It's been a busy summer for Kamala Harris, who recently accepted the Democratic party's nomination for president. In the course of doing so, Harris delivered a speech at the Democratic National Convention where she expressly promised to protect Social Security.
There are two big issues looming with Social Security that Harris will need to tackle if she's elected. Here's what she'll need to put her focus on early in a potential presidency.
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1. Benefit cuts
Social Security gets most of its funding from payroll taxes. But in the coming years, that revenue stream is expected to shrink due to a large number of anticipated retirements. The program will face a double whammy as older workers retire and begin claiming the monthly benefits they're owed.
Social Security can tap its trust funds to keep up with scheduled benefits until that money runs out. Currently, the program's Trustees project that Social Security's combined trust funds will be depleted by 2035. That projection could wiggle in future years, but Social Security will need a financial lifeline to avoid having to cut benefits for retirees.
Harris will have a number of potential solutions at her disposal for preventing Social Security cuts. These could include increasing Social Security taxes on the wealthy, increasing Social Security taxes across the board, or making changes to the age at which retirees can claim their benefits in full. Given the number of seniors who risk being plunged into poverty in the event of Social Security cuts, it's an issue Harris will need to prioritize.
2. Inadequate cost-of-living adjustments
Social Security benefits are eligible for an automatic cost-of-living adjustment, or COLA, each year. The purpose of COLAs is to help Social Security keep up with inflation.
The problem, though, is that Social Security's COLAs have been failing seniors for decades. And a big reason boils down to how they're calculated.
The current benchmark for determining Social Security COLAs is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When there's a rise in the CPI-W from one year to the next, Social Security benefits get a lift.
The CPI-W isn't the most accurate measure of the costs retired workers on Social Security bear. And why would it be? It's specifically focused on urban wage earners.
To address this issue, Harris could aim to change the way Social Security COLAs are calculated by fighting for a switch to the Consumer Price Index for the Elderly, or CPI-E. This could, in turn, help seniors on Social Security maintain more buying power from year to year and avoid having to resort to extreme cost-cutting measures, like skimping on food or medication, to stay afloat.
A mammoth task, no matter who wins
No matter who gets elected president this November, a lot of work needs to be done to strengthen Social Security and help ensure that benefits are serving seniors well. But of the two issues above, the first is clearly the most pressing. While inadequate COLAs are no doubt a problem, a broad reduction in benefits could be downright catastrophic.
