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Social Security 2100 Act Aims To Fix The Entitlement

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According to bill sponsors, the Social Security 2100 Act increases benefits for all current and future Social Security recipients, cuts taxes for almost 12 million seniors, and ensures the system remains solvent for the rest of this century.

 

By Al Norman

The House Ways & Means Committee in Congress recently convened a hearing on the Social Security 2100 Act, filed by Congressman John Larson of Connecticut.

Advocates for Social Security say this bill will extend the life of the Social Security Trust Fund into the 22nd century, increase benefits across the board, and is the first step towards expanding Social Security — not cutting itAccording to bill sponsors, the Social Security 2100 Act increases benefits for all current and future Social Security recipients, cuts taxes for almost 12 million seniors, and ensures the system remains solvent for the rest of this century.

Social Security 2100 Actprovides an increase for all beneficiaries that is the equivalent to about 2 percent of the average benefit. A modest boost in benefits strengthens the one leg of the retirement system that is universal and the most reliable.

Inflation Protection

The bill also provides protection against inflation by improving the annual cost-of-living adjustment (COLA) formula to better reflect the costs incurred by seniors by adopting a “Consumer Price Index-Elderly” formula to help seniors who spend a greater portion of their income on health care and other necessities. The current COLA formula may measure inflation for younger workers, but does not reflect the market basket of goods needed by elders. Improved inflation protection will especially help older retirees and widows who are more likely to rely on Social Security benefits as they age.

Social SecurityThe 2100 Act also protects low-income workers by establishing a new minimum benefit set at 25 percent above the poverty line, and tied to wage levels, to ensure that the minimum benefit does not fall behind over time. No one will work all their life and face poverty in retirement under this minimum benefit plan.

The 2100 Act will also cut taxes for beneficiaries. Nearly 12 million Social Security recipients would get a tax cut. Under current law, Social Security benefits are taxed if a person’s non-Social Security income exceeds $25,000 for an individual or $32,000 for couples. The 2100 Actraises the income threshold to $50,000 and $100,000 respectively. The legislation also guarantees that any increase in benefits from the bill will not result in a reduction in SSI benefits or loss of eligibility for people on Medicaid.

Finally, the 2100 Actrequires millionaires to pay the same Social Security payroll tax rate as everyone else. Today, payroll taxes are not collected on wages over $132,900. Rep. Larson’s bill would apply the payroll tax to wages above $400,000 — which would affect only the top 0.4 percent of wage earners. Only the very wealthy would be affected by this provision.

An independent analysis of the SS 2100 Act by the Social Security Administration’s Chief Actuary concluded that this new legislation will restore full solvency to Social Security throughout the 75-year projection period.

An independent analysis of the SS 2100 Act by the Social Security Administration’s Chief Actuary concluded that this new legislation will restore full solvency to Social Security throughout the 75-year projection period, and achieve “sustainable solvency” thereafter.

Congress could be poised to pass the most dramatic changes to retirement since 2006 with the 2100 Act. “We’re hoping to have the full floor vote by the time we adjourn for the summer recess, which will allow people to be able to go back to their districts and talk about the Social Security plan,” Larson said.

From there, the issue would hopefully get picked up by the Senate, and then it must go to the White House. “The question remains: will the President engage?” Representative Larson told CNBC. “I believe if he does, there is a clear path forward to the passage of the bill. If he doesn’t, I think this will be a major campaign issue.”

Readers are urged to cut and paste this article and send it, or email it, to your Congressman. To see a list of all the members of the U.S. House, by state and district, with phone numbers and mailing addresses,  go to: https://www.house.gov/representatives

Al Norman worked in the elder home care system in Massachusetts for 38 years. He can be reached at alnormaneldercare@gmail.com

 

 

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