(Yahoo!Finance) - When it comes to Social Security, many Republican 2024 candidates agree that a primary area to look for reform is trimming benefits for younger people. The debate is how to go about it.
A host of approaches are being offered to answer that question on the campaign trail. Raising the retirement age is one popular option — but others counter that such a move would be unfair to some workers.
Others are flirting with partial privatization of the program, another idea that also has its detractors. Likewise for ideas around trimming benefits for wealthier Americans, changing work requirements, and using economic growth to solve the problem.
The simmering debate — taking place at a temperature far below the hot-button topics like abortion or former President Trump’s indictments — is nevertheless an issue likely to only grow in prominence during the next presidential term.
Recent projections find Social Security only has the funds to continue paying out 100% of benefits through 2034. Without any action, checks could be decreased by over 20% when that moment of insolvency is reached, with experts warning that balancing the books becomes a more difficult task with every passing year.
As Marc Goldwein, policy director at the Committee for a Responsible Federal Budget, put it in a recent briefing: "This is a very near-term problem and one that if the next president doesn’t address — we may not be able to address at all."
Off the table among the menu of options — among the GOP contenders at least— is the approach favored by Democrats from President Biden on down: balancing the books by increasing revenues, likely through higher payroll taxes.
While a complete solution to the looming problem will likely require compromise and some combination of the two approaches, here’s a look at where Republican candidates looking to oust Mr. Biden stand:
Two ideas: Raising the retirement age and partial privatization
Among specific solutions being offered on the campaign trail, perhaps the most often expressed idea among the candidates in the field is around raising the retirement age down the road.
During a recent town hall, former UN Ambassador Nikki Haley said "the first thing you do is you change the retirement age of the young people coming up so that we can have some sort of system for them."
Former New Jersey Gov. Chris Christie and former Vice President Mike Pence have offered a similar outlook with positions that include an openness to raising the retirement age in addition to other measures.
The limitation of raising the retirement age idea is that it may help Social Security's finances over the longer term but it would do little to address the near-term shortfall.
Meanwhile, at least one candidate flatly opposes the idea. Former Arkansas Gov. Asa Hutchinson recently noted to PBS that raising the age would be unfair to many Americans who work in "tough manual labor jobs" and whose bodies may give out long before age 70.
Another idea that comes up with some frequency would be moving to a privatization of the program, or at least segmenting off a portion of it.
The leading advocate of this approach is former Vice President Mike Pence, who recently laid out a plan to allow younger workers to invest a chunk of their payroll taxes into a personal account. When they retire "they’ll have their own savings account, not an IOU from the federal government," he said recently.
The idea has similarities to one being pushed on Capitol Hill by Sen. Bill Cassidy (R-La.) to create a $1.5 trillion investment fund to supplement future Social Security benefits down the road.
But any moves towards privatization also have plenty of detractors. Florida Gov. Ron DeSantis has expressed openness to the idea in the past but in a recent Fox News interview said a lack of surpluses means that's an idea "totally not on the table."
For his part, former President Trump — in spite of expressing openness to ideas around the retirement age and privatization in a 2000 book — has now fully distanced himself from any such efforts and offers little in the way of a plan for how he would approach the program.
Instead, he is much more apt to weigh in on the issue as a political weapon to attack his political opponents, especially DeSantis. The Florida governor did vote for efforts to reform Social Security last decade while in Congress and "that’s a bad one," Trump has taken to saying.
Other ideas, from means testing to work requirements
On the Democratic side, President Biden has focused more on increasing taxes to cover the shortfall and repeatedly criticized any Republican who discusses reform that includes benefit cuts.
He had a memorable moment in his State of the Union address when he baited Republicans to promise to take entitlement programs off the table and "stand up for seniors." Democrats have also critiqued Haley and others for their comments on entitlement reforms.
Another idea from Republicans is to add means testing to the program, which would have the effect of limiting benefits for wealthy people who likely already have ample private retirement plans.
Both Haley and Christie have also floated this idea. As Christie put it during a recent appearance: "Warren Buffett does not need Social Security. He doesn't. Mark Zuckerberg, Elon Musk, Jamie Dimon, they don't need it. So maybe we can start there."
Another approach, which Hutchinson has pushed, would look at lessening work restrictions around Social Security.
Older Americans can currently work and receive Social Security benefits at the same time, but there are some earning limits for those under age 67 that can reduce benefits for a few years.
Lessening those restrictions, Hutchinson claims, could "add a million people back into our workforce" and help increase revenues that way.
Ongoing lack of clarity from the frontrunners
Meanwhile, there remains a lack of specificity from many of the top candidates.
Runaway frontrunner former President Trump has held a variety of positions over the years on the issue, from his 2000 book to now. The closest thing to a plan recently came in a video this year when he said "under no circumstances should Republicans vote to cut a single penny" from the program.
For his part, Sen. Cassidy has been critical of both Trump and Biden for their lack of plans, telling Yahoo Finance in a recent interview that "once the political season is over, I'm hoping that sanity returns."
DeSantis likewise has avoided specifics. He recently said there should be discussion on "making changes for people in their 30s and 40s" but has avoided saying what he would propose.
And perhaps the most unusual position comes from Vivek Ramaswamy, who has been surging in the polls and gotten notice for his recent debate performance.
The entrepreneur has said that he plans to focus his attention elsewhere. He recently told Gray Television that "Social Security reform, Medicare reform, that’s got to be somebody else’s job down the line."
"I don’t think it’s the job of every US president to try to do everything," he added.
The ongoing vagueness by some of the leaders is unsustainable, say many who point to the costs of inaction.
Goldwein notes that pledging to not touch Social Security "is a great political tagline but the reality is that it's an endorsement of a huge across-the-board cut."
Ben Werschkul is Washington correspondent for Yahoo Finance.
By Ben Werschkul· Washington Correspondent
September 3, 2023
