Dan Adcock, Director of Government Relations and Policy at the National Committee to Preserve Social Security and Medicare, said in an email that the DeFazio-Sanders bill, like the Social Security 2100: A Sacred Trust, introduced by Representative John Larson from Connecticut, “both extend solvency and improve benefits.” The Larson bill, however, is consistent with President Biden’s pledge not to raise taxes on Americans earning less than $400,000 per year, while the Sanders-DeFazio bill is not. A Sacred Trust adopts the consumer price index for the elderly as the basis of the annual cost-of-living adjustment and applies the payroll tax to annual wages above $400,000. Larson’s bill also includes more benefit improvements than the DeFazio-Sanders bill. But DeFazio-Sanders extends solvency for significantly longer than the Larson bill, with a duration of 75 years.
Both bills would update Social Security to meet the needs of today’s workers and beneficiaries, without cutting benefits or privatizing the program. Larson, chairman of the House Ways and Means Social Security Subcommittee, told reporters on May 23rd that his bill would be debated by the House Ways and Means Committee soon. It is unclear whether the Senate Finance Committee would be willing to consider Sanders’ bill. Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, said in an email that both bills would tie the COLA to the CPI-E, in order to provide a more representative and hopefully more adequate COLA over time. Both bills would also seek to increase the minimum benefit to 125% of the annual poverty guidelines.
The Social Security Expansion Act goes much further than the Larson legislation in that it applies the 12.4% payroll tax to investment income (in the same way the 3.8% tax on investment income went into effect in 2013 under the Affordable Care Act). There’s also a provision in the DeFazio-Sanders bill that would impose a 16.2% net investment income tax on active S-corporation holders and active limited partners. In a statement, Sanders said that “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 pay the same amount of Social Security taxes as someone making $147,000 a year. It’s time to scrap the cap, expand benefits, and fully fund Social Security.” The Social Security Administration, according to Sanders, has estimated that his bill, which would expand Social Security benefits by $2,400 a year, will fully fund Social Security for the next 75 years by applying the payroll tax on all income, including capital gains, above $250,000 a year. Other provisions of the bill include:
· Improving the Special Minimum Benefit for Social Security recipients by increasing the Special Minimum Benefit and indexing the benefit level so that it is equal to 125% of the poverty line, which is currently at about $17,000 for a single worker who has worked the entire duration of their career.
· It would also 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. These benefits were eliminated in 1983.
· Lastly, this bill aims to combine the Disability Insurance Trust Fund with the Old Age and Survivors Trust fund to help older adults and people with disabilities.
More than 40 organizations have endorsed the DeFazio-Sanders bill including: AFL-CIO, Social Security Works, National Committee to Preserve Social Security and Medicare, The Senior Citizen’s League and the Alliance for Retired Americans. Very excited to hear about this brand new bill. And I’m very happy that the government is finally starting to pay attention and take steps to protect and improve our Social Security programs for our struggling seniors.