Despite a $2 trillion economic stimulus package, many Americans are still financially ailing, as the economic impact of the COVID-19 pandemic is just beginning to take its toll. And even though the last stimulus provided for a one-time $1,200 check that was sent to qualifying Americans, many who have lost their jobs amid the crisis are still in dire need of longer term assistance from the government.
While some leaders on the left, like progressive Senators Elizabeth Warren and Bernie Sanders, have proposed monthly direct payments of $2,000 for all Americans until the crisis is over, Republicans in Congress are not as keen on limitless federal payouts.
In contrast, President Trump is now toying with what he views as a more cost-efficient way to get cash into the hands of struggling Americans: an advance on Social Security benefits.
As it currently stands, one cannot qualify for Social Security payments until they are at least 62 years of age or disabled and have paid into the system for at least ten years. But Trump now supports a plan that would let Americans receive up to $5,000 in the form of a loan from Social Security, which they would have to pay back in the future at a government-set interest rate. Retiree-rights advocates immediately condemned the proposal.
“Asking working Americans to give up even one dime of their future Social Security benefits to survive today’s economic crisis is a harebrained idea that would hurt families for decades to come,” said Richard Fiesta, executive director of the Alliance for Retired Americans. Currently, about 45 million retired workers depend on Social Security benefits, which supply retirees with an average of $1,503 per month.
But Trump’s plan is not the first time the idea of borrowing against Social Security has been proposed. Just last year, Senators Joni Ernst (R-Iowa) and Mike Lee (R-Utah) proposed that Americans who request paid family leave could receive the money in exchange for delaying Social Security benefits. But compelling retired Americans to pay back loans before they receive Social Security undermines the entire purpose behind the program.
Designed under Franklin D. Roosevelt’s New Deal, Social Security was intended to protect Americans from disability or financial insecurity in their old age. Retired folks who must make good on loans-plus-interest before they can access Social Security would be excluded from the very assistance that Social Security was invented to provide.
Joe Elsasser, president of Covisum, a Social Security software company, says he finds Trump’s proposal dubious. “I am not a fan, primarily because I think it is the most vulnerable people that would be impacted,” Elsasser says, referring to those Americans who need Social Security most for longevity protection and old age insurance. Ultimately, Elsasser says such a plan would hurt the bottom line of Americans. “People are always surprised at how much it costs in 40 years’ down the road’s money to get $5,000 today.”