As Congress nears the month-long mark of budget negotiations, a recent poll by Public Policy Polling found that voters in key swing states and districts both overwhelmingly oppose reducing social security and support expanding the long-time federal social insurance program. The findings, which run contrary to the current bi-partisan intent to cut social security in the name of fiscal austerity, not only poses electoral problems for members of both parties, but also challenges policymakers to produce bold policy solutions to expand the aims and concept of social security.
Last week, Senator Elizabeth Warren of Massachusetts made arguments for expanding social security on national television, citing the political plausibility of "modest adjustments" which can include eliminating the cap on wage income subject to payroll taxes or bringing in more payers into the system. The New York Times' Paul Krugman also weighed in on the debate, defending a program that has proven effective in keeping elderly Americans out of poverty and argued that to engage in its necessary expansion, such would indeed "cost money" and "require additional taxes.".
While we applaud Senator Warren and Paul Krugman for their unequivocal stance not to cut but to expand the benefits of social security, we believe we can be much bolder. By adopting a new "social security" program that would provide economic security and opportunity for all Americans at the onset of adulthood, we would begin to provide young adults with the avenues to launch their working lives or obtain higher education. The program we have devised -- the late Columbia University historian, Manning Marable labeled it a "baby bonds" formula -- is patterned after the Child Trust Fund plan that was recently implemented in Britain.
Under this program, every newborn infant in the United States would receive a federal trust fund that they could access at 18 years of age. Each fund would be guaranteed to increase at a real rate of interest of at least 1 percent until the child reaches adulthood. The fund could be designated for the purposes of financing higher education or training, the purchase of a home, or to support self-employment.
The program would be universal, but the amount of the endowment would be graduated on the basis of the child's parents' wealth or net worth. So, if by chance Bill Gates or Oprah Winfrey had a new child, their child's endowment could be $50. For children born into families in the lowest quintile of the wealth distribution, the endowment could be as large as $50,000 to $60,000.
With approximately 4 million infants born each year, if the average endowment was $20,000, the annual cost of the program would be $80 billion. This only would constitute 2.2 percent of the 2012 total federal expenditures and about 11 percent of current social security expenditures. When politicians ask how this program would be funded, highly regressive federal subsidies could be reduced, particularly the mortgage interest deduction.
If the political will of voters, especially in key swing district and states is to expand not just "save" social security, then now is the time for elected policymakers to propose bold policies to ensure the economic security of all Americans for future generations.