Monday, April 01, 2019
About 63 million people collect Social Security benefits today, and this will rise to 80 million in ten years. Without substantial changes in revenue or benefit levels, the system’s trustees project that the Social Security trust fund will be completely depleted by 2034. Neither political party wants to support payroll tax increases or benefit cuts unless the other party joins the effort, so in the highly partisan atmosphere of recent years, Congress has made little progress toward strengthening Social Security.
A bill introduced in January, HR 860/S 269, is the most recent attempt to extend the trust fund’s life, provide more adequate benefits, and treat all generations and income levels fairly. About a quarter of new payroll tax revenue would be used to increase benefits, and three quarters would bolster the trust fund and keep the system solvent through the end of this century.
On the revenue side, the bill would:
- gradually increase the Social Security payroll tax (currently 6.2%, paid by both workers and employers, for a total of 12.4%) to 14.8%. The increase would be phased in at the rate of 0.1% year over 24 years;
- apply the payroll tax to earnings over $400,000. The limit on taxable earnings ($132,900 in 2019) is adjusted annually to keep up with average earnings levels. When the limit reaches $400,000, in effect there will be no limit on taxable earnings – as is already the case for the Medicare payroll tax.
The bill’s major changes to benefits would:
- increase benefits by about 2% for all beneficiaries;
- revise the cost-of-living adjustment to reflect beneficiaries’ spending patterns more accurately, such as high medical costs;
- increase the minimum benefit so that workers with low lifetime earnings would not retire into poverty.
The House bill’s chief sponsor, Rep. John Larson (D, CT), chairs the Social Security subcommittee of the Ways & Means Committee, is in a strong position to promote the bill. It will be subject to political scrutiny, financial evaluation, debate, and amendments, so its final version, if adopted, may differ significantly from the present proposal. Social Security is often called the third rail of politics, which it is fatal to touch, but some version of this bill may defy that description.
The Agency on Aging Northeastern Illinois’ Board of Directors has voted to support this introduced bill. Anyone who currently receives Social Security benefits or expects to do so should consider it.
To learn more about the Advocacy work of the Agency on Aging Northeastern Illinois, visit our Advocacy page to learn more about our initiatives to advocate for older adults and how you can advocate for older adults in you community.