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An analysis of two approaches to reforming Social Security
Rep. Larson, would expand benefits by 2% for most workers and more for low earners. It would raise enough revenue to fund these benefits and to close a projected shortfall by slowly increasing the payroll tax rate and by taxing earnings above $400,000. The Larson bill would eliminate the entire 75-year projected shortfall but provide more modest benefit increases. Warren’s plan also relies on higher payroll taxes and would provide larger and more progressive benefit increases, but it would only extend the solvency of the program through 2054. Without any changes, Social Security becomes insolvent in 2035, meaning benefit cuts to all of about 23% at that time. Read Morrissey’s full article here.
Commentary: Neither plan above addresses the critical longevity issue, however. Increasing life expectancy (20 years longer than when Social Security started) and a declining birth rate among younger workers is causing the strain to the Social Security system rather than workers not being taxed high enough. The Larson and Warren bills appear more like expanded welfare benefits than true reform to a system that is outdated. The Association of Mature American Citizens (AMAC) believes Social Security must be preserved and modernized. This can be achieved by making modest changes in cost of living adjustments and the retirement age, with no additional taxes on workers. AMAC advocates for a bipartisan compromise, “The Social Security Guarantee Act,” taking selected portions of bills introduced by former Rep. Johnson (R-TX) and current Rep. Larson (D-CT) and merging them with the Association’s own well researched ideas. One component is Social Security PLUS, a new, voluntary plan that would allow all earners to have more income available at retirement. This component is intended to appeal especially to younger workers. AMAC is resolute in its mission that Social Security be preserved and modernized and has gotten the attention of lawmakers in DC, meeting with a great many congressional offices and their staffs over the past several years. Read AMAC’s plan here.
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