Following years of Republicans deciding how the future of Social Security will play out, the Democratic party has brought forth a new edition to the social insurance program that was originally put into play during the Great Depression. The plan is to implement changes that will keep the program solid for at least the rest of 21 century.
The plan is called The Social Security 2100 Act. Planning for the act began after crippling concern that the aging baby boomer population will bankrupt the government, when it becomes time for them to draw the benefits that they’ve earned. The change battles the 1983 change in importance; when the problem was partly-addressed by raising taxes as well as the required age to withdraw Social Security.
In all, the bill will result in an approximately two percent increase across-the-board compared to the current average of Social Security benefits. In addition, it would raise the annual cost-of-living, since the elderly generally use healthcare more than the other covered services. There would also be an increase in the minimum benefit so that workers who worked low-income jobs do not retire into the poverty that they worked so hard to stay out of.
The new Social Security act will cut taxes for around 12 million people of the middle class, while raising it in other places. Over the next 24 years, the payroll rate will rise to 14.8 percent, 2.4 percent more than the current rate, earning Social Security over $400,000 a year compared to $132,900 of projected earnings of this year. The only flaw is that a doughnut hole will form as earnings anywhere from $132,900 and $400,00 will not be taxed.
“Our bill, supported by more than 200 members of the House, would enhance and expand the nation’s most successful insurance program, which touches the lives of every American,” said John Larson, Democrat Representative of Connecticut and principal author of this new deal.
Larson, who serves as Chairman of the Ways and Means Subcommittee on Social Security, promised to host forums and hearings around the country to better educate and hear opinions about the legislation. One of the plan’s strongest supporters is a representative of Massachusetts, Richard E. Neal, who has called his own hearing to address ways to improve retirement benefits for the workers of America.
Even Republican Andrew G. Biggs, who served as the principal deputy commissioner of Social Security under President George W. Bush, agrees with important parts of Larson’s proposed bill.
“It doesn’t just fix Social Security for 75 years. It would keep the system permanently solvent. That’s a real plus,” said Biggs in response to the parts of the bill he supported. However, Biggs also said, “The bill would give a lot of money to middle- and upper-income retirees who are already doing well. And it would significantly increase payroll taxes on workers.”
As of last year, close to 63 million people withdrew a total of $1 trillion in Social Security, and the number of beneficiaries is expected to hit 80 million within in the next decade. The original intent of Social Security was to serve as a supplement to the person’s personal savings.
“The reality today for more and more Americans is that they’ve used up their savings, they’ve helped a child go to school, they’ve dealt with a family illness. And many companies have taken away pensions, ” said Democrat of Rhode Island David Cicilline. Others in opposition add that the program is headed for depletion by 2034, as the program will spend more many than it will take in.
However, Larson insists that the program will still be “able to pay all scheduled benefits in full on a timely basis” for the first 75 years. After that, the “financial stability of Social Security will be improving” says chief actuary of Social Security, Stephen C. Gross. A fourth of all the money earned by the new legislation will be used to increase benefits while the remainder will be used to cover the deficit that the opposers are worried about.
Democrats are going full throttle behind this bill, especially with the strategic releasing on what would have been Franklin D. Roosevelt’s 137th birthday, while standing in front of a life-size cardboard cutout of him.
Henry Connelly, spokesman for Speaker of the House Nancy Pelosi, says that Pelosi “supports Democrats’ efforts to strengthen Social Security and bolster seniors’ retirement security,” even though she previously opposed an attempt to send some payroll taxes into private retirement funds.
With the rising concern of the state of retirement income, a strong vote through both the House and Senate would most likely earn the bill a place in 2020 alongside the heated presidential race. At the very least, it will serve as guidelines for future Social Security budgeting.
The Republican party says that changes in Social Security is the main reason for growing deficits. To counteract the growth, the party has proposed changes that include raising the retirement age and a new way to calculate the cost-of-living. Both which were ultimately declined.
When running as a presidential candidate, Trump expressed that he was not, “going to cut Social Security like every other Republican.” Larson credits Trump’s receiving of the senior vote to that very pledge. Now halfway through his presidency, Trump has proposed cuts in Social Security benefits in hopes that beneficiaries will return to the workforce.
As calculated by the Congressional Budget Office, if no changes are made to the law, the deficit will predictably be grown from $779 billion last year to over $1 trillion every single year from 2022 to 2029.
By 2029, the amount of money specifically for people aged 65 or older, which addresses Social Security, Medicare and Medicaid, will be half of all federal spending. That’s an increase from 35 percent in 2005 and 40 percent in 2018.