PUBLISHED THU, NOV 12 202012:56
PM ESTUPDATED THU, NOV 12 20201:52 PM EST
KEY POINTS
·
President-elect Joe Biden’s campaign plans for Social Security
include expanded benefits and more payroll taxes that fund the program for high
earners.
·
The platform comes at a time when Social Security faces
questions as to how restore its solvency amid a national pandemic and provide
targeted benefit increases for those who need them.
·
Here are the changes that lawmakers could consider as the new
administration takes office.
President-elect Joe Biden ran on a platform that
included proposals to shore up Social Security benefits while extending the
program’s solvency.
How his administration and the next Congress
take shape will help determine just how many of those changes he may be able to
put through.
To experts and advocates for the program, the
timing could not be more crucial.
“We’re long overdue for this conversation, and
it’s causing great uncertainty for people who are either on the program now or
going to be on the program soon,” said Shai Akabas, director of economic policy
at the Bipartisan Policy Center.
“That’s not how we should be running one of the
most important safety net programs in the country,” he said.
For Biden, now comes the hard part of pushing
for bipartisan reform.
Big
reform efforts
The Covid-19 pandemic is not helping Social
Security’s trust funds, which were already hurting before the recession.
Having fewer workers in the economy contributing
the payroll taxes that fund the system has helped to further deplete the
reserves.
The Social Security Administration projected in
April its funds could be depleted in 2035, at which point only 79% of benefits
would be payable. Those estimates did not take the coronavirus pandemic into
account.
Recent estimates from
the Bipartisan Policy Center indicate that, in a worst-case scenario, the
disability fund could run out as soon as 2023 or 2024. The old age fund that
pays retirement benefits could be depleted anywhere from six to eight years
after that, Akabas said.
Such developments would force the question as to
how Congress wants to address the issue, he said.
With each
passing year, it’s becoming harder and harder to maintain the core
self-financing structure of the program.
Shai
Akabas DIRECTOR OF
ECONOMIC POLICY AT THE BIPARTISAN POLICY CENTER
Washington lawmakers have already started to put
forward proposals.
Biden’s Social Security platform includes
key benefit increases. Eligible workers would get a guaranteed minimum benefit
equal to at least 125% of the federal poverty level. People who have received
benefits for at least 20 years would get a 5% bump. Widows and
widowers could receive about 20% more per month.
Biden also proposes changing the measurement for
annual cost-of-living increases to the Consumer Price Index for the Elderly, or
CPI-E, which could more closely track the expenses retirees face.
To pay for the changes and extend the program’s
solvency, Biden would apply Social Security payroll taxes to those making
$400,000 and up. In 2020, only wages up to $137,700 are subject to
those levies.
Other Democrats have proposals that similarly
expand benefits and raise taxes without implementing cuts.
In the House of Representatives, Rep. John
Larson, D-Conn., has a bill called the Social Security 2100 Act, which has 208
co-sponsors.
On the Senate side, a bill called the Social Security Expansion Act was
co-led by Vice president-elect Sen. Kamala Harris, D-Calif.
“There’s a fair amount of unanimity within the
party,” said Nancy Altman, president of Social Security Works, a group that
advocates for the expansion of benefits.
“The arguments are kind of on the margin about
how much to expand and what’s the best way to fund the program … although even
there there’s a lot of overlap,” she said.
Sen. Mitt Romney, R-Utah, said in recent
interviews that he sees an opening for Congress to address Social Security and
other safety net spending.
Notably, the Republican senator has proposed a
bill called the TRUST Act to form bipartisan committees
that could come up with solutions to fast track changes to fix the funds for
Social Security, Medicare and the nation’s highways.
Social Security advocates fear that approach
would lead to benefit cuts.
Akabas said a broader discussion needs to
happen, regardless of the format.
“With each passing year, it’s becoming harder
and harder to maintain the core self-financing structure of the program,”
Akabas said.
Smaller
fixes
Some politicians have advocated for more
targeted changes to be included with upcoming legislation.
Biden’s coronavirus stimulus plans call
for increasing Social Security checks by $200 per month during the pandemic, an
idea that has also been proposed by other politicians.
Two House Democrats have separately proposed
putting an emergency cost-of-living adjustment in
place, which would bring next year’s benefit increase up to 3% from 1.3%.
Others are hoping lawmakers address an
unintended consequence of the Covid-19 pandemic that could result in lower
retirement benefit calculations for people who turn 60 this year.
“There’s a chance they could fix that in a
standalone piece of legislation,” Akabas said.
But the stimulus-related benefit increases could
be tougher to pass.
“It’s very difficult to open up the Social
Security Pandora’s box without getting into the broader solvency issues that
the program has,” Akabas said.
Leadership
changes
It remains to be seen whether the presidential
leadership transition will also trigger changes at the top of the Social
Security Administration, which administers benefits.
Social Security Administration Commissioner
Andrew Saul’s six-year term expires in 2025. He was appointed to
the role by President Donald Trump. Saul could decide he wants to resign, or
Biden could ask him to, Altman said. Alternatively, he could finish his term.
There are also other political appointees to the
agency. When Trump took office, he asked those employees to turn in their
resignations. It remains to be seen if Biden will do the same, Altman said.
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