without any details, to “asking Americans with especially high wages to pay the same taxes on those earnings that middle-class families pay” — in other words, the same payroll tax for high earners as is now the mainstream Democratic proposal, but without a dollar number attached to it. He also adds similar benefit boosts: a boost in benefits for those 20 or more years into retirement, the same 125%-of-poverty-level minimum benefit as the others, the same surviving spouse benefit boost, the same WEP elimination.
He also proposes changes to retirement savings, including “equalizing the tax benefits of defined contribution plans.” While his plan includes no details, other than it will “equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement,” these sorts of proposals typically involve eliminating the tax deferral for retirement savings (or the elimination of taxes on investment earnings, for Roth accounts) and the implementation of fixed dollar tax credits for retirement savings. His other proposal that’s much bigger than its incidental mention is this:
“Under Biden’s plan, almost all workers without a pension or 401(k)-type plan will have access to an ‘automatic 401(k),’ which provides the opportunity to easily save for retirement at work.” Would this take the form of a nationwide OregonSaves-type program, or a direct mandate for employers to offer 401(k) accounts? He doesn’t say.
Pete Buttigieg’s promises appear largely to match Biden’s. His white paper promises the same payroll tax for wages above $250,000, the same caregiver credit, the same 125%-of-poverty minimum benefit. He further proposes that the path towards solvency is to increase contributions for “high earners” even beyond the standard flate FICA rate to whatever’s necessary to ensure solvency from year to year.
He also promises a Public Option 401(k) (which, no, I did not have in mind when I addressed the topic in my last article), which employers would be required to provide and in which a worker choosing to participate at a 1.5% level would trigger a mandatory 3% employer contribution. He pledges that the retirement accounts’ fees would be required by law to be “nearly zero, like those in the Thrift Savings Plan” (even though the two programs are vastly different and it’s far more complex to manage accounts of countless employers than the employees of the federal government); however, he does not intend to disrupt the current system of tax breaks for retirement savings.
Finally, Amy Klobuchar — well, I start to sound like a broken record: the same payroll tax for wages above $250,000, the same pledge of increased benefits for surviving spouses and caregivers. She likewise proposes retirement accounts similar to Buttigieg’s, with mandatory employer contributions, and, since she is a senator, she has introduced legislation to that end already, the Saving for the Future Act (see Third Way’s analysis for a summary). I wrote about my skepticism at the time, though, in fairness, I never got around to analyzing the text of the bill once it came out — and, to be honest, it starts to look better after looking at the others’ proposals.
And here’s a final topic worth comment: multiemployer pensions. Biden, Buttigieg, Klobuchar and Sanders attended a Teamsters forum in December and commited to the Teamster Pledge to“prioritize and work with Congress to advance legislation to protect pensions and solve the multiemployer pension funding crisis” and that “I support bipartisan legislation introduced both in the 115th and 116th Congress (S.2147/HR4444 and HR 397, respectively) to create a loan program to put troubled plans on a path to solvency. As President, I will sign legislation similar to those bills, or another policy solution passed by Congress that would also set troubled plans on a path to solvency without asking for additional sacrifice from active and retired workers.”
Specifically, Biden promised that the Treasury Department would make 1% loans to these troubled pensions. Klobuchar and Buttigieg affirmed their support for Butch Lewis. And Sanders pledged that he “will never allow for a cut to a pension when that worker was promised that pension.” In fact, Bernie Sanders promises to eliminate the benefit-cutting provisions of the Multiemployer Pension Reform Act of 2014, and instead rescue the system through tax hikes and Klobuchar promises to “recommend that Treasury heighten the scrutiny of any applications to reduce retiree benefits under the Kline-Miller Multiemployer Pension Reform Act of 2014,” but none of the candidates have any proposals to put the system on more solid footing going forwards.
So what’s the bottom line? Each candidate makes the same promise to add a payroll tax for higher earners, and it’s hard to tell to what degree their pledges of increased Social Security benefits differ in degree of added spending versus in degree of details on the website, though at least on the latter point Klobuchar’s promises appear the least extensive. And as much as I hesitate to endorse nationwide federally-run retirement account systems, that’s at least better than an alternative of pushing for Social Security to cover Americans’ complete retirement income needs.
What do you think? Share your comments at JaneTheActuary.com!
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