Elizabeth Warren’s Plan for Social Security Looks Smart

Elizabeth Warren’s Plan for Social Security Looks Smart

This article is part of David Leonhardt’s newsletter. You can sign up here to receive it each weekday.

When I was a teenager, my mom showed me a statement that she had received in the mail from the Social Security Administration. It included an annual history of her earnings, which showed a big string of zero’s covering the years when she was in her late 20s and early 30s. “That’s you and your sister,” she explained, laughing.

My mom is doing just fine these days, but anyone who spends years as a stay-at-home parent — or an unpaid caregiver of any kind — faces a financial penalty when it comes time to retire. Our Social Security system doesn’t recognize parenting as the socially and economically valuable job that it is.

That’s not the system’s only inequity, either. It also punishes teachers, police officers, firefighters and other government employees. Their Social Security benefits are cut if their pension is large enough, unlike private-sector workers, who can keep their full Social Security benefit regardless of the size of their private pension.

Elizabeth Warren has become famous for her plans, and her latest one, out this morning, is meant to address this unfairness. It would let public-sector workers keep their full Social Security benefits and increase benefits for people who spend at least 80 hours a month as unpaid caregivers for young children, the elderly or the disabled.

The biggest part of the plan, however, is an across-the-board increase in monthly Social Security payments. Every current and future beneficiary will receive at least $200 more per month than under the current plan, and many low-income workers will receive at least $600 more.

“A generation of stagnant wages and rising costs for basics like housing, health care, education, and child care have squeezed family budgets,” Warren writes in a Medium post. “Millions of families have had to sacrifice saving for retirement just to make ends meet. At the same time, fewer people have access to the kind of pensions that used to help fund a comfortable retirement.” Her campaign also released an outside analysis, by Moody’s Analytics, which found that the plan would cut the elderly poverty rate by about two-thirds.

She would pay for the plan by increasing the payroll tax on incomes above $250,000, which are now shielded from it. As income inequality has soared in recent decades, Warren notes, the amount of the country’s total income subject to the payroll tax, which finances Social Security, has declined. She would reverse that decline.

I’ve criticized Warren and other Democrats recently for backing a couple of policies that I think are wrongheaded and unpopular (like forcing everyone to enroll in Medicare). The Social Security plan is different. I’ll want to read what others have to say about it in coming days, especially about the size of the increase, but my initial view is that this proposal is the opposite of mandatory Medicare — substantively smart and politically popular.

True, the economy has been kinder to older Americans than younger Americans in recent years (as Warren is well aware). Over all, I’d like to see federal spending become more focused on children and younger workers. But it’s also true that our high-inequality economy hasn’t been easy on most people over the age of 65. Many deserve help.

And as I’m sure you are aware, people over 65 tend to vote at very high rates.

Related: “Americans are pessimistic about the financial health of older Americans,” Kim Parker, Rich Morin and Juliana Menasce Horowitz of the Pew Research Center recently wrote. “Most say that, 30 years from now, those ages 65 and older will be less prepared for retirement than their counterparts today.”

My colleague Paul Krugman has written over the years about both the long-term finances and the politics of Social Security. “America’s overall retirement system is in big trouble,” Paul wrote in 2013. “There’s just one part of that system that’s working well: Social Security. And this suggests that we should make that program stronger, not weaker.”

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