Social Security’s Ongoing Solvency Discussion: CRS Weighs In - CRS; ASPPA

The long-term solvency problem facing Social Security is getting renewed attention now, with the re-introduction of the “Social Security 2100: A Sacred Trust” (H.R. 5723/S. 3071) bill two weeks ago. Shortly after this bill was dropped in the 117th Congress, the Congressional Research Service (CRS) released an Insight Report titled “Social Security: Removing the Taxable Maximum and Long-Term Program Solvency,” and it’s interesting to examine the two separate but related perspectives on the taxable earnings base currently in effect governing the amount of payroll subject to FICA tax. As we get set to roll into 2022, we know that wages in excess of $147,000 will not be taxed for Social Security purposes (the limit increases by $4,200, about 2.9%, over the 2021 limit). Despite the scheduled increase, the program is still projected to see complete depletion of its trust fund reserves by 2033.

The American Society of Pension Professionals & Actuaries has examined the CRS report and weighed in on its projections for the long-term Social Security solvency issue. Their viewpoints are presented in a post on their website, which you can access here…

The CRS report takes a look at the effects of completely removing the taxable earnings base, projecting a resulting 20+ year improvement on the anticipated trust fund depletion. The Social Security 2100: A Sacred Trust bills contain a recommendation to apply the payroll tax to wages above $400,000, leaving the gap between $147,000 and $400,000 untaxed for Social Security purposes. With respect to the long-term solvency issue, the CRS proposal would extend the trust fund’s life substantially longer than the H.R. 5723/S. 3071 adjustment, which, when combined with the other aspects of the bills, would result in about a five-year depletion delay. The bill would, however, give Congress more time to deal with the long-term solvency issue.

These are interesting aspects of a point that has been deliberated for a long time–the efficacy of the taxable earnings base and what adjustment of it would mean to the looming solvency problem. As visitors to this site are aware, the Association of Mature American Citizens (AMAC) has long advocated for a total modernization and financial strengthening of Social Security to ensure its benefits for future generations. Indeed, AMAC has advanced a proposed legislative framework that has the potential to accomplish this, without the need to raise taxes, and has discussed this framework with many congressional contacts over many years. To learn more about this proposal, check it out on the AMAC website.

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