Along with washing in a Democratic majority to the U.S. House, November’s blue wave is busting up a logjam of legislation, bills that warrant a higher public profile and more debate than House Republicans had allowed during the last eight years.
Among those bills — and reintroduced this week — is the Social Security 2100 Act, which would provide a modest increase in benefits for retired Americans, but should also secure Social Security’s solvency for the next 75 years and beyond.
Originally introduced two year ago, the bill was revived Wednesday by Rep. John Larson, D-Connecticut, now the chairman of the House Social Security subcommittee.
A number of reports have estimated there are about 15 years remaining before Social Security’s reserves begin to dwindle because of the stagnation of middle-class wages and the bulge of baby boomers entering retirement. Combined, the trust funds for Old-Age and Survivors and Disability Insurance total about $2.89 trillion. That’s enough to continue paying full benefits to all who are eligible until about 2035. After that, however, benefits would have to be cut by about 23 percent.
Some proposals to fix Social Security have suggested raising the retirement age, lowering benefits and even privatizing Social Security. Larson’s plan relies on none of those options and — while restoring solvency to the program with additional revenue — also allows for some modest increases and protections for retirement benefits.
The act would provide an immediate 2 percent increase for all beneficiaries and would also use a new formula to determine cost-of-living allowances — the Consumer Price Index for the Elderly or CPI-E — that better takes into account the spending priorities of retired Americans. In addition, some 12 million Social Security recipients would see their taxes cut as benefits would not be taxed for those with income below $50,000 for single filers or $100,000 for joint filers, instead of the current limits of $25,000 and $32,000. And those who receive an increase in Social Security benefits would not see a reduction in Supplementary Security Income or a loss of eligibility for Medicaid or the Children’s Health Insurance Program.
Those improvements and Social Security’s restored solvency would come largely from two changes to the program.
First, the act would adjust the cap on wages. Currently, the payroll tax is applied only to the first $127,200 of annual wages; income above that cap is not taxed. Larson’s bill would leave the cap, but those with incomes above $400,000 would resume paying the payroll tax, a provision that for starters would affect only the top 0.4 percent of wage-earners. Eventually, the cap would be eliminated altogether.
Secondly, the FICA payroll tax — split between workers and employers — would gradually increase from its current 6.2 percent to 7.4 percent by 2042, at a rate that would mean the average worker would pay about 50 cents more each week, or $26 a year.
The act already has more than 170 co-sponsors — all Democrats — among them this area’s members of Congress, 1st and 2nd district Reps. Suzan DelBene and Rick Larsen, who reaffirmed his support in a YouTube video this week. Passage in the House would then put pressure on the Senate to consider a companion bill, introduced by Sen. Richard Blumenthal, D-Connecticut.
Millions of Americans, including 1 in 6 Washington state residents, receive Social Security benefits and have paid throughout their working lives into the system. Millions more are now paying into Social Security and want assurances the benefits they have earned will be there when they retire and will not be reduced.
The tax cuts passed late in 2017 by House and Senate Republicans and signed into law by President Trump — mainly for the benefit of corporations — were supposed to provide a boost to the economy through new jobs and higher wages. Instead, a recent survey by the National Association of Business Economists found that 4 of 5 companies are not making significant changes in hiring or investments. Instead, corporations spent $1 trillion in tax savings by buying back their own stock, Goldman Sachs reported.
At the same time, however, seniors, workers with disabilities and survivors take the $1 trillion that Social Security provides each year and put that money back into the economy, where it actually does create and support jobs.
The Social Security 2100 Act would add to that real stimulus and make sure it continues into the 22nd century.