Elizabeth Warren’s Social Security Plan: Raise Benefits by $200 a Month

WASHINGTON — Senator Elizabeth Warren of Massachusetts unveiled a plan on Thursday to give all recipients of Social Security benefits an extra $200 per month and to pay for it by raising taxes on the rich, her latest economic proposal to redistribute wealth in the United States.

Ms. Warren, whose support has been rising steadily in polling of the Democratic presidential race, announced the plan ahead of a Democratic primary debate on Thursday evening. The proposal appeared to be targeted directly at older voters who have been gravitating toward former Vice President Joseph R. Biden Jr., who thus far is the front-runner in the primary campaign.

“It’s time Washington stopped trying to slash Social Security benefits for people who’ve earned them,” Ms. Warren wrote in a post her campaign planned to publish on Medium. “It’s time to expand Social Security.”

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Ms. Warren’s proposal would significantly increase government spending on Social Security, which is already the single largest federal program, accounting for about a quarter of the budget. The largest portion of her plan, raising benefits for 64 million recipients by $200 a month, would cost more than $150 billion in its first year.

The plan would also fundamentally alter the funding structure of the program, forcing the very rich to pay much more into Social Security in taxes than they would get out of it in benefits, while most Americans would get far more than they pay in.

Ms. Warren’s proposal is the latest sign that Democrats have shifted from promising to protect Social Security benefits — or in the case of former President Barack Obama, proposing to slow the rate at which benefits increase over time — to expanding the program and increasing benefits.

House Democrats are considering a vote on a bill that would increase benefits and shore up the program’s future finances by raising the taxes that fund the program, for middle- and high-income workers.

Social Security is popular with voters, but polls show they worry about its solvency. Attempts to change the program and reduce benefits have long been considered a “third rail” of American politics.

Earlier this year, a government report found that the cost of Social Security would exceed its income in 2020 for the first time since 1982. The program’s reserve fund is projected to be depleted in 16 years, at which time recipients would get smaller payments than they are scheduled to receive, if Congress does not act.

Older Americans, who would see the most immediate benefits from Ms. Warren’s proposal, represent a sizable voting block in the Democratic primary race. In 2016, nearly three in 10 Democratic caucusgoers in Iowa were 65 and older, according to polls of voters entering the caucuses.

In a national poll released by CNN on Wednesday, Mr. Biden was supported by 35 percent of Democrats and Democratic-leaning independents who were 65 or older. Ms. Warren was next at 22 percent. No other Democratic candidate exceeded 5 percent.

Mr. Biden has proposed increasing Social Security benefits for older Americans, as part of a plan to shore up the program. Senator Bernie Sanders of Vermont in February released a plan to tax workers earning above $250,000 a year, in order to extend the solvency of the program by more than 50 years.

Social Security recipients get an average of $16,248 a year in benefits, and Ms. Warren is proposing to give them a raise of $2,400 a year. The plan would also overhaul how annual cost-of-living increases are calculated so that benefits increase more rapidly over time. And it would create a new Social Security credit for people who leave the work force to care for family members — a benefit that Ms. Warren says would make the social safety net program more fair for women.

Like many of Ms. Warren’s major policy proposals, the plan to broaden Social Security has a particular source of financing: the rich. Under the plan, Ms. Warren would impose a new 14.8 percent payroll tax on individuals who earn more than $250,000 a year, to be split by workers and their employers, and a 14.8 percent tax on investment income that would apply to the top 2 percent of earners.

The Warren campaign estimated that the plan would reduce the federal budget deficit by $1.1 trillion over a decade.

Ms. Warren’s plan to accelerate the cost-of-living increases for Social Security benefits represents a stark shift from a proposal offered by Mr. Obama in 2013 that would have slowed the rate at which benefits increase over time by switching to a different measure of inflation known as the “chained” Consumer Price Index. That idea, which was floated in an effort to reach a budget agreement with Republicans, was ultimately scrapped.

President Trump vowed as a candidate not to cut Social Security and initially steered clear of addressing the program’s looming shortfall. However, in the budget proposal that the White House released in March, Mr. Trump called for a $26 billion reduction in spending on Social Security programs, including a $10 billion cut to the Social Security Disability Insurance program, which provides benefits to disabled workers.

Mark Zandi, the chief economist at Moody’s Analytics, who reviewed Ms. Warren’s proposal for the campaign, said that it would extend the solvency of Social Security by almost 20 years.

In his analysis, Mr. Zandi noted that Ms. Warren’s fondness for funding new spending by taxing the rich could affect the economy significantly. Ms. Warren, he wrote, “has put forth a number of other economic policy plans, including for affordable housing, student lending, clean energy and child care, that are also financed in large part by substantially greater taxes on high-income and high net worth households.”

“Given this financial burden,” he added, “there could be significant behavioral changes by these households that are difficult to gauge.”