Vermont Sen. Bernie Sanders is seeking to upstage his chief rival Hillary Rodham Clinton with his proposal to expand Social Security benefits. Sanders’ plan would extend the life of the program by forcing wealthy Americans to pay substantially more in payroll taxes.
Addressing the No Labels Problem Solver Convention in Manchester, N.H., through a video feed on Monday, Sanders argued that the current payroll tax funding the retirement system is grossly unfair and that the wealthiest Americans should be obliged to pay the same percentage of their incomes as middle-class families and individuals. “Somebody who is making hundreds and hundreds of millions of dollars a year pays the same amount of money into the Social Security trust fund as somebody who makes $118,500 a year,” he said, according to The Hill. “In my view, that is wrong.”
Currently, the amount of income subject to the 6.2 percent Federal Insurance Contribution payroll tax is capped at $118,500 – meaning that someone making hundreds of thousands or even millions of dollars pays the same amount in payroll taxes as someone making $118,500. Sanders’ proposal, which he introduced as legislation earlier this year, would subject all income over $250,000 to the payroll tax.
The Center for Economic Policy Research has estimated that Sanders’ plan for raising the cap on the FICA tax would hit the top 1.5 percent of wage earners. Sanders’ plan would also boost Social Security benefits by roughly $65 a month for most recipients, increase cost-of-living adjustments for Social Security beneficiaries and provide a “minimum Social Security benefit” to reduce the poverty rate among the elderly.
Sanders, former Maryland governor Martin O’Malley and legions of progressive Democrats have clamored recently for expanded Social Security benefits and much higher FICA taxes on the wealthy. Proponents discount warnings from conservative Republicans and fiscal watchdog groups that the program is on a perilous long-term track unless Congress and the White House eventually agree on cost-saving reforms.
According to the latest report by the trustees of the Medicare and Social Security programs, the retirement program is projected to pay all promises benefits until 2034. Beyond then, the system will be able to pay only 79 percent of those benefits without a change in law. About two in three elderly Americans rely on Social Security for most if not all of their income.
“At a time when over half of the American people have less than $10,000 in savings and senior poverty is increasing, we should not be talking about cutting Social Security benefits,” Sanders said in a statement. “We should be talking about expanding benefits to make sure that every American can retire with dignity.”
With Sanders and O’Malley now fully on board, Clinton is the only one of the three major Democratic candidates who has not specifically endorsed an expansion of the Social Security program – a fact that Sanders’ campaign supporters highlighted in a statement today. Last summer, as she scrambled to patch up her shaky relations with the liberal wing of the party, she indicated at a town hall gathering in New Hampshire that she would be open to raising the payroll tax.
"We do have to look at the cap, and we have to figure out whether we raise it or whether we raise it a little and then jump over and raise it more higher up," Clinton said in August, according to The Washington Post.
However, she was slow in coming around to that position. And during her unsuccessful bid for the Democratic presidential nomination in 2008, she criticized then-Sen. Barack Obama for supporting a proposal similar to Sanders’ which would subject incomes above $250,000 to the payroll tax. Clinton said at that time that she opposed that approach because she didn’t want to “raise taxes on anybody.”