Our parents and grandparents should be able to retire in dignity—not poverty. Yet today in America, too many retirees are struggling to make ends meet. At the same time, the economic pressures on millions of families—from stagnant wages and high housing costs, to a lack of affordable childcare and skyrocketing college tuition—have resulted in meager, if any, retirement savings for tomorrow’s retirees.
http://martinomalley.com/...
A number of Republican presidential contenders have called for reducing Social Security benefits, either by raising the retirement age or privatizing the program.
O'Malley and Sanders both fund their proposals by making income above $250,000 subject to the payroll tax. Currently, wages up to $118,500 are subject to Social Security payroll taxes, but wages above that point are not.
Social Security is only projected to be able to pay all promised benefits until 2034, after which it will be able to pay approximately 75 percent of those benefits. Nearly two-thirds of seniors rely on the program’s benefits for most of their income, and the same is true for an even higher percentage of former workers with disabilities.
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[Hillary's] comments on Social Security in this election cycle are notably different from her remarks on the issue during the 2008 presidential race, when she criticized then-Sen. Barack Obama for offering a proposal similar to Sanders' in which income over $250,000 would be subject to the payroll tax.
At the time, Clinton said that she was "certainly against" Obama's plan, because she didn't "want to raise taxes on anybody."
O'Malley's other white papers have enjoyed similar praise from progressives, but so far they haven't translated to higher polls numbers in a field dominated by Clinton and where Sanders has largely owned the space to her left.
From the whitepaper:
As president, Governor O’Malley will:
- Increase Social Security benefits for all retirees—both today’s and tomorrow’s. Governor O’Malley supports immediately boosting monthly benefits in a progressive manner for all retirees. Social Security was intended as a supplement to individual savings and pensions, but today, one in five married couples, and nearly half of unmarried individuals, rely almost exclusively on Social Security checks to survive. More than two-thirds of Americans near retirement will not have enough savings to maintain their current standard of living.
- Strengthen Social Security’s long-term fiscal outlook. The solvency of Social Security is not in crisis: Social Security has adequate funds to pay full benefits through 2034. But to pay for expanded benefits, Governor O’Malley supports lifting the cap on the payroll tax for workers earning more than $250,000. In addition, Congress should implement policies to lift the wages of all workers, which will make meaningful contributions to Social Security’s long-term balance sheet. This includes raising the minimum wage to $15 an hour and enacting comprehensive immigration reform.
- Ensure Social Security benefits are sufficient to keep retirees out of poverty. The immediate future is dire for many Americans nearing retirement: one in five Americans has no retirement savings at all. To keep seniors out of poverty, Governor O’Malley supports increasing the special minimum social security benefit to 125 percent of the poverty line for Americans who have worked at least 30 years.
- Increase Social Security benefits for minimum wage- and lower-income workers. As wealth inequality continues to widen and traditional middle class jobs prove harder to come by, Governor O’Malley supports adjusting “bend points” in the formula to give minimum-wage and lower- and middle-income workers more financial security.
- Prevent benefits from eroding over time. Governor O’Malley supports using the Consumer Price Index for the Elderly (CPI-E) instead of the Consumer Price Index for Urban Wage Earners (CPI-W) to determine Social Security’s cost-of-living adjustments. The CPI-E provides a more accurate reflection of the higher cost of living for retirees than the current measure, which focuses on younger workers. Using the CPI-E will ensure that benefits do not erode for future generations of retirees.
- Reform Social Security to support, rather than penalize, caregiving. Governor O’Malley supports providing up to five years of “caregiver credits” that would increase the 35-year wage base for those who spend an extended period of time providing fulltime care for children, elderly parents, or other dependents. In practice, current methods of calculating benefits penalize workers, most often women, who take extended time off to care for their families.
- Reject efforts to raise the Social Security retirement age. Governor O’Malley believes that raising the retirement age is a back-door way to cut benefits for lower-income workers. It harms these workers in two ways: by forcing them to delay retirement in jobs that are often physically difficult, and by reducing lifetime payouts compared to wealthier retirees, who live five years longer on average than their lower-income counterparts.
- Dramatically expand access to employer-based retirement plans. Half of all workers do not have access to a retirement plan. Among part-time and low-income workers, roughly seven in 10 lack an employer-based retirement option. Governor O’Malley would require employers with more than 10 employees to process an automatic employee contribution to an IRA for all employees, at a level determined by the employee (who would have the option to opt out).
- Raise wages so all workers can afford to save. Since millions of hardworking Americans live paycheck-to-paycheck and struggle to save for retirement, raising the minimum wage and other wage policies are also critical to ensuring that today’s workers can retire with dignity and security in the future.
- Reject efforts to privatize Social Security. Governor O’Malley views proposals to privatize Social Security for what they are—a massive benefits cut that will gut Social Security, add to the federal debt, and leave future generations without the critical protections Social Security has provided for decades.
- Increase penalties for those who defraud our seniors. Older Americans are often targets for financial scams and exploitation, at an estimated cost of nearly $3 billion a year. The vast majority of frauds go unreported. Governor O’Malley will advocate for policies to protect our seniors from financial fraud, including laws to increase penalties for the financial exploitation of older Americans, laws to allow financial advisors to refuse or delay transactions where clients are being defrauded or exploited, programs to better identify and report financial exploitation among older Americans, and increased investment in prosecutors and advocates to go after elderly abuse.
- Fully implement the fiduciary rule. Under existing retirement advice rules, some brokers and financial advisers are allowed to sell Americans products even if they know they are poor investments. This conflict of interest, where advisers put their own bottom lines before helping their clients, costs workers saving for retirement $17 billion every year. President Obama has proposed a critical and commonsense rule to require those who give financial advice to put their clients’ interests first. Governor O’Malley will fully enforce this important fiduciary standard, protecting the retirement savings of millions of Americans and creating a level playing field for the many investment advisers who already act in their customers’ best interests.
- Make affordable, high-quality long-term care a national priority. Americans’ longer lifespans are outpacing our ability to provide quality and affordable long-term care. Although seven out of 10 Americans will need home care at some point in their lives, many Americans and their families struggle to afford it. Nine out of 10 people who provide long-term care are women, while home care workers are underpaid, overworked, and lack important benefits and protections.
There are three aspects of O'Malley's plan that arguably make it a bit more ambitious than Sanders's.
-immediately boosting monthly benefits in a progressive manner for all retirees.
-caregiver credit: Sometimes people work fewer years pre-retirement because they drop out of the workforce to care for their children, or elderly or disabled relatives. As it stands, this reduces Social Security benefits, just because it means you worked less. O'Malley would give people credits that increase their lifetime earnings, for Social security purposes, for up to five years in which they were caretakers. This effectively boosts benefits for parents, women especially, who dropped out and back into the workforce upon having children.
-A mandate that all employers with 10 workers or more have their employees all contribute to an IRA by default.
If one judges such proposals by its critics, O'Malley's plan is looking good. An almost immediate broadside came from Third Way, a self-described "moderate," "centrist" think tank that we've described in the past as little more than a Wall Street front. (By my count, of its 32 board members, 25 have had ties to Wall Street firms, the investment industry more broadly, or industry.)
Third Way attacked O'Malley's plan as "political pandering at its worst" and described it as "heaping superfluous benefits on Lexus-driving retirees in Palm Beach."
"It’s not the sky that’s falling. It’s the floor that’s falling out from under our seniors."
-O'Malley