Coming on the heels of the latest trustees’ report showing that Social Security faces long-term funding problems, legislation has been introduced in both the House and Senate that seeks to expand benefits by $2,400 a year and fully fund it for the next 75 years.
The Social Security Expansion Act was introduced June 9 in the Senate by Sen. Bernie Sanders (I-VT), along with Sens. Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), Cory Booker (D-NJ), Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR), Alex Padilla (D-CA) and Sheldon Whitehouse (D-RI). Rep. Peter DeFazio (D-OR), along with more than 15 cosponsors, introduced companion legislation in the House of Representatives.
“At a time when half of older Americans have no retirement savings and millions of senior citizens are living in poverty, our job is not to cut Social Security,” Sanders said in a statement. “Our job must be to expand Social Security so that every senior citizen in America can retire with the dignity they deserve and every person with a disability can live with the security they need. And we will do that by demanding that the wealthiest people in America finally pay their fair share of taxes.”
The Social Security Board of Trustees’ annual report released June 2 shows that the asset reserves of the Old-Age and Survivors Insurance (OASI) Trust Fund is projected to become depleted in 2034—one year later than projected last year. But if Congress does not act before then, there would be sufficient income coming in to pay only 77% of scheduled benefits at that time.
According to a summary, the Social Security Expansion Act would:
- expand Social Security benefits across-the-board for current and new beneficiaries by $200 a month;
- increase cost-of-living-adjustments (COLAs) for recipients by adopting the Consumer Price Index for the Elderly (CPI-E);
- lift the Social Security payroll tax wage base (currently $147,000 in 2022), such that all income above $250,000 would be subject to the payroll tax (including for purposes of self-employment income), but it would not credit the additional taxed earnings for benefit purposes;
- increase the net investment income tax by 12.4% (from 3.8% to 16.2%) and apply it to certain business income (active S-corporation holders and active limited partners) not already covered by payroll taxes;
- increase the Special Minimum Benefit by indexing the benefit level so that it is equal to 125% of the poverty line or about $17,000 for a single worker who had worked their full career; and
- restore student benefits up to age 22 for children of disabled or deceased workers if the child is a full-time student in a college or vocational school (the summary notes that this provision was eliminated in 1983).
The legislation would also combine the Disability Insurance Trust Fund with the Old Age and Survivors Trust fund to help senior citizens and persons with disabilities. Social Security provides all-in-one retirement, survivor and disability benefits funded through the dedicated FICA contribution paid by workers, but there are technically the two trust funds. The legislation would combine the trust funds into one Social Security Trust Fund to ensure that all benefits will be paid.
In announcing the legislation, the lawmakers released an analysis prepared by Social Security Administration Chief Actuary Stephen Goss estimating that enactment of these provisions would extend the ability of the OASDI program to pay scheduled benefits in full and on time throughout the 75-year projection period.
The legislation likely will not be enacted this year, and it was panned by Senate Republicans during a June 9 Senate Budget Committee hearing on Social Security solvency, but there is general agreement from both parties that action will be needed at some point.
Separate from the expansion legislation, bicameral and bipartisan legislation was introduced last year that seeks to address Social Security’s funding problems. This legislation (the Time to Rescue United States’ Trusts (TRUST) Act) introduced in April 2021 by Sen. Mitt Romney (R-UT) and several other members from both parties, would set up a process to draft legislation that extends long-term solvency for Social Security and other trust fund programs.
