The recovery of the control of the House after years out
of power, and the disgust with the Republicans under Trump, seem to have
invigorated the Democrats and encouraged them to pursue some of their fondest
social goals. At the top of their list
has to be shoring up the healthcare system which Trump has been trying to
weaken over the past two years.
Regenerating a healthier version of Obamacare is a priority, but if
Medicare is ever going to be put on a sound financial basis it must capture
revenue and the associated savings from providing a Medicare-for-all type program. Next on the list is to recognize that the current
Social Security System plus private retirement savings is just not cutting it
when it comes to providing financial security in retirement. As private retirement pensions disappear, and
reliance on personnel savings plans has been demonstrated to be inadequate, some
sort of enhanced federal system is required.
The Democrats seem to be taking a baby step in that direction with what
is being called the Social Security 2100 Act.
The purpose of this legislation is both to upgrade the coverage
of the current Social Security system and to place it on a sound financial
footing. Young people today should no
longer have to listen to the lies coming from the right claiming that Social
Security will not be there for them when they come to retirement age. Robert Pear produced an article for the New York Times, Democrats Push Plan to Increase Social Security Benefits and Solvency, that describes the
legislation. The Democrats have actually
come up with a bold plan that dismisses the notion that benefits must be decreased
to save money and replaces that with an expansion of benefits paid for with a
modest increase in taxes for all wage earners, and a significant increase for
those with wage incomes over $400,000 per year.
“The bill would provide an
across-the-board benefit increase equivalent to about 2 percent of the average
Social Security benefit. It would raise the annual cost-of-living adjustment to
reflect the fact that older Americans tend to use more of some services like
health care. And it would increase the minimum benefit to ensure that workers
with many years of low earnings do not retire into poverty.”
Those with the lowest pre-retirement earnings, who depend
the most on Social Security for their retirement income, receive the biggest
benefit gains. A provision would raise
the income level above which Social Security benefits are taxable providing tax
relief to lower income retirees. All
earners and employers will experience a gradually increasing payroll tax. The most significant feature is imposing
payroll taxes on those earning $400,000 or more annually. They would face the tax on earnings up to a
current value of $132,900, then no payroll tax until reaching the $400,000
number at which point one-half the payroll tax, currently valued at 6.2% but increasing
to 7.4% in 2043, would be applied. Employers
would also pay that amount. This is a
significant tax on the wealthy, but rather than a straight income tax, the
wealthy would regain much of their contributions in retirement income just like
everyone else.
“’Our bill, supported by more than 200 members
of the House, would enhance and expand the nation’s most successful insurance
program, which touches the lives of every American,’ said Representative John
B. Larson, Democrat of Connecticut and the principal author of the legislation.”
“Mr. Larson, the chairman of the
Ways and Means Subcommittee on Social Security, said he would hold hearings and
forums around the country on the legislation.”
Action, as proposed in this bill, is clearly needed.
“Nonpartisan actuaries at the
Social Security Administration say that the program will soon be spending more
than it takes in and that the trust funds for retirement and disability
benefits will be depleted by 2034 if Congress makes no changes.”
“By contrast, under Mr. Larson’s
bill, Social Security would be solvent — ‘able to pay all scheduled benefits in
full on a timely basis’ — for 75 years, and after that its financial condition
would be improving, according to projections by Stephen C. Goss, the chief actuary
of Social Security.”
“Of all the money raised by the
bill, about one-fourth would be used to increase benefits, and the rest would
cover projected deficits in the Social Security trust over the next 75 years.”
Of all the possible tax-raising proposals, this one should
be the least noxious to the general public.
With Democrats in the majority in the House, it would stand a good
chance of passing there. With
Republicans in charge of the Senate, its prospect there would be less sanguine,
but if the public gets behind it, opposition could become difficult with
another election in the offing, one where many Republican seats are on the
ballot.
“The Congressional Budget Office
injected a note of fiscal reality into the debates this past week. Assuming no
change in existing law, it estimated that the budget deficit, $779 billion last
year, would exceed $1 trillion every year from 2022 to 2029.”
“It forecast remarkable growth
in federal spending dedicated to people 65 or older. By 2029, it said, such
spending, which includes Social Security, Medicare and Medicaid, will account
for 50 percent of all federal spending aside from interest payments on federal
debt. That represent a substantial increase from 35 percent in 2005 and 40
percent last year.”
Fixing Social Security is only one part of the problem,
the easier part. Still to be done would
be reining in medical expenditures, about one half of which are paid by the
government. The best way to do this is
by incorporating Medicare and Medicaid into a single payer plan that couples their
cost savings with a majority of younger, healthier people who will pay into it
but require less medical care. Medicare-for-all
plans fit that prescription. Let’s start
the conversation on both initiatives and find a way to make them work.
The interested reader might find the following articles
informative:
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