The balloons have all dropped on the major political conventions. Although we know what the candidates and their surrogates said, where do they truly stand on retirement security?
In analyzing the Democrat and GOP platforms along with candidate statements, it's clear that Hillary Clinton's proposals would do the most for most present and future retirees. It's an impressive plan to bolster retirement security, although it's difficult to say how much of it could be implemented in a divided Congress.
Surprisingly -- and this is the good part in an otherwise brutal political season -- both candidates say that want to preserve Social Security and Medicare. But it's Clinton who has a specific plan to enhance and expand both program.
National political language is often muddled because hefty promises are made and political platforms are often a statement of direction. But these policy guides rarely tell you how things will get done in a fractured political environment.
If you read between the lines of both plans, though, you can see important distinctions: The GOP's official stance is still to eventually take apart the present Social Security/Medicare system and privatize it. Clinton wants to expand benefits and ensure better funding for both.
Let's start with the GOP platform, which is actually at odds with what Trump says he will do. Here's Trump on Social Security:
“I will do everything within my power not to touch Social Security, to leave it the way it is; to make this country rich again; to bring back our jobs; to get rid of deficits; to get rid of waste, fraud and abuse, which is rampant in this country, rampant, totally rampant. And it’s my absolute intention to leave Social Security the way it is.”
This statement, which he's repeated fairly consistently, though, doesn't mesh with what the GOP wants to do to Social Security. The Republican platform, adopting a policy that's more than a decade old, wants to privatize the system.
According to the official GOP platform (p.24), the party states "we believe in the power of markets to create wealth and to help secure the future" of the system. I agree with that statement in principle, although it's so vague that it could be anything.
In previous statements, supported by party leader and House Speaker Paul Ryan, the GOP would break up the Social Security system -- although it's not clear how that would work to use "the power of markets to create wealth."
It likely means channeling Social Security money into private accounts, that is, mutual funds that charge fees managed by financial services companies. Such a proposal was floated by President George W. Bush and quickly withdrawn, although it's remained part of GOP policy statements for at least 15 years.
Ryan's plan would essentially turn part of Social Security into a 401(k). Benefit guarantees with cost-of-living adjustments would be dropped. You'd be handed a lump sum to invest on your own.
To date, Trump has not publicly embraced the Ryan-GOP plan, although he appears to be at odds with long-held GOP proposals to privatize the system.
On Medicare, Trump also says he wouldn't cut Medicare benefits. But the GOP platform advocates a "premium support model" (p. 34), that emphasizes "patient choice and cost-saving competition among providers."
In reality -- at least for those over 55 in the GOP plan -- the Republican proposal essentially calls for handing a lump sum over to Medicare beneficiaries to buy private health policies. That means being exposed to the ravages of the private insurance market.
The GOP platform doesn't estimate how much its plan will cost retirees, but it's hard to believe that splintering the retiree health care market among hundreds of insurers would lower costs. Note: Trump hasn't discussed the specifics of the long-standing GOP plan, either.
Trump's presidential Web site doesn't directly mention detailed Medicare reforms, but advocates negotiating with drug companies to lower pharmaceutical prices, repealing the Affordable Care Act, allowing the sale of health insurance nationally and the deduction of health insurance premiums on individual federal income tax returns.
Clinton's Plans
In contrast, Hillary Clinton's proposals for Social Security and Medicare are quite specific. Her proposals not only call for expansion, but offer ways to pay for increased benefits. Overall, they would provide greater retirement security.
Although Ms. Clinton's plans, like many candidate proposals, are short on funding specifics, it's unequivocal that she wants to expand Social Security and tax wealthier Americans more to pay for it. This is a summary of her expansion proposal:
-- "Reduce how much Social Security benefits drop when a spouse dies, so that the loss of a spouse doesn’t mean financial hardship or falling into poverty.
-- Americans should receive credit toward their Social Security benefits when they are out of the paid workforce because they are acting as caregivers.
-- Ask the highest-income Americans to pay more [in Social Security taxes?], including options to tax some of their income above the current Social Security cap and taxing some of their income not currently taken into account by the Social Security system."
A long-considered option to raise the earnings cap on Social Security taxes, currently at $118,500, has been on the table for years. In essence, upper-income earners would pay more into the Social Security system and ensure its long-term fiscal survival.
Ms. Clinton also opposes reducing the cost-of-living formula on retirement benefits, privatization and raising the retirement age.
On Medicare, Ms. Clinton surprisingly is on the same page with Trump on one issue: She states that the Medicare system should be able to negotiate with drug companies to lower prices, which is currently forbidden by law.
Unlike the GOP, though, Ms. Clinton wants to keep the Affordable Care Act and offer a "public option" to buy into Medicare for those over 55, an important link to offering those under full retirement age the benefits of Mediare at potentially lower cost than private plans.
And building on some reforms built into the Affordable Care Act to experiment with cost-saving measures in Medicare, Ms. Clinton advocates "delivery system" reforms that include accountable care organizations and changing the way Medicare services are billed. These components of the Democrat's plan are fairly well documented and the most progressive part of her healthcare proposals.
Overall, Ms. Clinton's retirement security reforms are superior to Trump's because they side-step the long-held GOP policy of privatization, which is the main reason why 401(k)s and the private health policy part of Obamacare are so ineffective. Costs for providing these services are still too high and too fragmented.
You can't control costs and ensure economic security if you shred these pieces of the social safety net among hundreds of inefficient companies.
Not only do you not benefit from economies of scale in a market-based model, it's still -- and will remain -- a divide and conquer world that doesn't benefit most Americans.
