WASHINGTON ― For the first time in recent memory, a bill to expand Social Security benefits and close the program’s long-term funding gap looks like it could pass the House of Representatives.
The legislation’s got a seasoned lawmaker carrying it, the support of more than 200 members and a vibrant grassroots movement behind it.
And sometime this month, Democratic Connecticut Rep. John Larson’s Social Security 2100 Act may get a hearing before the full House Ways and Means Committee.
The bill has no chance of getting through the Republican-controlled Senate. It might not even make it through the House.
But the fact that it is even being considered reflects a dramatic shift to the left in the way Democrats are discussing Social Security, a mere six years after then-President Barack Obama proposed cutting the program’s cost-of-living adjustment.
“This is going to be a huge bill,” Larson said Tuesday. “I mean, the last time we did anything with this was 1983.”
Retirement security advocates are excited about the direction the debate has moved: from a conversation that looks at Social Security purely as a financial challenge to one that sees it as part of a possible solution to the retirement income crisis.
With the decline of defined-benefit pensions, rising health care costs and slow wage growth for most of the population, these advocates argue, Social Security is more essential than ever. Fifty-eight percent of Americans have less than $1,000 in savings, according to a recent survey.
The bill is a political winner for Democrats since it stands in sharp contrast with Republicans who do not have plans to address the program’s funding gap.
Of course, the bill itself ― laden as it is with middle-class tax increases ― faces steep odds of advancement in the House, despite Democratic control of the chamber.
While Democratic presidential candidates and some members of Congress have backed higher taxes, Democratic leadership in the House has remained shy about tax increases. House Speaker Nancy Pelosi (D-Calif.), for instance, is willing to attend “Tax the Rich” rallies but not to endorse any specific tax increase.
House Ways and Means chair Richard Neal (D-Mass.), a Pelosi ally, declined to commit to a markup for Larson’s bill, saying only that the committee would “maybe” consider the Social Security legislation at some point.
“I think John Larson has done an excellent job of modeling it for the country,” Neal told reporters on Tuesday.
Asked if there were changes he’d like to see to the bill, Neal again offered more noncommittal praise for his colleague, saying he’d been “helpful to public debate.”
To close the program’s long-term funding gap and pay for higher across-the-board benefits, Larson’s bill would raise the payroll tax rate paid by workers and their employers from 6.2% to 7.4% each.
It would also gradually eliminate the cap on earnings taxed for Social Security. Currently, American workers contribute payroll taxes into Social Security on the first $132,900 that they earn, leaving the incomes of higher earners untouched. Larson would immediately subject earnings of $400,000 or more to payroll taxes. Once the current cap of $132,900 reaches $400,000, all earnings would be subject to the payroll tax. The program would pay out modest benefits to retiring workers based on earnings taxed above $400,000.
But Larson’s bill promises considerable benefit increases for future retirees and workers with disabilities as well. He would switch the program to a more generous cost-of-living formula to account for seniors’ health care costs, resulting in higher year-over-year benefit hikes. He beefs up the benefit formula in a way designed to disproportionately help low-income workers and those with shorter work histories, whose lower lifetime earnings keep their retirement benefits more modest. And he even reduces the effective income tax rate on Social Security benefits so seniors can hold on to more of their benefits.
Alex Lawson, executive director of Social Security Works, which supports expanding benefits, argued that the bill is a political winner for Democrats since it stands in sharp contrast with Republicans who do not have plans to address the program’s funding gap. Absent congressional action, Social Security will only be able to pay out about 80% of promised benefits starting in 2034, he said.
“House Democrats have already passed bills focused on pensions and savings,” he said. “Now is the time for Democrats to continue listening to the American people about the third and most important piece of retirement security and pass the Social Security 2100 Act out of the House.”
Larson, for his part, said he expected the committee to vote sometime in September. And he mocked the notion that Democrats ought to follow tradition and try and strike a deal with Republicans.
“We haven’t had a single proposal from ’em,” Larson said. “Maybe it’s coming. Maybe it’s in the offing or maybe their goal is to kick the can down the road and to do nothing.”