The 2020 presidential campaign is now in full stride, as early primary and caucus results have already started to thin the field. Yet in many ways, former New York City mayor Mike Bloomberg is just getting started with his campaign, having joined the race relatively late.
For tens of millions of older Americans, no issue facing the candidates is more important than Social Security. Bloomberg recently said how he'd handle the challenges facing Social Security, and although he didn't give quite as many specifics as some of his peers on the campaign trail, the plan still contemplates some significant changes.
What Bloomberg wants
Bloomberg set out a four-point plan for Social Security:
- Consider options for protecting Social Security's finances as well as the benefits of its neediest participants.
- Provide better minimum benefits for low-income retirees.
- Change the formula for calculating cost-of-living adjustments (COLAs).
- Fix other problems within the Social Security program.
We'll look at these four points in more detail below.
1. Saving Social Security
The Bloomberg plan chooses not to take an alarmist view of Social Security's finances, noting that even after Social Security trust funds run out of money around 2035, the program will still be able to pay out 75% of scheduled benefits from payroll taxes. Yet the presidential candidate still believes it's important to strengthen the program financially and ensure that those who need Social Security the most will still be able to get full benefits.
Beyond those general sentiments, though, Bloomberg doesn't go into any detail on exactly how he would look to preserve and strengthen Social Security. For instance, you won't find anything in his proposal that explicitly suggests boosting payroll taxes to increase revenue for the program. Indeed, his use of the word "consider" seems to be less than a full commitment toward necessarily taking any action with respect to Social Security's financial condition.
2. Minimum benefits for low-income seniors
Bloomberg is critical of the current Supplemental Security Income (SSI) system, which provides additional monthly benefits for low-income retirees. A complicated set of eligibility criteria and payment calculations makes SSI difficult to navigate and use.
Instead, Bloomberg would put together a new minimum benefit designed to help about 10% of current recipients get higher payments. His hope is that the new plan would better address the problems that low-wage earners currently have staying out of poverty in retirement.
3. Make COLAs bigger
The clearest commitment regarding Social Security that Bloomberg makes in his proposal is to boost the way that cost-of-living adjustments are made. Currently, COLAs are tied to a measure of inflation that's designed to track the costs that urban wage earners face. As many have pointed out, the particular basket of goods and services that this inflation measure follows doesn't accurately reflect the much different needs that older Americans have.
Bloomberg would instead look more closely at the costs that affect seniors the most -- especially healthcare. Although he doesn't specifically discuss using the CPI-E measure of inflation for the elderly, Bloomberg's proposed adjustment would likely end up in a similar place as a switch to CPI-E would.
4. Fix other Social Security problems
Finally, Bloomberg's plan looks at a group of catchall issues regarding Social Security. He would look for ways to protect family caregivers from the fact that their years of unpaid service produce much lower Social Security benefits than those doing similar work for pay. Bloomberg would also look at potential ways to ease the financial shock of the death of a spouse, given that under the current system, surviving spouses can suffer a huge cut in their household income.
More to come on Social Security
Social Security is a tough political issue to handle, and Bloomberg isn't alone in being careful about not wanting to give too many specifics. Yet with so many voters watching closely to see which candidate will protect their Social Security the best, Bloomberg might want to give more details as his campaign goes on in order to provide more complete answers to these tough questions.