On June 9, 2022 Senators Bernie Sanders, I-Vt. and Elizabeth Warren, D- Mass., along with Democrats including Sens. Cory Booker of New Jersey, Kirsten Gillibrand of New York, Jeff Merkley of Oregon, Alex Padilla of California, Chris Van Hollen of Maryland and Sheldon Whitehouse of Rhode Island, and Rep. Peter DeFazio, D-Ore. put forth a new Social Security Plan. This bill introduced in Congress would extend the program's solvency past 2096 and place an additional $200 a month in the pockets of Social security beneficiaries.
The proposal named The Social Security Expansion Act would expand benefits to $2,400 per year and make additional benefits available monthly as well. Cost-of-living adjustments would be made on a regular basis for current and future generations. This swift action took place after the Social Security Administration mentioned that unless Congress took action Americans would not receive benefits in thirteen years. The funds are too low to maintain the current system.
This 12% boost in pay and longevity of the benefits would come from lifting the cap on tax benefits that are presently in place. Payroll taxes are applied to income presently up to $147,000. This bill would lift that cap and include income above $250,000.
A rate of 6.2 % is now paid by both the employee and the employer for Social Security tax purposes. The total is 12.4% and it is deducted from payroll checks and goes directly to the Social Security Administration. The new bill proposes that the wealthy would pay a 12.4 % tax on investment and business income. At the present time, many business investments are not taxed, levies would be placed on those elements.
“Currently, a worker earning $147,000 pays 6.2% of their income to Social Security payroll taxes. But if instead, they earn $1.47 million, they pay just 0.6% of their income to Social Security. That may make sense to somebody,” Sanders said. “It doesn’t make sense to me.”
This bill also contains other contingencies to raise benefits for qualified individuals. It would increase benefits to 125% above the poverty line. To clarify, that would mean about $17,000 in benefits to a single worker that has worked their entire career. Cost of living adjustments would be a bit more generous as well. These adjustments would be made according to the Consumer Price Index for the elderly (CPI-E) which advocates believe to better reflect retiree needs and spending.
Benefits for students up to age 22 would increase with this legislation if they are attending a vocational school or college and are children of disabled or deceased workers. The 1983 policy that eliminated these individuals would be overturned.
Chief Actuary of the Social Security Administration, Stephen Goss, has analyzed the proposal. He stated, “We estimate that enactment of these provisions would extend the ability of the OASDI (Old Age, Survivors, and Disability Insurance) program to pay scheduled benefits in full and on time throughout the 75-year projection period”.
Republicans took to the quick issue of the plan and assured it would not pass. “This bill has no chance whatsoever of receiving a single Republican vote in either House,” said Sen. Mitt Romney, R-Utah. “So it will not be passed.”
The new proposal does have support from advocacy groups including The National Committee to Preserve Social Security and Medicare and Social Security Works.