The last Social Security reform on record took place in 1983 and now in 2021, as forecasts predict insolvency, Congress proposes Social Security reform to prevent disaster. Social Security effects all Americans, and yet it’s the policy that no one in D.C. wants to touch, unless they’re withdrawing from the Trust. The Social Security Administration claims that by the mid-2030s, the Social Security Trust will be depleted of its resources.
If we stay on this current trajectory Congress will have no choice but to act, reforming Social Security for the first time in decades. The House Ways and Means Social Security Subcommittee re-proposed a new version the Social Security 2100 Act, one set on merging proposals to Social Security reform from both sides on the aisle.
What Changes are Proposed?
As reported by Lorie Konish for CNBC, the newly revied bill will offer several lasting changes to Social Security. The most notable change being expanding the payroll tax limit. Earners that make more than $142,800 don’t have to pay into the Social Security tax past that limit; however, this bill would require taxing earners that make more than $400,000. MarketWatch.com clarifies further, explaining that workers that earn between $142k and $400k are taxed at the capped rate, which adjusts each year for inflation.
Other changes included increasing the minimum benefit for low-income earners, establishing benefits fixed at 125% above the poverty line. The minimum benefit has been shrinking for decades and has been considered in need of an overhaul.
Another lasting change to Social Security reform would be how COLAs (cost-of-living-adjustments) are calculated. COLAs would be based off the CPI-E, the Consumer Price Index for the Elderly, to better represent the specific and unique expenses seniors tend to face, like heightened healthcare costs.
Additional changes the bill introduces are general benefit increases by 2%, protections for surviving spouses claiming benefits from their deceased spouse, allowing disability benefits to be received faster, and the introduction of a caretaker benefit. The caretaker benefit, or “caretaker credit,” would allow those who take time off to look after another avoid a reduction to their retirement benefits.
Is it Enough?
Whether these proposed changes are enough to protect Social Security against insolvency remain to be seen. It’s an important first step; however, it is not the only Social Security reform out there. This bill can help fund the Social Security Trust, but it will mean little if the Trust isn’t protected against frivolous government spending.
The Council for Retirement Security is looking to help pass the Social Security Lock-Box Act, policy that will help safeguard the trust from being spend on programs that aren’t paying out Social Security benefits. The Social Security Lock-Box Petition will help communicate to Congress what real American seniors expect from their Social Security, guiding positive reform without losing any benefits in the meantime.