The Rebuild America Act, introduced in March by Sen. Tom Harkin, as a wish-list of progressive ideas that would be widely discussed in this election if it reflected anything other than the standard Washington agenda. One very important section but little-noticed of the bill would actually expand Social Security.
Thanks to Ken Buffin of Buffin Partners, Inc., and the Buffin Foundation, for calling attention to the Social Security provisions of the Rebuild America Act in his latest monthly Commentary. Two of the three main provisions are familiar: raising the cap on earnings subject to payroll tax, and switching from using the current CPI formula to the CPI-E so that benefit payments better keep pace with the cost of living for the elderly.
The third part of Harkin’s plan is more unusual. It would boost benefit payments by changing the PIA formula that’s used to calculate benefits. Buffin explains this in more detail, but briefly, it would widen the range of income to which the current formula applies a 90% replacement rate, and create a new, high-income range that would receive a 5% replacement rate. This would boost benefits significantly for a large slice of low-income workers, and raise benefits modestly for people with higher incomes, many more of whom are likely to need their Social Security in coming decades.
The irony of the Social Security debate in Planet Washington today, as Buffin and others have pointed out repeatedly, is that while all the political class seem to be able to talk about is how to cut Social Security, the reality is that today’s working Americans will need Social Security more than their parents due to the collapse of other sources of retirement income. The proposal by Harkin, who chairs the Senate Health, Education, Labor and Pensions Committee, is certain to receive no attention in the capital this year. But that doesn’t mean it can’t have a presence in this election.
Friends of Social Security should be confronting their elected officials and candidates, demanding 1) that they pledge to hold Social Security harmless in any deficit or budget talks after the election, and 2) demanding to know what they propose to do to expand and improve Social Security.
Rather than the phony “conversation” between the Republican right and the Democratic center-right on the size of government that the national media has been touting – in reality, a conversation on how deeply to slash the public sector – what’s needed is something that Buffin called for early last year: steps toward formulating a “National Retirement Income Policy” that addresses the crisis looming for today’s working generations. The Rebuild America Act lays down a marker by creating an occasion to once again discuss expanding Social Security.