Wednesday, 22 May 2019
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How The Midterm Elections May Steer Retirement Policy

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Seniors vote more than anyone (over 70 percent of those age 65 and older vote compared to less than 50 percent of 18 to 29 year olds).  Seniors also are the nation’s fastest growing demographic group, with a 75 percent growth rate compared to less than 10 percent for other groups. How government affects elderly voters affects the political life of this country. Older voters are consistent voters, known also as “always voters” because of their consistent turnout.  According to the Pew Charitable Trusts “A 65 percent majority of consistent voters were 50 and older.”

So how did these “always voters” vote in the midterm election, and what might that signal for future political outcomes?  For some time, older voters have been among the strongest demographic group supporting Republicans.  But in the midterms, older voters (like all age groups) seemed to shift to the Democrats, though the analysis is not done yet on exit polls so these conclusions could change.

A  Washington Post article reports the swing to Democrats among those over age 65 was smaller than among other age groups and the older voters remain are the only group inclined to vote Republican.  In fact, they appear to be the only age group giving a majority of their votes to Republicans, although even older voters came close to 50 percent support for Democrats. The younger the voter, the more Democratic they are.  But the sheer size of the older voter cohort make older voters a powerful political force.

But the sheer size of the older voter cohort makes them a powerful political force.Writer and Social Security advocate Nancy Altman writes that older voters moving towards the Democrats may make Social Security, Medicare and Medicaid critical issues in the next election.  I would add that retirement policy generally is becoming more and more important, as the consequences of the failed 401 (k) system become more and more apparent.

So now Democrats will control the House, while Republicans retain control of the Senate. How might that affect the framing and actions on retirement policy in the next two years?  Here is what I expect the 116th Congress to do on key policies related to retirement.

Congressman John Larson (D-Conn.), co-chair of the Expand Social Security Caucus, will chair the House Ways and Means Subcommittee on Social Security. He has a comprehensive bill to expand Social Security’s modest benefits and also raise revenue.  We should expect more information on Social Security’s ability to prevent poverty while getting more tax revenue without distorting economic growth.  We also may hear about bolder Social Security finance options including dedicating a restored estate tax to Social Security and raising the earnings cap beyond the 2019 ceiling of $132,900. We also may see House Democratic majority bills aimed at improving Medicare by adding vision, hearing, and dental.

But in our constitutional design, Congress also has an important oversight function in addition to its lawmaking powers.  That role has been neglected during the Trump Administration’s first two years, but I expect House Democrats to aggressively play the role that the Constitution envisons, and hold the executive branch responsible for its actions.  For example, the Trump administration has scaled back consumer protections and oversight of nursing homes while reducing their fines for violations.  There may even be some chance of bipartisan progress and agreement, such as that which fellow Forbes writer Howard Gleckman argues we are seeing in changes to Medicare Advantage plans.

Also watch for hearings on lowering the cost of prescription drugs, with Democratic proposals to have the government aggressively negotiate lower prices.  The Veterans Administration already does this, with up to 50 percent reductions in drug prices for their clients.  With Democrats controlling the House, Trump and Congressional Republicans will need to decide on whether to cooperate on policies such as expanding Social Security and restoring it to long-range actuarial balance; improving Medicare and Medicaid; and lowering prescription drug prices.  Republicans, like Democrats, can count votes, and they see the size and importance of elderly voters.

But I don’t expect  Republicans in the Senate to advocate cutting Social Security and Medicare to reduce projected federal deficits, in spite of their long-standing party opposition to such programs, and Senate Majority Leader Mitch McConnell’s hint that they might attack those programs.  Instead, I expect House Democrats to point–correctly–to the Republican tax cuts as the main driver of rising deficits, which could spark more contentious debates.  Even with the desire of both parties to appeal to older voters, it remains to be seen whether cooperation or confrontation dominates the policy debate.

Older Americans may not realize that the Affordable Care Act provides important insurance protections to older Americans still too young for Medicare, especially against denying care for those with pre-existing conditions. Outright federal ACA repeal efforts are probably dead for now, but states and the Trump administration can have tools to continue weaken the ACA (eg the lawsuit pursued by red state attorney generals to declare the ACA unconstitutional.)

Meanwhile red  state voters expanded the ACA’s Medicaid in Idaho, Nebraska and Idaho though all three states voted for President Trump in 2016 — 500,000 people will gain health insurance.

Rep. Richie Neal (D-MA), likely will become chairman of the powerful House Ways & Means committee. Neal has an interest in retirement policy, and has introduced bills aimed at shoring up retirement savings to cover 63 million American workers with no pensions at work. I am worried incentives to get people covered are very expensive in terms of tax breaks and regulatory red tape. A universal system would be more efficient. Ideas for expanding the failed 401(k) and IRA system include establishing new automatic safe harbor rules, changes to minimum default contributions, matching contributions and a special tax credit. All voluntary and no employer contributions are proposed in the current line up of pension reforms.

Rep. Neal’s bill – the Automatic Retirement Plan Act (ARPA) would require employers above a certain size to have or establish a 401(k) or 403(b) plan that covers all eligible employees, while exempting small employers, governments, churches and businesses not in existence for three years. The bill also allows for open MEPs and increases the start-up credit for small employers.

Neal has acknowledged that his ARPA proposal does include a mandate, but told delegates to this summer’s NAPA DC Fly-In Forum that he believes the parties are amenable to moving in that direction.

Rep. Bobby Scott (D-VA) will likely take over the Education and the Workforce Committee which oversees all matters dealing with workforce-related issues, including labor relations and employment-related health and retirement security matters dealing with ERISA.

We may see the Department of Labor fiduciary rule abandoned by the Trump administration and Republican Congress to be advanced by Rep. Maxine Waters.

Other proposals for affecting more than 10 million U.S. workers and retirees covered by 1,400 multiemployer pension plans is expected.

From the Census Department on Voters

Divided governments require compromise to get anything done and both parties want the support of older voters. Therefore, we may see some momentum on retirement policy that will help seniors: could restoring the fidicuary rule, improving nursing home regulation, and lowering drug prices not be bipartisan places to start?

Voters by Ages from the Census DepartmentUS Census

Source: https://www.forbes.com/sites/teresaghilarducci/2018/11/11/how-the-midterm-elections-may-steer-retirement-policy/

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