The former Maryland governor’s proposal would be paid for in part with a rise in the payroll tax cap.
By Quentin Misiag
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Democratic presidential underdog Martin O’Malley’s newest call to action — an ambitious plan to expand Social Security — is being hailed as a win among his party’s liberal wing, but it is also seeing push back by a group of nonpartisan national economic experts.
At the same time O’Malley struggles to gain ground among Democratic voters, it has also directly placed a target on party front-runner Hillary Clinton, who has yet to publicly announce her stance on pumping more money into the federal program.
“We cannot ask seniors with modest savings to live on even less,” O’Malley said in a white paper released Aug. 21. “Instead, we should expand Social Security so they can retire with the dignity they have earned over the course of their working lives.”
O’Malley’s plan calls for expanding Social Security benefits to all Americans for “current and future” retirees.
In a move that demonstrates O’Malley’s desire to curb support among wealthy Americans, the payroll tax cap would be raised to $250,000.
The former Maryland governor’s latest economic policy rollout is seen by some as a political ploy to attract voter attention from Clinton and Sen. Bernie Sanders, I-Vt., who both lead him by wide margins in Iowa and national polls.
On Monday, O’Malley snagged a lucrative endorsement from Nancy Altman, the president of Social Security Works, a Washington-based left-leaning lobbying group.
“Gov. O’Malley’s Social Security and related proposals underscore what a visionary, pragmatic, fiscally responsible, and compassionate leader he is,” Altman said in a statement. “He understands that Social Security is a solution to our looming retirement-income crisis, the financial squeeze confronting today’s working families, and the nation’s rising and dangerous income inequality.”
Another key Democratic voice, former Sen. Tom Harkin, D-Iowa, previously championed efforts to expand Social Security.
Harkin endorsed Clinton for president last week.
Sanders recently released a similar proposal to bolster the 80-year-old program, which is funded through payroll taxes called Federal Insurance Contributions Act or Self Employed Contributions Act Tax.
Both O’Malley and Sanders would fund their proposals with the rise in the payroll cap. Currently, individuals who earn up to $118,500 are subject to the payroll taxes. However, earners making more than that are not.
O’Malley’s call to action would increase benefits for low-income workers, otherwise known as those who make minimum wage.
A requirement in O’Malley’s version would require companies with more than 10 employees to have an IRA contribution for their staff.
Boston University economics Professor Laurence Kotlikoff, who has worked with a small group of Social Security wonks at the University of California-Berkeley, chastised O’Malley’s plan Monday, calling it a political ploy to “buy votes.”
“We need to deal with the bills we have. The system is broke as it stands,” Kotlikoff said. “The idea of spending more money without addressing the fiscal problem, to me, is irresponsible.”
Kotlikoff said he and his colleagues have estimated that Social Security is saddled with $26 trillion in debt.
O’Malley and politicians on both sides of the aisle need to begin hiring veteran economic researchers, not political operatives, if they hope to keep the program afloat, Kotlikoff said.
“If you called Gov. O’Malley and asked him what the fiscal gap is, he would have no idea,” he said. “I’m happy to talk to the governor and explain what needs to be done.”
O’Malley’s announcement follows a survey released by AARP earlier this month on the 80th anniversary of Social Security. Of 1,200 adults polled, 61 percent said their average monthly payment of $1,332 is too low.
Nearly one in five Iowa residents received Social Security last year, according to a 2014 report by AARP.