The next U.S. president and Congress will face a serious test: What to do, if anything, about the nation's retirement crisis?
Americans aren’t saving nearly enough in their 401(k)s, while wide swaths of the workforce aren't saving at all, because they don’t have access to a retirement plan. Social Security, meanwhile, faces a financial shortfall as the baby boomers enter retirement.
On the Democratic side of the aisle, the election breathed new life into an old idea that still seems outlandish to many in Washington: Why not help Americans save more for retirement by expanding the 80-year-old Social Security program?
It became a key plank in Vermont Senator Bernie Sanders’s campaign for the White House. Hillary Clinton also proposed modestly expanding Social Security, while President Barack Obama said he supported the idea earlier this year.
Is expanding Social Security the right thing to do? Is it even possible?
Yes and yes, Jesse Rothstein argues. A 42-year-old professor of public policy and economics at the University of California at Berkeley, Rothstein was chief economist at the U.S. Department of Labor earlier in the Obama administration. His essay, “Expand Social Security,” was included among more than a dozen policy proposals for the next president released this week by the Washington Center for Equitable Growth, a think tank, with ties to the Clinton campaign, that focuses on economic inequality.
Here, in an interview edited for space and clarity, Rothstein makes his best argument for a provocative idea.
How dire is the retirement situation for Americans? Is “crisis” the right word?
The only problem with the word “crisis” is that it didn’t happen overnight—it’s a very slow-rolling crisis. An awfully large number of people hit retirement with nothing to live on except Social Security benefits, which were never meant to be big enough to support you exclusively. [Franklin Roosevelt] talked about the “three-legged stool,” that Social Security would be basically one-third of the solution to the retirement puzzle.
Along with pensions and private savings.