A key House lawmaker introduced legislation that would increase social security benefits for various beneficiaries and make other reforms to the system, including increased payroll taxes.
Noting that benefits have not been improved for over 50 years, Representative John Larson (D-CT), Chairman of the House Ways and Means Social Security Subcommittee, introduced the legislation, Social Security 2100: A Sacred Trust, October 26. .
“The pandemic only underscored what we already knew and exacerbated systemic inequalities – the current benefits are not enough,” Larson said in a statement. “For too long, Congress has abandoned its duty to improve benefits. With 10,000 Baby Boomers a day becoming eligible, and Millennials in need of Social Security more than any other generation, now is the time for Congress to act. One of the co-sponsors of the bill is House Ways and Means President Rep. Richard Neal (D-MA).
The bill will be sent back to the House Ways and Means Committee for consideration, but it is not clear whether it will find traction in the current Congress. During a press conference on the bill, Larson nonetheless said the committee would hold a hearing in November, followed shortly after by markup and action from across the House.
A fact sheet released by Larson’s office notes that the bill would make the following changes, among others:
- Increase in benefits for current and new beneficiaries: Provide an increase for all beneficiaries equivalent to approximately 2% of the average benefit.
- Inflation protection: Improve the annual COLA formula to better reflect the costs incurred by seniors through the adoption of an IPC-E formula. The fact sheet explains that this provision will help seniors who spend more of their income on health care and other necessities.
- Protections for low-income workers: Noting that no one who has contributed to the system in their lifetime should withdraw into poverty, the new minimum benefit would be set at 25% above the poverty line and would be linked to wage levels to ensure that the benefit minimum is not late. The fact sheet also notes that the legislation improves benefits for widows and widowers.
- Increase in social charges: The payroll tax base is expected to increase to $ 147,000 in 2022. The legislation would apply payroll tax to salaries above $ 400,000. The fact sheet argues that this provision would only affect the richest 0.4% of wage earners.
- Social Security Trust Fund created: Noting that Social Security provides all-in-one retirement, survivor and disability benefits funded by the dedicated FICA contribution paid by workers, but that technically there are both trust funds, the legislation would combine the trust funds into one social security trust fund to ensure that all benefits will be paid.
The legislation would also repeal the windfall elimination provision and government pension compensation.
A section-by-section summary is available here.