What should the Democratic House do? While the country will be relieved to have a Congress that doesn’t dedicate its next two years torepealing Obamacare, the Democratic Party needs direction. This new House is showing up without a Contract with America. Its only clear mandate is to restrain a hare-brained chief executive. Democrats have to prove they can govern. And to win further elections, they need policies that help break up some of Donald Trump’s coalition.
Here’s one idea for incoming Speaker Nancy Pelosi.
Raise Social Security. Raise it from its current level, which pays senior citizens, on average, 39 percent of their working incomes, all the way up to 50 percent. And pay for it with a carbon tax.
Social Security is a highly popular program, and this proposal will be attractive to Trump supporters. Working-class voters with no 401(k)s, after all, would be the biggest gainers. At the same time, the proposal will earn the backing of younger voters and affluent liberals who are committed to doing whatever it takes to save the planet. It will therefore tie several different interest groups to the federal government, as well as to one another. Older voters who might not otherwise pay attention to climate change would be incentivized to support a measure that combats it.
Administratively, this proposal wouldn’t be difficult. Carbon taxes are relatively straightforward—you tax greenhouse gas-emitting fuels. And unlike crafting a workable single payer healthcare system, increasing Social Security is hard to screw up. It just means wiring more cash into bank accounts. This will appeal to a middle class that long ago lost their own private pensions and have nothing but Social Security for their old age, which is no longer quite so far off. Soon, Americans over 65 will outnumber U.S. children. If the next elections are a matter of increasing the size of their monthly check, even the most die-hard Trump supporters might slow walk their way to the next rally that demonizes Pelosi’s House.
Of course, Trump is not the only thing in the way of expanding Social Security. If Democrats campaign on this issue, a good part of Trump’s base will have an incentive to vote out not just Trump but GOP senators, who will oppose any Democratic plan with all their might. Divided government means no wage increases for the elderly.
Using a carbon tax to help expand Social Security is financially possible. While technically, Social Security will be insolvent by 2034, there are plenty of ways to keep it afloat at its current level. One popular proposal, engineered by the pro-New Deal National Academy of Social Insurance (NASI), would lift the cap on the amount of income subject to the payroll tax and lift the cap on employer contributions. A carbon tax could then help further boost Social Security paychecks from 39 percent to 50 percent of working incomes. The Congressional Budget Office estimates that a broad-based carbon tax starting at $20 a ton in 2011 and rising to $34.4 a ton over a decade could have brought in $1.2 trillion during a ten-year period.
That goes a long way to the 50 percent goal. Social Security benefits pay out a cumulative total of roughly a trillion dollars each year to 63 million Americans, including retirees and the disabled—and retirement benefits account for 72 percent of that total. A carbon tax alone could therefore cover one-sixth the entire current cost of retiree payouts, even without building in reserve. Of course, this includes a lot of assumptions. But even if carbon taxes fall short, we have other potential sources of revenue for a Social Security expansion. We could, for example, tap into the estate tax by restoring it to its 1972 level.
Carbon taxes, for their part, are becoming an increasingly popular idea even in some conservative intellectual circles. But what to do with the money is more controversial. The Climate Leadership Council’s Baker-Schultz plan, named after former Republican bigwigs James Baker and George Schultz, would establish a carbon tax that returns the money it collects back to Americans, in a rebate. A bipartisan group of congresspeople has introduced a bill that would make what is essentially this plan into law. But no one trusts a rebate—as Jimmy Carter found out when he proposed a rebate as part of his 1977 National Energy Plan. Carter wanted to raise the price of controlled domestic oil by a tax that would have been set to the world oil price, and then rebate the proceeds to people equally. But Americans were suspicious of Carter’s real intentions, and the rebate was never enacted.
Increasing Social Security is different. In my plan, money from a carbon tax would go into Social Security’s locked box. This is not funny money, like the Baker-Schultz plan. It’s wages. For the more than 60 million Americans old enough to receive Social Security, this pay increase would take place immediately.
There will still be opposition. Republicans will fight tooth-and-nail to stop any expansion of social welfare. And carbon taxes are facing rough waters in other parts of the world. French President Emanuel Macron’s carbon tax, for example, birthed a sometimes-violent protest movement that has wrecked havoc on his administration and forced him to drop the measure, at least for now.
But Macron’s carbon tax was mostly used to reduce France’s budget deficit, not to help the working-class families who are now the tax’s most dedicated opponents. In my plan, there is a payday for everyone, one that will take care of a concern that can top anxiety about the price of gasoline: how we are going to afford life after we retire. There’s a reason that the GOP has consistently failed in its attempt to privatize Social Security, or to make it less generous. As much as our written Constitution, Social Security may be the biggest bond holding our polarized republic together (along with Medicare). In proposing an expansion, Democrats can set themselves apart from Republicans.
And they need to do so. In 2012—during the first presidential debate—Barack Obama said that he and Mitt Romney were in basic agreement about Social Security. Really? Then it’s time to disagree. Democrats should campaign to raise Social Security—not just to show which party is really for the working class, but to give Trump voters a reason to keep the planet from burning up.