The Case for Expanding Social Security, Not Cutting It

Nowadays, whenever Social Security comes up in policy debates around Washington, the discussion often focuses on how best to cut benefits in order to shore up the program’s finances.

But a big new report (pdf) from the New America Foundation suggests that the conventional wisdom is exactly backward. Congress should be looking at ways to expand Social Security, not shrink it — particularly at a time when traditional corporate pensions are disappearing, and 401(k)s have proved fairly risky.

The major proposal in the report is to add a brand new benefit to Social Security, called Part B, which would provide a flat $11,699 per year to all retired workers. This would come on top of regular Social Security, which would also be protected from any further cuts.

That’s a large hike. But the New America report, written by Michael Lind, Steven Hill, Robert Hiltonsmith and Joshua Freedman, makes a case that alternative retirement options for Americans aren’t working. Defined-benefit employer plans are vanishing. Workers aren’t saving enough or dipping into their retirement funds too often. And private-savings plans like 401(k)s or IRAs are proving quite volatile — the financial crisis wiped out an estimated $2.8 trillion from retirement plans.