Coming on the heels of the latest trustees’ report showing
that Social Security faces long-term funding problems, legislation has been
introduced in both the House and Senate that seeks to expand benefits by $2,400
a year and fully fund it for the next 75 years.
The Social Security Expansion Act was introduced June 9 in
the Senate by Sen. Bernie Sanders (I-VT), along with Sens. Chris Van Hollen
(D-MD), Elizabeth Warren (D-MA), Cory Booker (D-NJ), Kirsten Gillibrand (D-NY),
Jeff Merkley (D-OR), Alex Padilla (D-CA) and Sheldon Whitehouse (D-RI). Rep.
Peter DeFazio (D-OR), along with more than 15 cosponsors, introduced companion
legislation in the House of Representatives.
“At a time when half of older Americans have no retirement
savings and millions of senior citizens are living in poverty, our job is not
to cut Social Security,” Sanders said in a statement. “Our job must be to
expand Social Security so that every senior citizen in America can retire with
the dignity they deserve and every person with a disability can live with the
security they need. And we will do that by demanding that the wealthiest people
in America finally pay their fair share of taxes.”
The Social Security Board of Trustees’ annual report
released June 2 shows that the asset reserves of the Old-Age and Survivors
Insurance (OASI) Trust Fund is projected to become depleted in 2034—one year
later than projected last year. But if Congress does not act before then, there
would be sufficient income coming in to pay only 77% of scheduled benefits at
that time.
According to a summary, the Social Security Expansion Act
would:
expand Social Security benefits across-the-board for current
and new beneficiaries by $200 a month;
increase cost-of-living-adjustments (COLAs) for recipients
by adopting the Consumer Price Index for the Elderly (CPI-E);
lift the Social Security payroll tax wage base (currently
$147,000 in 2022), such that all income above $250,000 would be subject to the
payroll tax (including for purposes of self-employment income), but it would
not credit the additional taxed earnings for benefit purposes;
increase the net investment income tax by 12.4% (from 3.8%
to 16.2%) and apply it to certain business income (active S-corporation holders
and active limited partners) not already covered by payroll taxes;
increase the Special Minimum Benefit by indexing the benefit
level so that it is equal to 125% of the poverty line or about $17,000 for a
single worker who had worked their full career; and
restore student benefits up to age 22 for children of
disabled or deceased workers if the child is a full-time student in a college
or vocational school (the summary notes that this provision was eliminated in
1983).
The legislation would also combine the Disability Insurance
Trust Fund with the Old Age and Survivors Trust fund to help senior citizens
and persons with disabilities. Social Security provides all-in-one retirement,
survivor and disability benefits funded through the dedicated FICA contribution
paid by workers, but there are technically the two trust funds. The legislation
would combine the trust funds into one Social Security Trust Fund to ensure
that all benefits will be paid.
In announcing the legislation, the lawmakers released an
analysis prepared by Social Security Administration Chief Actuary Stephen Goss
estimating that enactment of these provisions would extend the ability of the
OASDI program to pay scheduled benefits in full and on time throughout the
75-year projection period.
The legislation likely will not be enacted this year, and it
was panned by Senate Republicans during a June 9 Senate Budget Committee
hearing on Social Security solvency, but there is general agreement from both
parties that action will be needed at some point.
Separate from the expansion legislation, bicameral and
bipartisan legislation was introduced last year that seeks to address Social
Security’s funding problems. This legislation (the Time to Rescue United
States’ Trusts (TRUST) Act) introduced in April 2021 by Sen. Mitt Romney (R-UT)
and several other members from both parties, would set up a process to draft
legislation that extends long-term solvency for Social Security and other trust
fund programs.
Click here for the
original article.