A Connecticut Democrat in the House of Representatives introduced legislation yesterday that would increase Social Security payments by 2% and pay for it by taxing “millionaires and billionaires.”
The Social Security 2100 Act was introduced by Rep. John Larson, chairman of the Subcommittee on Social Security in the House Ways and Means Committee. The bill, which has 200 co-sponsors, is designed to shore up the Social Security fund, which will be unable to pay full benefits beginning in 2034, according to the program’s most recent trustee report.
“With 10,000 baby boomers a day becoming eligible, and with millennials needing Social Security more than any generation, the time for Congress to act is now,” Larson said at a press conference.
The bill increases Social Security benefits for current and new beneficiaries by 2% and pushes forward by four years the anticipated 20% benefit haircut that could take place in 2034. The change is designed to give Congress more time to find a solvency solution, Larson said.
The legislation would also replace the annual cost-of-living adjustment formula with one based on the Consumer Price Index for the Elderly (or the CPI-E). Larson argued that this novel index better tracks the costs seniors experience in day-to-day life. President Joe Biden used the index in his own Social Security proposal.
“The bill is fully paid for by making millionaires and billionaires pay the same rate as everyone else,” Larson said, referring to the fact that in 2021, only the first $142,800 of a person’s earnings is subject to Social Security tax. “Presently, payroll taxes are not collected on wages over $142,800. This legislation would apply the payroll tax to wages above $400,000. This provision would only affect the top 0.4% of wage earners.”
To prevent poverty, the bill would also raise the lowest benefit level, increasing the lowest monthly benefit to 25% above the poverty level, according to the lawmaker.
Other provisions in the bill would:
• Improve benefits for widows and widowers in two-income households;
• Repeal the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) that currently penalize many public servants such as police officers;
• End the five-month waiting period for receiving disability benefits;
• Provide credits to caregivers to ensure they are not penalized in retirement for taking time out of the workforce to care for children or other dependents;
• Extend benefits for students through age 22;
• Increase access to benefits for children who live with grandparents or other relatives.
The bill would also establish a single Social Security Trust Fund, created by combining the different funds earmarked for old-age, survivors and disability insurance.
Rep. Alexandria Ocasio-Cortez, a New York Democrat, said at Larson’s press conference yesterday that Social Security benefits helped her family survive when her father died unexpectedly of cancer.
"Social Security checks helped my family through," she said. "It's why my brother and I were able to go to college. The benefit helps us feel like we are part of a society that respects our elders and values our vulnerable."
While it is unclear how the bill will fare in a Congress seemingly paralyzed by partisan gridlock as it heads into a tense election year, what is clear is that the Social Security trust funds are in trouble.
The latest trustee report said the impact of Covid-19 decreased the funds’ ability to pay full benefits by one year. If lawmakers fail to act, Americans receiving benefits will see the amount of their monthly checks cut by 20% starting in 2034.
Nancy Altman, president of the advocacy group Social Security Works, said in a statement: “The entire nation owes Rep. Larson an enormous debt of gratitude for his powerful leadership and legislation. Thanks to his visionary leadership and tireless work, Democrats are united and ready to take action to protect and expand Social Security.”