Martin O'Malley wants boosts to Social Security that even Bernie Sanders hasn't called for.

[elleng]

His latest attempt to turn things around is a proposal to expand Social Security that matches and in some ways exceeds Sanders'.

O'Malley and Sanders both fund their proposals by making income above $250,000 subject to the payroll tax. Currently, wages up to $118,500 are subject to Social Security payroll taxes, but wages above that point are not. That helps limit benefits, which are determined by applying a formula to one's average monthly earning over the course of their career. But it also means that rich people pay less as a share of their income into Social Security.

Sanders goes a bit further on this point, and would also subject unearned income above $250,000 to the tax. That means that capital gains and dividends (which typically provide a lot of income to the rich but not much to the poor) would be taxed to fund Social Security, for the first time ever.

Both O'Malley and Sanders want to establish a higher minimum benefit for poor retirees. Both want to place it at 125 percent of the poverty line for Americans who've worked for at least 30 years; currently the minimum is $9,957.60 a year for people with 30 years of work experience, which is below the poverty line.

They would both adjust benefits for inflation using CPI-E, an experimental inflation measure the Bureau of Labor Statistics devised which measures price increases for items bought by seniors, as opposed to goods bought by the public as a whole. . .

Finally, both would increase benefits across-the-board by mucking with the formula by which the Primary Insurance Amount (PIA) is calculated. The PIA is the initial monthly benefit that Social Security beneficiaries get, before cost-of-living increases. Currently, the PIA is a function of income, but it's not a fixed percentage. . .

There are three aspects of O'Malley's plan that arguably make it a bit more ambitious than Sanders'. . .

Finally, O'Malley would mandate that all employers with 10 workers or more have their employees all contribute to an IRA by default. Workers could opt out, but the default would be to start saving for retirement. Recent economic research suggests that "nudges" like this are far more effective than tax breaks (like making IRA contributions deductible, or Roth dispersals tax-free) at encouraging people to save, so this could meaningfully improve retirement for people currently working.

President Obama has included this idea in his budgets, and a number of states (including California and Illinois) have automatic IRAs already, and Bernie Sanders has expressed support, but O'Malley stands out for emphasizing it as part of his Social Security plan.

http://www.vox.com/2015/8/22/9189675/martin-omalley-social-security

[fredamae]

1. Lift. The. Cap. n/t

[elleng]

2. Included, of course.

In a white paper shared with the Guardian, the former Maryland governor calls for expanding social security benefits and raising the payroll tax used to fund the government retirement program so that all income above $250,000 is taxable. Currently the threshold on earnings subject to the social security tax is set at $118,500. The O’Malley campaign would create a “doughnut hole”, exempting income over $118,500 and below $250,000 from taxation. The overall goal of O’Malley’s plan is to “increase the number of Americans with adequate retirement savings by 50% within two terms in office”.

http://www.theguardian.com/us-news/2015/aug/21/martin-omalley-to-campaign-on-expansion-of-social-security

[rurallib]

3. good to hear

so wonderful to hear real liberal ideas on the campaign trail.
If he doesn't win this year he is surely building a solid base for the future.

Hope to see him tomorrow, cross my fingers.

[elleng]

4. Crossing my fingers for you too, rurallib!