Biden Mulls Social Security Rescue Plan

Plus, debt ceiling rate risks ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Michael Rainey Hope you're having a good Thursday! Here's what's happening on the fiscal front. Abaca via Reuters Connect Sanders Pitches Biden on Social Security Rescue Plan Sen. Bernie Sanders (I-VT) is trying to convince President Joe Biden to embrace a plan that would fully fund Social Security for more than seven decades, as well as raise benefits by $2,400 a year. According to [The Washington Post’s Jeff Stein]( Thursday, Sanders met with Biden late last month to discuss his proposal to raise taxes on investment income and to apply payroll taxes to employment income above $250,000, rather than limiting the payroll tax to the first $160,000 in employment earnings, as under current law. Doing so would stabilize the program’s finances for 75 years, according to the Social Security actuary. Sanders also wants to increase benefits by $200 a month for everyone receiving Social Security. "It is not enough to point out the reactionary, anti-worker vision of the Republican Party," Sanders told the Post. "We have to present a positive, pro-worker alternative. The truth is that Social Security does have a solvency problem, and we have got to address that." Internal debate: The White House has gained considerable political advantage in recent weeks by highlighting Republican proposals that would cut Social Security and Medicare, but so far has remained quiet about the administration’s own plans. Sanders wants Democrats to talk about how they would bolster the programs, which face funding shortfalls in the coming years that could result in painful benefit reductions if no steps are taken to avoid them. Sanders said that Biden listened to his pitch but remained noncommittal. For one thing, the Sanders plan, which is backed by nine Democrats in the Senate, would violate Biden’s pledge to not raise taxes on anyone earning less than $400,000 a year. In addition, some Democrats think there is little advantage for Biden in offering his own proposal right now, since the current effort to portray Republicans as threats to the popular social programs has been so effective politically. "There’s a faction inside the White House that feels some need to offer a plan, though I personally feel that’s misplaced," a Democratic pollster told the Post. "Stick to our basic message: Hands off our seniors. That’s working." The bottom line: Biden has been making political hay by attacking Republicans on Social Security and Medicare, but at some point, Democrats will need to get behind their own proposal to fix those programs’ finances. For now, though, the political forces in play suggest there will be more heat than light on the issue for some time to come. Most Americans Want Congress to Raise the Debt Ceiling: Poll A slim majority of 52% of registered American voters participating in a recent NPR/PBS NewsHour/Marist [poll]( said they want Congress to raise the debt limit, while 46% said they do not. Voters are deeply divided on the issue according to their party affiliations. Seventy-nine percent of Democrats support raising the debt limit, but only 26% of Republicans say the same. Still, the overall results offer a stark contrast to 2011, when the same issue was leading the headlines. Back then, only 24% of all registered voters in a Marist poll said they wanted to raise the debt ceiling, compared to 69% who said they did not. Asked in the latest poll how they would approach efforts to reduce the national debt, half of the respondents (50%) said lawmakers should "mostly cut programs and services," while nearly the same number (47%) said lawmakers should "mostly increase taxes and fees." At the party level, Democrats and Republicans present close to mirror images. Most Democrats (71%) said lawmakers should focus on raising revenues, while just 25% said lawmakers should cut spending. Republicans are basically the opposite, with just 22% focused on raising taxes and 74% emphasizing less spending. The survey of 1,352 adults was conducted February 13-16, and respondents were reached via phone, text and online. Chart of the Day: Debt Ceiling Rate Risks With the U.S. cruising toward the X Date on which the Treasury will be unable to meet all of its obligations in full and on time due, researchers at the Kansas City Federal Reserve [took a look]( at what happened the last few times the nation played chicken with the debt ceiling, which now stands at $31.4 trillion. They found that each time the country approached the X Date, short-term interest rates spiked, raising borrowing costs throughout the economy. "Borrowing costs rose more steeply when debt ceiling episodes were resolved closer to an x-date," the researchers said. "Chart 1 [below] plots market rates for one-month Treasury securities 90 days before and after the x-date during each of these previous episodes. In both 2011 and 2013, short-term Treasury bill rates jumped sharply about two weeks prior to the expected x-date. In contrast, financial market changes in 2021 were initially more subdued due to the passage of a temporary resolution. A month later, however, as the temporary resolution reached its expiration date (dashed line), short-term rates rose sharply and were highly volatile." Current estimates put the X Date in the July to September range, though it could occur as soon as June. In a [separate analysis]( economists at RSM found that the burgeoning debt ceiling standoff is already increasing the cost of issuing debt. Modeling what would happen if the U.S. were to default, the researchers found that "the economy would immediately sink into a deep recession in the following quarter, with a decline in gross domestic product exceeding 10%. The recession would last into next year before an economic rebound in 2025. In that scenario, total GDP loss would approach $700 billion while 11 million jobs would be lost." Number of the Day: $1.5 Million Following the downing of a suspected Chinese surveillance balloon earlier this month, the U.S. military spent more than $1.5 million to shoot down three additional unidentified flying objects flying high above North America, according to [The Wall Street Journal](. That total reflects the cost of the four AIM-9X Sidewinder missiles that were used to destroy the mystery objects, which were likely balloons that represented no military threat. The true cost of what some are mockingly calling the [Great UFO Turkey Shoot of 2023]( is almost certainly higher, and probably significantly so. The Pentagon has not provided the cost of the aircraft and pilots used to down the flying objects, saying that the flights are being categorized as normal training exercises and thus already budgeted. Also unknown are the costs associated with the use of Navy, Coast Guard, National Guard and FBI personnel and equipment in the search for debris. --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- News - [GOP Group of 16 Complicates McCarthy’s Debt Ceiling Leverage]( – Axios - [Americans Want Congress to Deal With the Debt Ceiling. 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