What a new plan in Congress would mean for benefits

zimetos | iStock | Getty Images

House Democrats are reintroducing a Social Security reform bill popular with their party. This time, it features some changes aimed at attracting more support from Republicans.

The bill, known as Social Security Act 2100, was introduced by Representative John Larson, Democrat of Connection, chair of the House Social Security Subcommittee on Methods and Means.

Representative Alexandria Ocasio-Cortez, a Dane, and House Ways and Means Committee Chairman Richard Neil, D-Mass., appeared with Larson on Tuesday to announce the bill’s reintroduction.

Neil urged lawmakers to offset the concentration of wealth, which is becoming more prevalent in the United States, by adopting this Social Security proposal and expanding the children’s tax credit.

“We have this rare moment for seismic breakthroughs, and this is the right time to do it,” he said.

More life changes:

Here’s a look at other stories that offer a financial angle on important life milestones.

The new version of the bill, called Social Security 2100: Sacred Fund, follows the Social Security Administration’s latest estimate that trust funds supporting the program will be depleted in just 13 years. At that time, in 2034, only 78% of the promised benefits will be paid.

The bill proposes extending that date until 2038 to give Congress more time to come up with a long-term solution to the program’s solvency issues.

The measure will also include proposals made by President Joe Biden during his presidential campaign.

“We have someone on Pennsylvania Avenue who knows and understands that Social Security is a sacred trust,” Larson said of Biden.

He said this new bill combines Biden’s proposals with House Ways and Means initiatives to expand and enhance Social Security benefits.

“There’s a lot of appeal, and nothing I think should cause problems for Democrats in an election year,” said Nancy Altman, president of Social Security Works, an advocacy group that promotes expanding benefits.

Like Biden’s plan, Social Security Act 2100 would set a higher minimum level of benefits for low-income workers. Benefits will be set at 125% above the poverty line and tied to current wage levels.

There is also an increase in benefits for both new and existing beneficiaries of about 2% of the average accrual.

Annual cost-of-living adjustments will be linked to the Consumer Price Index for Seniors, or CPI-E. The argument is that this empirical indicator may better reflect the costs that older adults face. Biden also included this change in his Social Security proposals.

Notably, the proposed Social Security Act 2100 in 2019 involved more than 200 sponsors, although all of them were Democrats. On Tuesday, lawmakers noted that the new version of the bill had already won a similar level of support.

Having this social safety net is not only beneficial to us individually for our peace of mind, but it helps us feel part of a community that respects seniors and values ​​our vulnerability.

Representative Alexandria Ocasio-Cortez

Democratic Congressman from New York

Ocasio-Cortez has spoken about how Social Security benefits helped her family when her father died unexpectedly of cancer.

“Social Security checks helped my family get through it,” she said. “That’s why my brother and I were able to go to college.”

“That’s why I felt confident while I was in college that my mom would be able to get something to eat,” she added. “Having this social safety net is not only beneficial to us individually for our peace of mind, but it helps us feel part of a community that respects older people and values ​​our vulnerability.”

Seeking bipartisan support

Representative John Larson, Connecticut Democrat, leaves the Capitol after this week’s final vote on February 28, 2019.

Bill Clark | CQ-Roll Call Group | Getty Images

The plan also incorporates two elements that may help draw support across the driveway.

The new version will eliminate rules that reduce Social Security benefits for public sector workers and their spouses, widows or widows who also have retirement income. These are known as the Sudden Gain Elimination Provision and State Pension Compensation.

This issue emerged in a recent House hearing on Social Security and has bipartisan support.

Repealing one proposal – a higher payroll tax rate – may help attract more support. Social Security Act 2100 had previously called for contributions to the program to be gradually increased from workers and employers to 7.4%, up from the current rate of 6.2%, over a period of about 20 years.

However, the legislation does not call for an increase in Social Security taxes paid by higher wage earners. In 2021, these taxes are set at $142,800 in wages, and in 2022 they will increase to $147,000. This proposal reinstates wage taxes at $400,000 and above, which is also in line with what Biden proposed.

At the same time, the bill would also raise the thresholds above which income, including Social Security, is taxed. The plan calls for changing that to $35,000 for singles and $50,000 for couples, up from $25,000 and $32,000, respectively.

The bill would also prevent benefits from being reduced for some recipients if the national average wage index falls due to unforeseen circumstances, such as events affecting the economy.

It will also require the Social Security Administration (SSA) to mail paper statements to all workers age 25 and older, unless they request an electronic delivery.

Other changes to the bill include extending benefits for students up to age 25, increasing benefits for some widows and widows, increasing benefits for recipients after 15, eliminating the five-month waiting period for receiving disability benefits, and creating trusts for caregivers so that retirement benefits are not reduced for those who take time out. of the workforce.

It remains to be seen how much interest this bill will garner amid Congress’ busy legislative agenda and whether it will be adopted by Republican lawmakers.

However, advocates such as the Social Security business are optimistic.

“We all hope that after they’re done, however, they’re done with reconciliation and debt reduction and all that other stuff, they’re going to bring up Social Security,” Altman said.

The National Commission for the Preservation of Social Security and Medicare was among the groups that supported the proposal.

“There’s good news for everyone in this bill, and it’s just fitting, because Social Security touches the lives of nearly every American,” said Max Richtman, the organization’s president and CEO.

“It’s time for the full House of Representatives to pass Representative Larson’s bill and send it to the Senate,” he said.

.

Leave a Comment