Social Security 2100: The Coming Debate
It’s probably no secret to our site visitors that Social Security’s future is entering the home stretch toward an insecure future–a future in which benefits could face cuts in the neighborhood of 20-25%, depending on which pundit you subscribe to. That trajectory, of course, assumes there is no action taken by our legislators to address the program’s funding problems. And on that note, the House Ways and Means Committee’s hearing on July 25 set the tone for what promises to be a protracted debate on the appropriate strategy to address the Social Security solvency issue.
H.R. 860 (the Social Security 2100 Act), the legislation sponsored by Rep. John Larson (D-CT-1) and co-sponsored by 210 members of Congress, was originally submitted in January of this year. The Act calls for expansion of Social Security through formula changes that would result in across-the-board benefit increases for all, a more senior-oriented cost of living formula, and an increase in the “special minimum PIA” (the primary insurance amount–the amount a beneficiary would receive at full retirement age). In addition, H.R. 860 raises the threshold for taxation of benefits from $34,000 (single) and $44,000 (joint) to $50,000 (single) and $100,000 (joint).
To fund the expansion, the Act calls for taxation of wages exceeding $400,000, and raises what we know as the FICA tax rate on wages (6.2% today) to 7.4% by 2043. The combined employee/employer rate would increase from 12.4% to 14.8%.
The arguments that will unfold in debate will likely be focused on the impact of the additional tax levies on both workers and the economy in general, versus the alternative of using long-term economic growth as a means to ensure Social Security’s solvency and improvements in several of the program’s rules that, in the eyes of some critics, unfairly penalize workers (e.g., the Windfall Elimination Provision). In any event In any event, the battle lines appear to be drawn.
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.