As a diminishing pool of workers funds a growing pool of recipients, Social Security has considerable solvency issues. Some have proposed raising the retirement age or cutting benefits in an effort to salvage the program; others suggest cutting the program’s losses by phasing it out altogether for younger generations.
However, most Democratic members of Congress want to increase benefits.
On Tuesday, the House Ways and Means Social Security Subcommittee held a hearing to discuss “Social Security 2100: A Sacred Trust” — meant as an updated version of the Social Security 2100 Act, which was proposed during previous sessions of Congress.
Rep. John Larson (D-CT) and Sen. Richard Blumenthal (D-CT) are spearheading the legislation; all 195 co-sponsors are Democrats.
Notably, the bill would not include ideas like raising the retirement age, which Larson and other advocates oppose.
It would provide a benefit increase for new and current beneficiaries amounting to about 2% of the average benefit.
The bill would set the minimum benefit at 125% above the poverty line. It would also repeal certain rules that make it so public workers and their families with pension income wouldn’t receive reduced benefits, which is now the case.
The proposal would also boost benefits for certain widows and widowers and provide credits to caregivers who take time out of the workforce. It would also raise the benefit age for students up through age 25 and end the five-month waiting period for disability benefits. Additionally, it would change the way cost-of-living adjustments for beneficiaries are calculated each year.
How would the barely-afloat Social Security pay for the new payouts? You guessed it — more taxes on the wealthy:
To pay for those changes, the legislation calls for increasing Social Security taxes paid by higher-wage earners. In 2021, those taxes are capped at $142,800 in wages, and in 2022 that will rise to $147,000. This proposal reapplies taxes on wages at $400,000 and up.
In 1935, President Franklin D. Roosevelt approved the Social Security Act as one of many New Deal social welfare measures. The law created benefits for the elderly and other vulnerable citizens — wresting away caretaking responsibilities from states, localities, and families.
Social Security’s reserves are financed by mandatory “contributions.” The program started with a combined 2% tax on workers’ incomes, split evenly by employees and their employers. The rate gradually rose over the subsequent decades; today, it is 15.3%.
According to a previous analysis from The Daily Wire, Social Security could be seen as the world’s largest Ponzi scheme — because participants in the upper tranches of the benefits pyramid are compensated by new contributors.
“As with Ponzi’s scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits,” wrote Cato Institute senior fellow Michael Tanner. “Those early windfall returns are long gone. When today’s young workers retire, they will receive returns far below what private investments could provide. Many will be lucky to break even.”
“Eventually the pyramid crumbles.”