There are currently three proposed bills being floated by Democrats on Capitol Hill that seek to strengthen Social Security.
Action is needed, they say, because—as the Social Security Board of Trustees reported in its 2022 annual report this past June—the combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, with 80% of benefits payable at that time.
Republicans, meanwhile, have expressed their unanimous opposition to each of these plans, arguing broadly that raising taxes to increase benefits when the program is going broke is not a sustainable way forward.
While poll after poll shows a strong majority of Americans—Republicans and Democrats alike—do not want to see cuts in Social Security, plenty of uncertainty remains as to how the program’s solvency will eventually be addressed after many years of “kicking the can down the road” by lawmakers.
The three different bills that are currently under consideration—the Social Security Expansion Act, Social Security 2100 and the Protecting and Preserving Social Security Act—all have similar goals of extending Social Security’s solvency, but would go about it in different ways and have varying priorities.
Here’s a quick look at each of the bills, starting with the one most recently proposed.
Protecting and Preserving Social Security Act
Originally introduced in April 2019, the Protecting and Preserving Social Security Act was reintroduced on July 21, 2022 by Sen. Mazie Hirono (D-HI) in the Senate and by Rep. Ted Deutch (D-FL) in the House.
According to the Social Security Administration’s Office of the Chief Actuary, the legislation if enacted would extend the date of projected depletion of the OASI and DI Trust Fund Reserves from 2035 to 2052. The bill would also reduce the federal deficit by approximately $12.3 trillion by the end of the 75-year projection period.
Per a July 21 press release from Hirono, specifically, the bill:
• Ensures the appropriate weight is given to the real costs in seniors’ budgets by using the Consumer Price Index for the Elderly (CPI-E) to calculate the relevant cost-of-living adjustment (COLA), rather than the more generic Consumer Price Index for Urban Wage Earners (CPI-W).
• Requires the wealthiest Americans to pay their fair share by phasing out the cap on Social Security contributions over the next seven years and encouraging contributions above the cap in exchange for additional benefits.
• For the first time, the bill pro-rates the benefit for the month of death, so Americans struggling with a loss no longer have to return their loved one’s last Social Security check.
“While our country continues to recover from the COVID-19 pandemic and the resulting increase in cost of living expenses, people deserve to know Congress won’t ever let these benefits—which people have worked for throughout their lives—dry up,” Hirono said. “The Protecting and Preserving Social Security Act will strengthen the system so qualified recipients get the benefits they deserve now and for decades to come, while also making sure the wealthiest Americans pay their fair share.”
Most Americans pay 6.2% of their wages into Social Security, but the effective tax rate for the wealthy is significantly lower because of the current cap on Social Security contributions, which is $147,000 in 2022.
This bill would require the wealthiest Americans to eventually pay more by phasing out the cap.
The bill has the backing of a coalition, including the National Committee to Preserve Social Security and Medicare, the Alliance for Retired Americans, and Social Security Works.
The full text of the bill is available here.
Social Security Expansion Act
On June 9, Sen. Bernie Sanders (I-VT) and Rep. Peter DeFazio (D-OR) introduced the Social Security Expansion Act, which also seeks to adopt the CPI-E as the formula for calculating Social Security cost-of-living adjustments (COLA).
It also would require higher earners to contribute to payroll taxes on wages above $250,000 (leaving a donut hole between $147,000 and $250,000), and, unlike the Protecting and Preserving Social Security Act, also would boost benefits by $200 per month ($2,400 per year). Finally, it would extend the solvency of the program for the next 75 years—past the year 2096—”all without raising taxes by one penny on over 93% of American households,” Sanders claims.
The estimates reflect an analysis of the legislation conducted by the Social Security Administration on the request of Sen. Sanders and Rep. DeFazio. The analysis was also released June 9 in a letter from Chief Actuary Stephen Goss.
“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,” Sen. Sanders said in announcing the bill. “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. It is absurd that a billionaire in America today pays the same amount of Social Security taxes as someone making $147,000 a year. It is time to scrap the cap, expand benefits, and fully fund Social Security. I am very proud that the Social Security Administration has estimated that our legislation to 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.”
The Social Security Expansion Act’s $200 per month increase would represent a 12% boost.
Of the three bills, the one that could see movement first is the Social Security 2100: A Sacred Trust, legislation which House Ways and Means Social Security Subcommittee Chairman John Larson (D-CT) introduced along with more than 200 cosponsors in the House that seeks to increase Social Security benefits across the board and strengthen the program.
Just last week, Rep. Larson told a press briefing he’s hopeful that markup of the bill and a vote will happen once House members return from August recess—sentiments echoed by Rep. Pramila Jayapal (D-WA), Chair of the Congressional Progressive Caucus. Earlier this year, Jayapal penned a letter to Speaker of the House Nancy Pelosi encouraging the bill’s “prompt floor consideration.”
Although bearing a title similar to a bill Rep. Larson introduced in the previous Congress (H.R. 860, 116th Congress), the current proposal is substantially different, according to a July overview of the bill from the Center on Budget and Policy Priorities.
Social Security 2100: A Sacred Trust (H.R. 5723) includes 13 provisions that would increase Social Security benefits, 12 of which would be temporary, applying for only five years. The bill would also increase Social Security revenues by imposing the Social Security payroll tax on individual earnings above $400,000.
Overall, it would reduce Social Security’s 75-year shortfall by about half and postpone by about four years the program’s reserve depletion date—by far the shortest extension of the trust fund depletion date of the three bills.
“However, if the bill’s benefit increases were all made permanent—and there would be public and political pressure to do so—Social Security’s financial picture would worsen compared to current law,” the overview states. “Congress would then have to raise even more revenues or cut benefits to finance the permanent benefit improvements and also close the long-term financing gap.”
In contrast, the overview notes the previous version of the bill contained only four benefit expansions, and all of them would have been permanent. It also would have gradually increased the Social Security payroll tax rate in addition to expanding the payroll tax base. As a result, the earlier legislation would have fully financed Social Security for 75 years and beyond.
Under Larson’s bill, everyone on Social Security would receive a 2% increase, with lower-income beneficiaries, widows and widowers, and the “oldest of the old” receiving an extra boost.
Like the other two bills, Social Security 2100 would adopt the consumer price index for the elderly as the basis of the annual COLA.
If the CPI-E had been used to index the annual COLA for the past 30 years, a an average beneficiary would have received about $14,000 more in benefits than the CPI-W has provided, according to The Senior Citizens League.
SEE ALSO:
• Bernie Sanders: Expand Social Security; Lindsey Graham: Take Less, Pay More
• New ‘Social Security 2100’ Bill Will Change COLA Formula
• High June Inflation Leads to Double-Digit Social Security COLA Prediction
• 7 Bipartisan Ways to ‘Fix’ Social Security
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
