In-Depth: This bill’s sponsor, Rep. Peter DeFazio (D-OR), introduced this bill on the day that millionaires stop paying into Social Security because they hit the tax cap at $127,000 in annual income:
"Millions of Americans -- including hundreds of thousands of Oregonians -- depend on the earned benefit of Social Security as their livelihood, yet congressional Republicans continue to play games with its funding. This legislation will protect this vital program from future attempts to dismantle it while expanding benefits to better meet the needs of our nation's seniors."
As he did in the last Congress, Sen. Bernie Sanders (I-VT) introduced this legislation in the Senate. This version of the bill currently has the support of 25 cosponsors, all of whom are Democrats.
Of Note: Given current projections, the Social Security trust funds would not be able to meet all of their obligations in 2033 -- when obligations would exceed incoming tax revenue -- and it would only be able to pay out about three-quarters of scheduled benefits. In an analysis of this legislation, the actuaries for the Social Security trust funds estimated that this proposal would allow the provision of full Social Security benefits through 2060.
There have been several other proposals that address Social Security’s future insolvency without raising taxes. Some of which would raise the retirement age, while others would suspend ‘overlapping benefits’ that allow people collecting disability payments and unemployment benefits.
The retirement age is already being gradually raised from 65 to 67 years old for full Social Security benefits, but 70 is the age often being used in proposals as raising the retirement age to 70 could save nearly $35 billion. Given that life expectancy for those who reach age 65 has grown from 77.2 years in 1930 to 84.1 years in 2010 while the retirement age remained essentially constant, that may be a realistic option.
The main threat to Social Security’s long-term survival comes from the shrinking ratio of workers to beneficiaries -- as the number of people in the workforce paying taxes to fund the program has declined relative to the number of people receiving benefits. In 1960, there were 5.1 workers for every Social Security beneficiary, by 2009 that number had dropped to 3 workers, and it is expected to fall to 2.2 workers in 2030.
Summary by Eric Revell
(Photo Credit: Public Domain)