In a little over three months, Americans from across the country will be heading to the polls or mailing in their ballots to determine who'll lead our great nation for the next four years.
Until recently, the fight for the Oval Office looked as if it would be a rematch of the 2020 presidential election, with former President Donald Trump as the Republican candidate and incumbent Joe Biden seeking his second term as the presumptive Democratic Party nominee. This all changed last weekend when President Biden announced he wouldn't be seeking a second term.
This means delegates at the Democratic National Convention, which is scheduled to take place from August 19 through August 22, will be responsible for nominating the presidential candidate who will face Donald Trump in the November election.
Potential Democratic Party presidential nominee and current Vice President Kamala Harris attending a cabinet meeting. Image source: Official White House Photo by Adam Schultz.
Although the field is wide open, in theory, current Vice President Kamala Harris has the inside track to the Democratic Party nomination. As of the time of this writing, informal betting site PredictIt.com pegs Harris as having close to a 90% chance of being named the Democratic presidential nominee.
While there is no shortage of topics the American public wants addressed, the health and longevity of Social Security are high on the list.
Social Security is staring down a $23.2 trillion long-term funding shortfall
Since the first Social Security retired worker check was mailed out in January 1940, the Social Security Board of Trustees has published an annual report detailing the short- and long-term (75-year) outlook for America's top retirement program. For the last 39 years, every Trustees Report has cautioned that long-term revenue collection would be insufficient to cover outlays. The 2024 report estimates that this leading retirement program is facing a $23.2 trillion funding shortfall over the next 75 years.
What's even more worrisome is that Social Security's Old-Age and Survivors Insurance Trust Fund (OASI) is forecast to burn through its asset reserves by 2033. If the OASI's excess capital becomes exhausted, sweeping benefit cuts of up to 21% may be necessary for the more than 51 million retired workers and nearly 6 million survivor beneficiaries currently receiving a payout.
The OASI's asset reserves could be completely exhausted by 2033. US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.
The silver lining here is that Social Security's revenue streams (the payroll tax and taxation of benefits) ensure it can't go bankrupt or become insolvent. If you're eligible for a benefit, you'll receive one. However, the Trustees Report makes clear that the current payout schedule is unsustainable after 2033 without reform from Capitol Hill.
With Kamala Harris looking likely to take the Democratic Party presidential nomination, here are 10 things you need to know about her views and policy proposals pertaining to Social Security.
1. Technically, the Harris campaign has yet to adopt an official plan
The first thing to note about Kamala Harris' Social Security stance is that, technically, there isn't one as of this writing. Harris only learned last weekend that Joe Biden would be stepping aside and not seeking a second term as president. It'll likely be a few weeks before Harris and her campaign team outline the key points that'll form the foundation of her Social Security plan.
Nevertheless, Harris has previously made her views clear and supported proposals in the past that should give us a very good idea of how she plans to tackle the program's shortcomings.
2. Harris is staunchly opposed to any proposal that would reduce/cut Social Security benefits
One concrete given is that the current vice president and likely Democratic presidential nominee will not support any proposals that reduce or cut Social Security benefits. This includes a core element of the Republican Party proposal -- gradually increasing the full retirement age from its current peak of 67 -- which would lower lifetime benefit collection.
3. She has previously supported proposals from President Biden
As Vice President, Harris has stood behind Social Security proposals put forth by President Biden. This includes a recent call by Biden for the 12.4% payroll tax to be reinstated on earned income (wages and salary but not investment income) above $400,000.
In 2024, all earned income between $0.01 and $168,600 is subject to the 12.4% payroll tax. Meanwhile, earnings above this maximum taxable earnings cap of $168,600 are exempted from the payroll tax. Approximately 6% of workers will surpass this threshold in 2024.
4. As a Senator in California, Harris co-sponsored the Social Security Expansion Act
In 2019, Sen. Bernie Sanders (D-VT) introduced the Social Security Expansion Act in the upper house of Congress. Then-Senator Kamala Harris of California was one of the bill's four co-sponsors.
Sanders' bill would take an even more aggressive approach to payroll tax collection. Instead of being reinstated on earned income above $400,000, the Social Security Expansion Act calls for the 12.4% payroll tax to recommence at $250,000. This bill would presumably raise even more revenue than Biden had proposed.
5. She favors cost-of-living-adjustment (COLA) expansion for seniors
Furthermore, the Social Security Expansion Act seeks to boost benefits amid a period of above-average inflation. One way this would be accomplished is by switching away from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as the program's inflationary measure in favor of the Consumer Price Index for the Elderly (CPI-E).
Whereas the CPI-W is focused on the spending habits of working-age Americans, the CPI-E measures the costs senior households (age 62 and above) are contending with. Over time, the CPI-E would be expected to increase annual cost-of-living adjustments (COLAs).
Image source: Getty Images.
6. Current and new beneficiaries would enjoy a $200/month benefit boost
On top of modestly higher COLAs over an extended period, compared to the CPI-W, the Social Security Expansion Act that Harris co-sponsored would increase monthly benefits to current and new beneficiaries by $200 per month, or $2,400 annually.
According to nonpartisan senior advocacy group The Senior Citizens League (TSCL), the buying power of a Social Security dollar has plunged by 20% since 2010. This benefit boost would help retirees recapture some of this lost purchasing power.
7. Harris aims to increase the special minimum benefit
The Social Security bill Kamala Harris co-sponsored would also increase the special minimum benefit for lifetime low-earning workers to 125% of the federal poverty level and index it in future years. President Biden proposed this, as well, prior to being elected in 2020.
For some context, the special minimum benefit for a lifetime low-earning worker with 30 years of coverage in 2024 is only $1,066.50, which is well below the federal poverty level for a single filer this year of $1,255 per month ($15,060/annually).
8. Harris would have the rich pay their fair share by ending payroll tax loopholes
In addition to the payroll tax being reinstated on earned income above $250,000, the wealthy could see some of their business and/or investment income subjected to a higher net investment income tax under the Social Security Expansion Act. This would be done by increasing the net investment income tax by 12.4% above its current level. Note that this matches the payroll tax applied to earned income, which currently excludes investment income.
9. The proposals Kamala Harris supports would almost certainly fall short of "fixing" Social Security
The good news is that both proposals Kamala Harris has previously supported -- Biden's call to tax the rich and Bernie Sanders' Social Security Expansion Act -- would, indeed, extend the solvency of Social Security and push the estimated asset reserve exhaustion date for the OASI out years, perhaps decades.
On the other hand, repurposing the extra revenue raised from taxing the rich to beef up benefits elsewhere typically offsets a substantial portion of what's gained. An analysis from the Washington, D.C.-think tank Urban Institute estimates that Biden's proposal would only add "about five years" to the solvency of Social Security's trust funds.
Long story short, Harris's approach would provide temporary relief for Social Security, but it doesn't offer a long-term fix or resolve the entirety of the program's 75-year funding shortfall.
10. The likely Democratic presidential nominee would find little support in Congress for reform
Last but not least, Kamala Harris is liable to find the sledding incredibly tough on Capitol Hill when it comes to Social Security reform.
To amend the Social Security Act, 60 votes in favor will be needed in the Senate. However, it's been 45 years since either party had a supermajority of seats (60) in the upper house of Congress. This means bipartisan cooperation is a necessity if anything is to be done. With Democrats and Republicans unable to find common ground, whatever Kamala Harris proposes, assuming she becomes the Democratic party presidential nominee and wins in November, would likely fall on deaf ears.
