Both Democrats and Republicans are working on a bill to keep social security going as well as keeping it solvent through the next 80 years with the Social
Security 2100 Act, which was introduced this past week in the House and Senate.
Concerns for aging baby boomers bankrupting the system as they begin to draw social security benefits and from other entitlement programs is prompting both parties to work together to expand Social Security in a major way since 1972 as well as making major changes since 1983. In 1983 the government averted a financial crisis by raising taxes as well as the eligibility age for drawing
The Social Security 2100 Act bill would first increase Social Security benefits across-the-board by about 2 percent of a person’s Social Security benefit. This will be done by raising the cost-of-living adjustment to help seniors who use more health care services and then by increasing the minimum benefit allowed so that those workers who have had low earnings income will not end up in poverty during their retirement years.
The Social Security 2100 Act bill would also cut the federal income taxes on Social Security benefits for approximately 12 million middle-income people. It would raise taxes in other areas. According to this bill over the next 24 years the payroll tax rate would increase from 12.4 percent to 14.8 percent.
Right now for this year, $132,000 in earnings is the maximum amount subject to Social Security payroll taxation. Because of this, earnings above $132,000 to $400,000 would not be taxed. But with the new bill, the payroll tax will be imposed on earnings above $400.000 a year.
Currently $1 trillion in Social Security benefits were paid out last year in 2018 to approximately 63 million people and that number of recipients is due to increase to about 80 million in the next 10 years by 2030.
Originally, Social Security was was meant to supplement retirees income along with their pensions and personal savings.
However, House Representative, David Cicilline, Democrat from Rhode Island, says that most retirees have used up their savings paying for college expenses for their children or for family illnesses. Also, pensions have been discontinued by many companies and are not even being offered anymore.
Andrew G. Biggs, a Republican and a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform says, in an interview by the New York Times, that the Social Security 2100 Act bill not only fixes Social Security through the end of this century but that it would make it a permanently solvent system. The only draw back he sees is that the middle and upper-income retirees who are already doing well, would receive a lot more money while the Social Security payroll taxes would increase significantly for all workers.