- California lawmakers recently approved a joint resolution asking Congress to pass a Social Security expansion proposal.
- The bill, called Social Security 2100: A Sacred Trust, would require those with incomes of more than $400,000 to pay more taxes toward the program.
- Such a change may help prevent a funding shortfall that would reduce benefits, California state Sen. Nancy Skinner told CNBC.com.
As talk of Social Security reform heats up heading into the November election, one congressional proposal to expand the federal program has received a new endorsement from California lawmakers.
In August, a joint resolution passed both the state’s senate and its assembly.
Now, it goes to Capitol Hill with a specific purpose: to request California representatives in Congress support expanding Social Security by voting in favor of the bill, formally known as Social Security 2100: A Sacred Trust.
“It’s the state of California telling Congress we want you to pass HR 5723,” said California state Sen. Nancy Skinner, the lead author of the bill.
The latest version of Social Security 2100 was introduced by Rep. John Larson, D-Conn., in October. The event included attendance of high-profile Democrats, including House Ways and Means Committee Chairman Richard Neal, D-Mass., and Rep. Alexandria Ocasio-Cortez, D-N.Y.
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The bill has attracted broad support among Democratic House lawmakers, with 202 co-sponsors. Democrats currently have a House majority, with 221 members.
Most California House Democrats have signed on as co-sponsors, with two exceptions: House Speaker Nancy Pelosi and Rep. Scott Peters. Neither of their offices responded to requests for comment.
Social Security has an estimated 13-year time frame when it can continue to pay full benefits. After that, in 2035, just 80% of benefits will be payable, according to a report from the program’s trustees released in June.
“Social Security is a lifeline for so many people, many more people than the public often realizes,” Skinner said.
Bill would apply payroll taxes to higher incomes
Social Security 2100 offers one key change, according to Skinner, aimed at resolving those funding woes: applying Social Security payroll taxes to those with higher incomes.
Currently, only wages up to $147,000 are subject to those taxes, with employees and employers each paying a rate of 6.2%, for a total of 13.4%.
The cap — often called the taxable maximum — is adjusted each year.
The Social Security 2100 proposal calls for reapplying those payroll taxes for wages of more than $400,000, a change Skinner calls “one of the most important features” of the bill.
“Multimillionaires and even billionaires are paying the same amount into the Social Security system as someone who makes $150,000,” Skinner said.
In California specifically, there is a small percentage of very high-income people who can afford to contribute more to Social Security, she said.
“The fact that we have not adjusted it is partly why we are going to face a shortfall,” Skinner said.
Social Security 2100 proposes a host of other changes to make benefits more generous. That includes a broad increase of about 2% of the average benefit for both new and existing beneficiaries.
It would also raise the minimum benefit to 25% above the federal poverty line. It also seeks to change the way annual cost-of-living adjustments are measured; improve benefits for widows and widowers; increase benefit access for some students and children; repeal rules that result in reduced benefits for public workers; eliminate the five-month waiting period for disability benefits; and create caregiver credits.
How the proposals affect Social Security solvency
The latest proposal would move the depletion date for Social Security’s funds to 2038, based on an analysis of the bill done last year by the Social Security Office of the Chief Actuary.
Most of the provisions to increase Social Security benefits would last for only five years. Consequently, groups such as the Center on Budget and Policy Priorities and the Committee for a Responsible Federal Budget favor previous versions of the bill, which had less generous benefit increases but aim to extend the program’s solvency into the next century.
A separate bill proposed by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., introduced this year would push out the program’s solvency for 75 years while adding $2,400 per year to benefits. That proposal calls for reapplying the payroll tax at incomes of $250,000 rather than $400,000.
Social Security and the midterm elections
As the November election approaches, President Joe Biden has ramped up social media attacks on Republicans for their plans for Social Security.
This week, that included a tweet accusing Sen. Rick Scott of planning to “put Social Security and Medicare on the chopping block.” Scott has denied those claims.
But fears for the program’s future have led Democrats to ramp up their campaigns on behalf of the program ahead of the November election.
Michigan Democratic House lawmakers recently held a delegation to call on the House to pass Social Security 2100.
Jon Bauman, president of Social Security Works Political Action Committee, expects to appear at more than 40 events across the country this election cycle.
“I am extremely worried about candidates supporting ending the program, privatizing the program, cutting the program in any way in November,” Bauman said.
“I don’t think that’s going to happen, because the program is so popular,” he said. “But is it scary? Yes.”