A combined image shows U.S. President Donald Trump and Democratic presidential candidate Joe Biden during the first 2020 presidential campaign debate held on September 29, 2020 on the Cleveland Clinic campus of Case Western Reserve University in Cleveland, Ohio, United States, Sept. 29, 2020 September 2020. REUTERS / Brian Snyder
October 2, 2020
(The opinions expressed here are those of the author, a Reuters columnist.)
By Mark Miller
CHICAGO (Reuters) – When an actuary is mentioned in a presidential advertising campaign, you know something strange is going on in politics. Along with the unprecedented campaign breaking norms this year, the focus is on retirement planning.
Surveys show that social security and medical care are generally popular among all partisan and population groups. The programs rarely emerge as major presidential campaign themes, but this year President Donald Trump brought Social Security into play. In August, he signed a memorandum from the President calling for the Federal Insurance Contribution Act (FICA) revenue to be deferred until the end of the year as a pandemic relief measure / 3kSYzRI if he wins a second term.
If Republican Trump prevails and FICA isn’t replaced with something else, the program will run out of money very quickly – and this is where the actuary comes in. Democratic candidate Joe Biden’s campaign ran a series of televised advertisements https://bit.ly/3kTj2WM quoting an actuarial opinion letter on Trump’s proposal from Stephen C. Goss, the impartial chief actuary of social security. The letter contains the bomb forecast that in this “What if?” In this scenario, the Social Security Disability Insurance Trust Fund would be depleted in the next year and the Old Age and Survivors Trust would depleted in 2023.
And that’s just one of the retirement questions this year.
Even before the FICA conflict, social security faced a long-term solvency problem that is expected to accelerate due to the collapse of the economy. Prior to the pandemic, Social Security Trustees predicted that the program’s combined retirement and disability trust funds would be emptied in 2035 due to long-term shifts in the employee-to-beneficiary ratio. At this point, the current income would be sufficient to pay only 80% of the benefits. The pandemic is likely to postpone that date for a year or more, Goss predicts.
Voters should consider which party would offer the solution they prefer. Restoring solvency requires choosing between higher revenues, reduced benefits, or a mix of both. Most Democrats in Congress support a modest expansion of benefits as part of a broader social security solvency solution. Biden’s social security plan https://bit.ly/2RMNWU4 calls for the restoration of long-term solvency by lifting the cap on wages that are subject to FICA taxes. He also advocates targeted expansion for low-income and very old beneficiaries.
The Trump campaign has no specific social security proposal and the Republican Party declined to come up with a political platform document this year.
However, the party’s history of reform proposals was clear. Most include calls for a gradual increase to the full retirement age – the age at which you can qualify for full benefit. As a result of the changes that came into force in 1983, the retirement age is already gradually increasing from 65 to 67 years. Some Republican proposals called for the FRA to be gradually increased to 69 or 70. Their argument: As longevity increases, everyone should wait longer for benefits.
This would create big problems for low-income workers, and skin-colored workers who tend to earn less, have lower life expectancies and work in physically demanding jobs that become more difficult to keep up with with age. But it would also hurt the millions of older workers who are taking early retirement due to the pandemic and may have to apply for social security at a younger age. A higher retirement age would mean a severe reduction in benefits for them.
Republicans have tried to overthrow the Affordable Care Act (ACA) since it was passed in 2010. The latest volley is a lawsuit filed by 20 Republican states and backed by the Trump administration in the US Supreme Court. The case revolves around the constitutional feasibility of the ACA’s individual mandate.
The Supreme Court is expected to hear the case immediately after the November 3rd election, and a decision is not likely until next year. If the court rules in favor of the plaintiffs, the law would be invalid and millions of Americans would lose health insurance.
The ACA improved coverage for older Americans before Medicare, and guaranteeing coverage for people with pre-existing conditions changed the game fundamentally.
The death of Justice Ruth Bader Ginsburg earlier this month has drawn attention to the Supreme Court case. Some observers predict that further shifting the court to the right increases the likelihood that the ACA could be overturned.
What happens then?
Republicans have been promising a superior replacement for the ACA for years, but most of their proposals focus on lowering premiums in exchange for lower levels of insurance coverage, such as pre-existing conditions. Some Democrats believe that the ACA should be improved and expanded. others prefer to expand Medicare.
Biden has called for a public option to be added to the ACA and the Medicaid extension of the law to be retained. Medicare eligibility could be extended by lowering the eligibility age, establishing Medicare for All, or creating a Medicare buy-in. Biden advocates reducing the Medicare registration age to 60 https://reut.rs/2Sa8bLC.
MEDICARE TRUST FUND
If all of these are not enough, the Health Insurance Trust Fund (HI), which accounts for Medicare Part A spending, must take action almost immediately to counter the impending bankruptcy. According to the Congressional Budget Office https://bit.ly/3iT43eJ, the HI fund should be exhausted in 2024. This is two years faster than the last 2026 trust fund depletion estimate made by Medicare trustees prior to the pandemic.
The HI Trust Fund is financed primarily through a FICA tax split of 2.9% between employees and employers. Falling revenues due to the economic downturn have hurt the outlook, as have some of the recent changes to federal law.
(Reporting by Mark Miller in Chicago; Editing by Lauren Young and Matthew Lewis)
This article originally appeared on www.oann.com