Moody’s Analytics completed an analysis of the two leading presidential candidates’ proposals on 18 issues; Forbes magazine published a summary of the results. Taking a subset of the list of issues I will discuss the differences between the candidates’ proposals and their implications. I will do this over a few separate blog posts. This post will focus on the Social Safety Net.
The chart below shows the change in spending and income across key program areas. Data is shown in trillion dollars.
Source: Moodys Analytics September 2020
Social Safety Net
The Social Safety Net is comprised of public policies and programs and employer benefits which together provide needed support for workers. For instance, employer retirement and healthcare programs in combination with Medicare and Social Security provide the “social safety net” for workers in retirement. Being newly retired I am grateful and make full use of all these elements to sustain myself in retirement. The Social Safety Net consist of other public programs provided based on need and means including: Medicaid, the USDA’s Supplemental Nutrition Program(SNAP), Temporary Assistance for Needy Families(TANF), housing assistance, child care subsidies, supplemental security income and earned income credits. Unemployment insurance is also considered part of the Social Safety Net.
Today we are in the middle of a pandemic. As of October 23, 2020, the US has had over 8.46 million people who have contracted the virus and over 223,000 who have died of the virus. The American Prospect did an analysis of the impact of income on the death rate in New York. For those earning less than $25,000 a year the death rate per 100,000 residents was 221.8 versus those earning $240,000 and above where the death rate was 85.7. Many of the news reports have focused on the higher death rates among persons of color the study conducted by The American Prospect would indicate there is more to the story. In addition, today’s unemployment is 7.9 percent and many businesses face uncertainty.
Trump Plan
Donald Trump’s economic plan looks to fund the tax breaks for the wealthy with budget reductions to SNAP, TANF, Medicare, Medicaid, and Social Security.
According to the Economic Research Service of the Department of Agriculture, SNAP provides over 40 million people per month with food and nutrition assistance, but it also acts as an economic stabilizer. Families participating in SNAP tend to spend the funds soon after receiving. These funds pay for food and leave other funds to be spent on other goods and services. According to USDA Research each dollar delivered to families through SNAP results in an increase of $1.5 to GDP.
The Trump plan calls for the following reductions to the Social Safety Net.
| SNAP and TANF | -$105.7 |
| Disability and Social Security | -$7 |
| Medicare | -$107.8 |
| Medicaid | -66.7 |
Biden Plan
The Biden Plan calls for investment in the Social Safety Net. Biden’s plan for Social Security includes minimum benefits for lifelong workers, computing the Cost of Living Adjustment (COLA) based on the Consumer Price Index for the Elderly (CPI-E) rather than CPI and protection of widowers. The CPI-E uses the changing costs of a set of categories that better reflect the expenditures of people age 62 and over; greater emphasis is given to healthcare and housing in place of gas and electronics. The Caregiving element includes funds to allow Americans to choose if they receive care at home or in a community and a national paid family and medical leave program.
| Social Security | $63.4 |
| Caregiving | $255.0 |
The Biden Plan pays for the increase in expenditures through a tax increase on corporations and individuals with annual income greater than $400,000.
Summary
One plan (Trump) calls for cutting expenditures for the poor and elderly to provide tax cuts for the wealthy, those earning over $1million a year. The other plan (Biden) looks to spend more on the poor and the elderly and pay for it with higher taxes for the top 5 percent.
The looming question: is now the right time to be cutting benefits to the poor and the elderly in the midst of a pandemic? I will address this in a future blog post so that we can determine if the trade-off is worth the cost.
Wow. This is really eye opening! Thank you for showing the differences in the 2 leaders plans. GO BIDEN!
Thank you – more to come