Investment advisers praised Bernie Sanders for addressing Social Security shortages in Tuesday's Democratic presidential debate, but said his aggressive ideas may not be politically realistic.
The independent Vermont senator who calls himself a socialist highlighted his plan to fortify the safety-net program by raising taxes on the wealthy.
“The way you expand it is by lifting the cap on taxable incomes so that you do away with the absurdity of a millionaire paying the same amount into the system as somebody making $118,000,” Mr. Sanders said during the debate. “You do that, Social Security is solvent until 2061 and you can expand benefits.”
Currently, the Social Security payroll tax is applied to a maximum of $118,500 of income.
Under Mr. Sanders' plan, everyone making more than $250,000 annually would pay the same percentage of their earnings into Social Security as those who are lower on the pay scale. That adjustment would increase benefits by an average of $65 per month, according to his campaign.
Mr. Sanders' idealism appeals to one investment adviser, who doubts his proposal would ever make it through a Republican-controlled Congress.
“His plan for Social Security sounds great,” said Carolyn McClanahan, founder of Life Planning Partners. “I don't know if it's passable.”
Scot Hanson, a financial planner at EFS Advisors, gave Mr. Sanders credit for putting Social Security reform on the agenda.
“Bernie at least threw out an option,” Mr. Hanson said. “It's something to consider. I'm not sure it's the best answer, but we have to do something.”
During the debate, the Democratic front-runner, former Secretary of State Hillary Clinton, said she wants to keep Social Security solvent, but was less specific in her comments about the program.
“The most important fight we're going to have is defending it against continuing Republican efforts to privatize it,” Ms. Clinton said during the debate. “I want to enhance the benefits for the poorest recipients of Social Security. We have a lot of women on Social Security, particularly widowed and single women who didn't make a lot of money during their careers, and they are impoverished, and they need more help from the Social Security system.”
On her campaign website, Ms. Clinton gives little detail about her plans for reforming the old-age pension.
But less might be more when it comes to the reality of Social Security politics.
“Hers is more tempered, and it's probably easier to pull off in reality,” Ms. McClanahan said of Ms. Clinton's approach.
Another Democratic candidate, former Maryland Gov. Martin O'Malley, outlines on his campaign website a plan for strengthening retirement security that encompasses expanding Social Security, in part also by raising the income-cap on the payroll tax. Mr. O'Malley didn't elaborate on Social Security during the debate.
As part of his retirement-security plan, Mr. O'Malley vows to “fully enforce” a Labor Department rule that would raise investment advice standards for retirement accounts. In her financial reform proposal last week, Ms. Clinton vaguely referenced the pending rule.
