House Democrats on Tuesday slammed Republicans for putting Social Security benefits at risk amid an ongoing federal debt ceiling stalemate, while also re-upping a plan that aims to tackle Social Security’s looming funding shortfall.
“This tactic of holding the economy hostage hurts seniors the most,” said Rep. John Larson, D-Conn., at an event to reintroduce his legislation, the Social Security 2100 Act. The bill calls for making Social Security benefits more generous by increasing taxes on the wealthy.
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Larson was joined at the event by other House Democrats who also decried the debt ceiling negotiation process for putting Social Security benefit checks at risk.
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What debt ceiling standoff means for money market funds
The debt ceiling is the limit the federal government can borrow to pay its bills. Treasury Secretary Janet Yellen has warned the U.S. could default on its debt as soon as June 1.
Without a deal to either raise or eliminate the debt ceiling, Yellen said Sunday the country will face “hard choices” as to which bills will go unpaid.
Social Security and other federal programs may not be able to make payments to beneficiaries on time, experts have warned.
At the Tuesday event, House Minority Leader Hakeem Jefferies, D-N.Y., called it “dangerous default gamesmanship” that could put benefits for millions of retirees across the nation at risk.
Social Security already faces funding risks
In order to prevent a Social Security funding shortfall, congressional Democrats and Republicans must agree on a solution.
The latest projections from the Social Security Board of Trustees show the trust fund used to pay retirees, as well as their family and survivors, will be depleted 10 years from now. At that point, 77% of those benefits will be payable.
When combined with the trust fund used to pay disability benefits, the funds are projected to be depleted in 2034, when 80% of benefits would be payable.
The Social Security 2100 Act that was introduced in the last Congress had broad support among House Democrats.
This tactic of holding the economy hostage hurts seniors the most.John LarsonDemocratic Representative from Connecticut
The latest version of the bill will be sponsored by Democratic Sens. Richard Blumenthal of Connecticut and Chris Van Hollen of Maryland, Larson said.
Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., reintroduced their own Social Security proposal earlier this year, which similarly aims to increase benefits while extending the program’s solvency through taxes on the wealthy.
To date, Republican lawmakers have not proposed legislation to address Social Security’s funding woes. Sen. Bill Cassidy, R-La., recently said he is working on a bipartisan “big idea” to address the program’s 75-year shortfall.
“That’s why we’re here, to implore our Republican colleagues to work with us, to sign on to our bill, or produce what they believe is a better plan,” Larson said.
Changes in the Social Security 2100 Act
The Social Security 2100 Act aims to extend the program’s solvency, though estimates are not yet available for how long it could prolong the program’s funding. The last version of the bill was expected to extend the program to 2038.
In contrast, the Sanders and Warren plan would extend the solvency through 2096.
A key difference between the two plans is how they affect higher taxes. The Sanders and Warren plan calls for reapplying Social Security payroll taxes for incomes of more than $250,000.
In contrast, Social Security 2100 would apply those taxes to earnings of more than $400,000, in keeping with President Joe Biden’s promise not to raise taxes for households with annual incomes below that threshold.
This year, the maximum earnings subject to Social Security payroll taxes is $160,200.
Social Security 2100 also calls for adding an additional 12.4% net investment income tax for taxpayers making more than $400,000.
In addition, the bill would introduce a host of expansions to benefits.
The Social Security 2100 Act would increase all benefits by 2% for the program’s more than 65 million beneficiaries.
It also seeks to make benefits more generous for elderly beneficiaries who have been receiving benefits for 15 years or more, as well as low-income seniors and widows and widowers from two-income households.
It would repeal rules that reduce benefits for some public workers and their spouses, known as the Windfall Elimination Provision and Government Pension Offset.
Congressman Larson offers a common sense, fair and forward-looking plan to ensure that the 88 year-strong promise of Social Security remains fulfilled.Max Richtmanpresident and CEO of the National Committee to Preserve Social Security and Medicare
It would also increase access to benefits for children who live with grandparents or other relatives, as well as restore student benefits up to age 26 for children of beneficiaries.
The bill also calls for changing the way annual cost-of-living adjustments are measured, among other changes.
Social Security advocates praised the reintroduction of the bill.
“At a time when the House Majority has taken the country to the brink of default — which could have catastrophic consequences for seniors on fixed incomes — Congressman Larson offers a common sense, fair and forward-looking plan to ensure that the 88 year-strong promise of Social Security remains fulfilled,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.