A couple of weeks ago, we talked about how President Trump keeps pushing a payroll tax cut even though there are far more effective policies that would help ease the economic pain inflicted by the COVID-19 crisis. Fortunately, that proposal continues to garner little support. But recently, it was reported that “Senior administration officials have discussed” a new bad idea that would mess with Social Security. The “Eagle plan” would cut federal retirement benefits, including Social Security, in exchange for a one-time $10,000 payment. So, AGAIN, this proposal would ask people who are struggling right now to shortchange their future selves for modest short-term relief. And while press reports state that the plan has been rejected, this proposal is extremely troubling—and would especially harm women.
Social Security is the foundation for the retirement security for hundreds of millions of Americans, and its benefits are especially critical for women. Women tend to live longer than men, and are more likely to outlive their spouses, so the fact that Social Security benefits are lifelong and inflation-adjusted particularly helps women. In addition, women are paid less than men over their lifetimes, which not only results in less retirement income at the end of their careers, but smaller Social Security benefits since those payments are based on previous wages. As a result, women rely more on Social Security in retirement than men do. In fact, Social Security keeps the incomes of millions of women above the poverty line every year.
For all these reasons, any cut in benefits or change to the fundamental structure of Social Security would be harmful to everyone, but especially to women. On top of that, proposing to give people a cash payment in the middle of a recession would provide some short-term relief but is a recipe for disaster when it comes time for them to retire. Only the very wealthiest of people will be able to afford to save and invest that cash for their future retirement during the highest period of unemployment and economic contraction since the Great Depression. The rest of us will need to use that money to pay bills or rent, leaving little or nothing for retirement.
As the experience of millions of current beneficiaries during the COVID-19 economic downturn demonstrates, a recession is the worst possible time to mess with Social Security. Right now, Social Security provides stable, guaranteed income that people are pumping right back into the economy when they spend it on food, medicine, and other necessities. For people aged 62 and above who lose their jobs, run out of unemployment benefits, and cannot find new employment, Social Security provides a back-up source of income (and just remember, people can later decide to suspend their Social Security retirement benefits if they find work!). So in a recession, Social Security both helps people meet their basic needs, and stabilizes the economy.
In good times and in bad, Social Security is there for us—and especially benefits women. Instead of entertaining proposals that would undermine this critical program—and harm women—we should be laser-focused on how to make it stronger and expand its benefits.