The idea that Social Security benefits should be modestly boosted, with an across-the-board benefit increase and a more generous cost-of-living (COLA) adjustment, is getting some serious attention in the U.S. House of Representatives. For years, lawmakers have tended to focus almost exclusively on how to cut Social Security benefits, and by how much. In recent years, though, some Members of Congress have begun to realize that Social Security’s financing problems aren’t limited to the growing number of people starting benefits, and fewer workers paying into the system. They argue that Social Security benefits actually need boosting to support modern retirements, that can often last 25 years or more. Also, more Members of Congress are beginning to debate the fairness of how wages are taxed, or not taxed for Social Security.
The interest in strengthening the adequacy of Social Security benefits, while making the program solvent well into the future, is evident in the growing support for U.S. Representative John Larson’s Social Security 2100 Act (H.R. 860) which he introduced with 200 House co-sponsors. The bill:
- Modestly strengthens benefits of all Social Security beneficiaries with a monthly benefit boost.
- Uses the Consumer Price Index for the Elderly (CPI-E) to increase the COLA, which would result in higher benefits over the course of a retirement.
- Increases the minimum Social Security benefit to ensure that the lowest benefit is 125% of the annual poverty guidelines.
- Lifts the income thresholds for federal income taxation of Social Security benefits from $25,000 to $50,000 for single filers and from $32,000 to $100,000 for joint filers, so that retirees with more modest incomes can keep more of their money.
The bill pays for boosting benefits and addresses Social Security’s solvency by applying the Social Security payroll tax to all earnings above $400,000, and would allow credit for those earnings above $400,000 to be used in calculating slightly higher Social Security benefits. In addition, the bill would very gradually increase the payroll tax rate by 0.1 percentage point each year starting in 2020 until reaching 14.8% in 2043 and later. (Currently the payroll tax rate is 12.4%, with employees and employers each paying 6.2%.).
Representative Larson’s bill has been analyzed by the Social Security’s Office of the Chief Actuary, which found that, under the provisions of this bill, Social Security would be solvent for 75 years and “meets the conditions for sustainable solvency.” What do you think of this approach? Please take our all new online 2019 Social Security survey here.