The last time Social Security was truly reformed took place with a Democratic House and a Republican president, so could that happen again now?
Social Security’s costs are projected to overtake its expenses starting next year, in 2020. Worse still, the program is projected to become entirely insolvent — meaning they essentially won’t have any money left to pay out benefits at all — in 2035. (See page 5 in that PDF link.)
(Although at least it’s actually in better shape than Medicare, which is projected to go insolvent even sooner: in 2024.)
Many say Social Security is heading towards the abyss because it hasn’t been fundamentally reformed since 1983. Then, a Democratic-led House and a Republican President Ronald Reagan joined forces to change the payment system and tax rates associated with the program.
With a Democratic-led House and Republican president once again, many say what’s needed once more is a dramatic reform similar to the 1983 law.
What the legislation does
The Social Security 2100 Act would introduce several reforms in an effort to keep the program running until at least the title year of 2100. These include:
- Setting the minimum Social Security benefit for retirees at +25% above the poverty line, so people are no longer “retiring into poverty.”
- Raising the income threshold at which one’s Social Security benefits start getting taxed, from the current $25,000 to $50,000 for an individual, and from the current $32,000 to $100,000 for a couple filing jointly.
- Collecting payroll taxes to help pay for Social Security on higher levels of income, from the current $132,900 maximum up to a new $400,000.
- Uses a new formula to calculate the annual cost of living increases to Social Security benefits, from the current one which measures inflation for the population at large (called CPI-W) to another formula which measures inflation for the elderly population specifically (called CPI-E). Historically, this formula has averaged +3.3% annually, slightly higher than +3.1% for the whole population at large.
The House version was introduced on January 30 as bill number H.R. 860, by Rep. John Larson (D-CT1). The Senate version was introduced the same day as bill number S. 269, by Sen. Richard Blumenthal (D-CT).
What supporters say
Supporters argue the legislation takes the necessary steps to ensure that one of the most popular — perhaps the single most popular — American government program can continue through the lifetime of virtually every person alive today.
“With 10,000 baby boomers becoming eligible for Social Security every day, the time to act is now,” Rep. Larson said in a press release. “The Social Security 2100 Act will provide economic security not just for today’s seniors but for future generations too.”
“Social Security has not had any significant adjustments made since 1983, when Tip O’Neill was Speaker and Ronald Reagan was President,” Rep. Larson continued. “It’s time for Congress and the President to come together again, just like Speaker O’Neill and President Reagan did to make this a reality.”
What opponents say
Opponents counter that the legislation would significantly raise taxes, and fails to confront the true issue hurdling Social Security towards insolvency: the program’s decades-long shift away from its original mission solely of poverty reduction towards an entitlement program almost everybody receives.
“The Social Security 2100 Act would raise payroll taxes for all workers. An average worker with an annual salary of $50,000 would pay an extra $1,200 per year,” Rachel Greszler and Drew Gonshorowski write for the conservative Heritage Foundation think tank.
“Today, Social Security provides the highest benefits to the workers with the least need. The proposed act would further increase benefits for wealthy individuals,” they continue. “If Congress gradually returned Social Security to its goal of poverty prevention, the program would not need to take such a large portion of workers’ paychecks.”
Odds of passage
The House version has attracted 209 cosponsors, all Democrats — the vast majority of the 235 House Democrats.
Previous House versions in July 2014, in March 2015, and in April 2017 attracted two, 105, and 174 cosponsors respectively — making this by far the most popular version yet. (Although it has yet to attract a single cosponsor across the aisle.)
It awaits a potential vote in either House Education and Labor, Energy and Commerce, or Ways and Means Committee. All three prior versions failed to receive a floor vote, as the chamber was under Republican control.
The Senate version only has one Democratic cosponsor. It’s unclear why there’s such a discrepancy between the cosponsor numbers in the two chambers.
Even if it passes the Democratic-controlled House, odds of passage in the Republican-controlled Senate are low.