It shouldn't be surprising that the Democratic and Republican nominees for U.S. president have very different views on a wide range of issues. Social Security is among the areas of disagreement between Vice President Kamala Harris and former President Donald Trump.
The presidential election in November will almost certainly be a close one. As things stand now, pollster Nate Silver estimates that Harris has a 51% chance of defeating Trump in the Electoral College vote.
How might Social Security change if Harris beats Trump? Here's my prediction.
Vice President Kamala Harris delivers remarks at the 40th Annual Black History Month Virtual Celebration, hosted by Congressman Steny Hoyer of Maryland, Saturday, Feb. 27, 2021, in the South Court Auditorium of the Eisenhower Executive Office Building at the White House. (Official White House Photo by Lawrence Jackson.)
Social Security changes Harris might want to make
Vice President Harris hasn't provided full details on her platform yet. However, we can make some reasonable educated guesses about which Social Security changes she might want to make if elected president.
In 2019, Harris -- then a U.S. senator representing California -- co-sponsored a bill to reform Social Security. This plan called for increasing the payroll contribution base for Social Security to $250,000. It would also tax investment income for high earners, including capital gains, dividends, interest, and rental income.
The Social Security reform featured several provisions that would boost benefits. They included increasing the minimum benefit and changing the cost-of-living adjustment (COLA) calculation method to better reflect the costs incurred by seniors.
It's possible, though, that Harris could revise her plans for Social Security if she becomes president. The most likely changes would be on specific income thresholds for taxing earnings. (For example, President Biden campaigned in 2020 with a plan to raise the payroll contribution base to $400,000.)
Any Social Security proposals from Harris would almost certainly avoid any benefit cuts while generating additional revenue from high-income individuals.
Other ways her policies could affect Social Security
Does a president have to make structural changes to Social Security to affect the program? No. Any policies that impact the inflation rate can also impact Social Security COLAs.
Harris' appointments to the Federal Reserve could directly affect inflation and, therefore, potentially the Social Security COLAs. The Fed regulates the money supply and sets interest rates, both of which can nudge the inflation rate higher or lower.
Her trade policies could also affect inflation and COLAs. In particular, high tariffs can cause inflation to rise, and well-crafted trade agreements with other countries can help lower inflation.
Harris has criticized major tariffs proposed by former President Trump. However, she has opposed some trade agreements in the past, including the Trans-Pacific Partnership that the Obama administration unsuccessfully attempted to secure with 12 Pacific Rim countries.
Fiscal policies focused on government spending and taxation could also impact inflation. If a Harris administration pushes for significant increases in federal spending, it could drive inflation higher and lead to higher Social Security COLAs. On the other hand, offsetting personal income tax increases could help control inflation.
How Social Security is likely to change if Harris beats Trump
Now for my prediction. I don't think Social Security is likely to change much at all if Harris beats Trump. I base this on two primary assumptions.
First, I think the GOP will probably control the Senate. Republicans have 50 Senate seats that are safe, are likely GOP, or lean GOP, according to RealClearPolitics. If this is correct, the GOP will only need to win one 1 of 7 toss-up races to have a Senate majority. Assuming Republicans control the Senate, the Harris administration would have a difficult time getting major Social Security changes through Congress.
Second, I suspect Harris' Federal Reserve appointments and policies as president wouldn't rock the status quo too much. If so, Social Security COLAs could be in the ballpark of the average over the last 20 years.
Of course, my assumptions could prove to be wrong. However, I don't think retirees should count on major Social Security changes if Vice President Harris wins in November.
