On Tuesday, a House Ways and Means Social Security Subcommittee held a hearing to consider this proposal. The hearing marks the eighth Capitol Hill session on the issue since 2019, according to Democratic Representative John Larson from Connecticut, chair of the Social Security Subcommittee, who recently introduced the legislation with Senator Richard Blumenthal.
The bill is the latest version of the Social Security 2100 Act, which Larson introduced in previous sessions of Congress. The bill’s new name comes from President Joe Biden, who referred to Social Security as a “sacred trust” during his presidential campaign. As Washington lawmakers push to accomplish a host of items on their agenda before year end, Larson hopes the bill will have momentum in 2022. According to Larson, “I’m thinking the first of the year we’ll be ready for a mark-up and bring it to the floor by spring”. The bill currently has 195 co-sponsors, all of whom are Democrats. However, based on Tuesday’s testimony, it may be difficult to sway Republican lawmakers to support it. Republican Representative Tom Reed from New York praised the inclusion of certain reforms in the measure, but said he has concerns about covering the costs of benefit increases.
Congress faces a deadline to act on Social Security, due to a benefit shortfall set to take effect in 2034, according to the most recent estimates from the Social Security Administration. At that time, just 78% of promised benefits would be payable from trust funds the program relies on to issue those monthly checks. To address that shortfall, lawmakers could implement benefit cuts, tax increases or a combination of both. The new Social Security 2100 Act includes a host of provisions aimed at increasing benefits while adding more revenue through additional taxes on the wealthy. Notably, the bill would not include ideas like raising the retirement age, which Larson and other advocates oppose. It would provide a benefit increase for new and current beneficiaries amounting to about 2% of the average benefit. The bill would set the minimum benefit at 125% above the poverty line. It would also repeal certain rules that make it so public workers and their families with pension income wouldn’t receive reduced benefits, which is now the case.
The proposal would also boost benefits for certain widows and widowers and provide credits to caregivers who take time out of the workforce. It would also raise the benefit age for students up through age 25 and end the five-month waiting period for disability benefits. Additionally, it would change the way cost-of-living adjustments for beneficiaries are calculated each year. To pay for those changes, the legislation calls for increasing Social Security taxes paid by higher-wage earners. In 2021, those taxes are capped at $142,800 in wages, and in 2022 that will rise to $147,000.This proposal reapplies taxes on wages at $400,000 and up. The bill would create only about half the revenue of the previous Social Security 2100 Act proposal put forward in 2019.Notably, the benefit enhancements would only be in place for five years.
The proposal also aims to extend the depletion of Social Security’s trust funds to 2038. One bill, called the TRUST Act, would create a bipartisan committee that would be tasked with coming up with legislative fixes. But Larson and others have complained that much of those decisions would be made behind closed doors. During Tuesday’s hearing, Andrew Biggs, a senior fellow at the American Enterprise Institute who worked in President George W. Bush’s White House when other Social Security reforms were proposed, said a two-party approach is needed for legislation on the issue to pass.