Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, I-Vt., during the 10th Democratic primary debate of the 2020 presidential campaign season in Charleston, South Carolina on February 25, 2020.
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Senators Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., introduced a new bill Thursday to extend Social Security solvency for 75 years by raising taxes on the wealthy, while making the more generous benefits.
The proposal, called the Social Security Expansion Act, would increase benefits for current and new recipients by $200 a month, or $2,400 a year, and make monthly checks more generous in other ways.
To do this, and at the same time improve the solvency of the program, the plan also plans to increase taxes for high-income households.
Sanders and Warren, who are co-chairs of the Expand Social Security Caucus, were joined by 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, as well as Representative Peter DeFazio, an Oregon Democrat who introduced complementary legislation in the House.
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In 2022, payroll taxes apply to earnings up to $147,000. The bill calls for lifting that cap and applying the Social Security payroll tax to all income over $250,000.
Social Security payroll taxes are applied at the rate of 6.2% for both employer and employee, for a total of 12.4%, which is deducted from wages.
The bill calls for the wealthy to pay more through a 12.4% tax on investment and business income. It would also apply levies on certain business income that is not currently subject to payroll taxes.
“Today, absurdly and unfairly, there is a cap on income subject to Social Security taxes,” Sanders said in prepared remarks during a Senate hearing Thursday.
Currently, a worker earning $147,000 pays 6.2% of his income in Social Security payroll taxes. But if they earn $1.47 million instead, they only pay 0.6% of their earnings to Social Security, Sanders said.
“It may make sense to someone,” Sanders said. “It doesn’t make sense to me. »
Under the bill, more than 93% of households would not see their taxes increase.
At the same time, it would extend the solvency of the program beyond 2096.
New projections from Social Security administrators show that the combined program funds will only be able to pay full benefits until 2035, when 80% of benefits will be payable.
Raising taxes on the wealthy to bolster the program is popular among voters, according to a survey released this week by the University of Maryland. Public consultation program.
How the bill would increase benefits
The proposal also calls for increasing benefits in several ways.
For example, it would increase minimum benefits to 125% of the poverty line and index them. That would equate to about $17,000 for a single worker who has worked their entire career, according to the proposal.
It also aims to make annual cost-of-living adjustments more generous by changing the measure by which they are calculated into the Consumer Price Index for the Elderly, or CPI-E, which some proponents say better reflects the expenses of retirees.
The legislation would also restore benefits for students up to age 22 if they attend college or vocational school and are the children of disabled or deceased workers. This would reverse a 1983 policy that eliminated benefits for these people.
A Social Security Administration office in San Francisco.
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The effects of the plan has been analyzed by the Office of the Chief Actuary of the Social Security Administration.
“We believe that the adoption of these provisions would extend the ability of the OASDI (Old Age, Survivors, and Disability Insurance) program to pay expected benefits in full and on time throughout the 75-year projection period,” said said Stephen Goss, Chief Actuary. to the Social Security Administration, in a statement.
The new proposal has the support of advocacy groups focused on expanding Social Security, including Social Security Works and the National Committee to Preservation of Social Security and Medicare.
However, Republican leaders were quick to challenge the plan, particularly the proposed tax increases, during the Senate hearing on Thursday.
“This bill has no chance of receiving a single Republican vote in either House,” said Sen. Mitt Romney, R-Utah. “So he will not be adopted. »
Romney has proposed a bill called the TRUST Act, which would create bipartisan committees that would work to identify potential ways to shore up struggling federal programs, including Social Security, Medicare and trust funds for highways.
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Sanders, Warren bill target Social Security solvency, benefit boost – Reuters News in France and abroad