The Social Security Expansion Act
Making the program solvent while improving your benefits
The biggest risk to your Social Security is not pressing for legislation that will overhaul the program. We shouldn’t settle for a bandaid that will leave us, and America, worse off.
The Social Security Expansion Act (S.770 and H.R.1700) is legislation authored by Sen. Bernie Sanders and co-sponsored by ten of his fellow senators. Its identical companion bill in the U.S. House has an additional 37 cosponsors.
Minnesotans Sen. Tina Smith, Rep. Ilhan Omar and Rep. Angie Craig are co-sponsors. Lt Governor Peggy Flanagan, who is seeking the DFL nomination for the U.S. Senate, has indicated that she will become a co-sponsor as well.
Funding your Social Security for another 75+ years
The Social Security trust will be able to pay benefits as long as people keep working and contributing payroll taxes. However, its current surplus will run out in 2032 which would likely result in a 24 percent decrease in those benefits. That means a typical couple, after the surplus runs dry, would face an $18,400 benefit cut.
Increasing the revenue for the Trust Fund
A National Academy of Social Insurance (NASI) survey found that 85% of Americans are in favor of paying more taxes to keep Social Security from cutting benefits. It also found that Americans are on the same page about Social Security, regardless of their generation, income level, education level or even political leanings.
Eliminating the cap on W2 income
W2 income subject to the Social Security portion of payroll taxes is currently capped at $184,500. The cap is adjusted each year adjusted to inflation.
Scrap the cap” is a slogan that means to get rid of the cap so all W2 income would be subject to the Social Security tax.
The Expansion Act aims to gradually remove the cap. Initially, it will begin to collect Social Security tax on W2 earnings exceeding $250,000. Over time, the difference between the existing cap and $250,000 annually will be narrowed, and then disappear, as the cap is raised.
Taxing non-W2 income
Very wealthy individuals frequently avoid the Social Security tax by earning their income through methods that are not documented on a W2.
For instance, Elon Musk is the richest man in the world with a net worth of more than $400 Billion. He famously receives a salary of $1 a year. He recently had a $1 Trillion contract approved by Tesla. He and the other ultra wealthy do not currently contribute to Social Security.
The Expansion Act will seek to assess Social Security taxes on investment and business income exceeding a quarter million dollars. This ensures that everyone contributes fairly to Social Security. No income will ever be taxed twice.
According to Sanders, more than 91 percent of American households will not see any increase in taxes under the provisions of the Expansion Act.
The Social Security Expansion Act improves your benefits
Fixing the COLA formula
Social Security benefits have lost 20 percent of their buying power since 2010. That’s due in large part to Cost of Living Adjustment (COLA) being tied to the Consumer Price Index (CPI). Many feel that this index does not realistically reflect senior spending.
Future increases would be tied to the Consumer Price Index for the Elderly (CPI-E), which better represents the items that make up the items that drive senior spending, such as medical care and housing.
The Expansion Act proposes raising benefits for everyone by $200 each month, which would recover roughly half of the 20 percent purchasing power that has already been diminished.
Bringing back survivors’ educational benefits
The Expansion Act will reinstate educational benefits for student survivors up to the age of 22. Student survivors began receiving benefits under Social Security in 1965, thanks to Congress. This allowed unmarried children of deceased, disabled, or retired parents to receive payments until they turned age 22, provided they were enrolled in full-time postsecondary education.
In 1981 the age was lowered to age 19 and only applied to high school students. It was during the Reagan years that Social Security benefits started being taxed.
A final word about legislation
Proposed legislation rarely emerges from the legislative process unscathed, as negotiations and compromises are necessary to secure the votes required for their approval.
The Social Security Expansion Act represents a bold initiative that acknowledges the vital role Social Security plays in American society. It is imperative that we protect it and that our leaders prioritize this issue.
Ensure that your Senate and Congressional candidates are in favor of this act. The clock is ticking, and it must be included in the discussions for this year’s elections.
