Unlike the very similar bill reintroduced by Bernie Sanders earlier this year, Warren doesn't flat-out suggest entirely scrapping the current $132,900 cap on taxable earnings. But just like Bernie's legislation, her sweeping, smart and totally original brand-spanking new bold plan also calls for separate taxation of select investments to augment the payroll tax system.
Interestingly enough, Warren did not join with four other Democratic senators - current presidential contenders Cory Booker and Kamala Harris, along with Jeff Merkley and former contender Kirsten Gillibrand - in co-sponsoring Bernie's original Social Security expansion bill in 2017.
But back to the gist of it all: as Bernie has been talking about for many decades and as Warren has begun talking about as the 2020 horse race heats up, the very restrictive cap now in place means that the ultra-rich essentially finish paying off an entire year of Social Security taxes on January 1st, contributing exactly the same amount to the program as someone who earns $132,900 a year. Wealth is by no means taxed at the same rate as work. It's not even close.
Put another way, Jeff Bezos and Bill Gates pay the exact same amount in Social Security taxes as a middle class single or two-income couple living in a modest home in the suburbs. If oligarchic empires were subject to full progressive taxation, the nation's retirement program could conceivably flourish into perpetuity.
So, unlike Bernie's bill, whose progressive taxation of plutocratic wealth would guarantee the solvency of the Social Security trust fund for the next 50 years, Warren's more modest proposal would extend it for less than half that span, or for 20 years.
Therefore, her claim that she is proposing the "biggest and most progressive increases in Social Security in nearly half a century" is a bit overblown, and not just because it copies the Sanders bill without crediting it. Her language is a lot less class-conscious than his is. Instead of demanding that the wealthy pay more, she is politely "asking" them to, as though they actually have the choice to refuse. Her suggestion that plutocrats contribute more is also far less than what ordinary people might consider a "fair share." This is especially true since this requested, allegedly fair share serves to protect the long-term interests and the rattled psychic security of the rich in this age of rising civil discontent. Her tax reforms to benefit regular people are really no skin off rich financial noses at all. Best of all, the convoluted tax figures which she puts forth, unlike a true permanent scrapping of the cap, would be very much subject to back-room tinkering and bipartisan sausage-making and horse-trading, with maximum input from the minimally affected donor class and their teams of hungry lobbyists. The poor, of course, have no lobby.
In her own much more liberal way, Warren echoes the mantra of her former boss, Barack Obama, uttered reassuringly to the Wall Street bankers who ruined the economy. She is the latest thing standing between the squeamish, tax-averse wealthy and what Obama denigrated as the "pitchforks." Oh, and she also wants to seduce older Joe Biden fans into her camp as she brings up his own myriad disgusting efforts to cut Social Security.
It's interesting to note, meanwhile, that even as she claims to support Bernie's Medicare For All legislation without yet putting forth her own original detailed plan, one of Warren's rationales for modestly increasing monthly retirement benefits is to help struggling seniors meet their rising medical and drug costs. She writes in her Medium post:
In 2019, the average Social Security beneficiary received $1,354 a month, or $16,248 a year. For someone who worked their entire adult life at an average wage and retired this year at the age of 66, Social Security will replace just 41% of what they used to make. That’s well short of the 70% many financial advisers recommend for a decent retirement — one that allows you to keep living in your home, go to a doctor when you’re sick, and get the prescription drugs you need.She makes it a point to sell her plan as a stopgap measure just "in case we don't adopt Medicare For All." (wink, nod to the neoliberal Clinton operatives she is reportedly canoodling with these days.) And just to emphasize, Sanders's M4A legislation would abolish the 20 percent co-pays that are financially breaking so many struggling older people covered under regular Medicare.
And in pointing out that Congress hasn't increased Social Security benefits in 50 years, her suggested $200-a-month increase, adjusted for inflation and the rising cost of living, is actually a pittance. To her credit, she does call for revising cost of living calculations to ensure that monthly benefits keep pace with the costs of barely staying alive. It's certainly a lot better than Barack Obama's failed attempt to reduce benefits through a chained CPI formula.
So don't get me wrong. There's plenty to like in Warren's plan, not least of which is in the inclusion of unpaid stay-at-home mothers and other caregivers in the earnings tables, thus boosting their future Social Security benefits.
But here's the catch (there's always a catch):
My plan will give credit toward the Social Security average lifetime earnings calculation to people who provide 80 hours a month of unpaid care to a child under the age of 6, a dependent with a disability (including a veteran family member), or an elderly relative. For every month of caregiving that meets these requirements, the caregiver will be credited for Social Security purposes with a month of income equal to the monthly average of that year’s median annual wage. People can receive an unlimited amount of caregiving credits and can claim these credits retroactively if they have done this kind of caregiving work in the last five years. By giving caregivers credits equal to the median wage that year, this credit will provide a particular boost in benefits to lower-income workers.Given that caring full-time for a newborn, a toddler, a preschooler, or a sick or elderly relative means being on call 24 hours a day, seven days a week, this reimbursement formula seems far from generous or fair. It's giving part-time status to a full-time job whose "median wage" includes mandatory unpaid double overtime.
Say you're a single mother in her 40s, 50s or 60s who struggled financially ten or 20 or 30 years ago and has a spotty paid work history and no retirement savings as a result. You're out of luck under Warren's plan. You would have had to squeeze all that approved care-giving into the last five years to qualify for better retirement benefits. And even if you had, you'd still have to jump through all kinds of bureaucratic hoops in order to qualify for "credits." What busy parent or caregiver has ever bothered to keep a written record of his or her hours?
Given that we are increasingly becoming a jobless society in a "gig economy," wouldn't it make more sense to phase out the traditional work requirements for Social Security altogether? And no, Social Security should never be replaced with the universal basic income (UBI) proposals so beloved of technocrats and billionaires like Elon Musk. For starters, UBI would eliminate all other programs serving the vulnerable, the old, the young, the sick and the disabled. It would, effectively, be a highly regressive scheme, with the poor essentially subsidizing the middle classes and the affluent because those in need would get less than they do now, even under already meager assistance programs like SNAP (food stamps.)
Chunks of Warren's own technocratic Social Security reform package seem unnecessarily stingy - not to mention confusing and complicated - especially when they're coupled with her worthy suggestions to give full widows' benefits to prematurely retired disabled women, and to restore a deceased parent's survivor benefits to full-time students up to age 22. (Under Ronald Reagan, survivor benefits were cut off when the beneficiary reached age 18 or graduated high school.)
Bernie demands that avaricious billionaires pay more, and he welcomes their hatred. Warren not only politely asks them to contribute a fair share, she consistently refers to the wealthy as "families," thus gifting them with qualities of nurturing and humanity that many of them don't even remotely possess. She lumps professionals making a tad more than $250,000 in with criminal oligarchs who've looted billions from the body politic. This effectively removes the onus from the oligarchs, besides, perhaps, alienating a few of the wealthy elites currently rooting for her while attracting less well-off Biden supporters who might be convinced to root for her with the dream of an extra two hundred bucks a month wafting through their heads.
Her new suggested FICA tax rate of 14-odd percent on the entire top two percent, split with one's putative employer, certainly seems meager compared to the 90 percent rate imposed upon the highest earnings in the Eisenhower years. A self-described "capitalist to my bones," Warren is loath to directly address the class war, loath to demonize the obscenely rich, loath to directly call them out by name.
There's just enough wealth redistribution in Warren's plan to make the neoliberal thought collective pretend to howl with outrage at the mere prospect of being parted with even a modest percentage of their wealth. They might even have to fire one of their maids or forgo purchase of their third luxury car next year.
Bernie is much more to the point. He cuts right to the chase and he names names and he unabashedly evokes the public indignation so absolutely necessary if we are ever to truly change the system rather than just tweak it around the edges.