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Congressional leaders can agree on one thing — Social Security needs to be fixed before the program’s funds are unable to pay full benefits in 2035.
But that is where the consensus ends.
Leaders from both the Republican and Democratic parties have each recently discussed the issue on Capitol Hill.
That was prompted in part by the release of the annual Social Security trustees report, which included the new projected 2035 date for when the program’s combined funds will become depleted. At that point, 80% of benefits will be payable.
The new date is one year later than projected last year. Yet the program still has a 75-year deficit.
House Republicans held a meeting last week to discuss their contention that “Democrats’ harmful proposal fails to put Social Security programs on a sustainable footing.”
“Republicans want to protect Social Security for current beneficiaries and future generations — and if possible save Social Security once and for all,” said Rep. Kevin Brady, R-Texas, Republican leader of the House Ways and Means Committee.
That followed a June Senate hearing that coincided with the proposal of a new bill to reform the program put forward by Sens. Bernie Sanders, I-Vt.; Elizabeth Warren, D-Mass., and others.
“Our job, in my view, is not to cut Social Security, is not to raise the retirement age, as many of my Republican colleagues would have us do,” Sanders said at the hearing.
“Our job is to expand Social Security so that everyone in America can retire with the dignity that he or she deserves and that every person in this country with a disability can retire with the security they need,” he said.
The latest Social Security trustees report may underestimate the precariousness of Social Security’s financial outlook. Because the report was based on data through February, it does not account for high inflation in the months since.
To fix the program, lawmakers generally have a choice of raising taxes, cutting benefits or a combination of both.
Democrats’ proposals firmly advocate for tax increases, while significantly increasing benefits. The plans call for raising payroll taxes, which are used to fund Social Security, in order to make benefits more generous. Currently, workers and employers each pay 6.2% on wages up to $147,000 in 2022.
One Democratic plan proposed by Rep. John Larson of Connecticut, the Social Security 2100 Act: A Sacred Trust, would reapply payroll taxes starting at $400,000 and up.
The plan put forward by Sanders and Warren would reapply those taxes at wages over $250,000, among other tax increases.
But Republicans at both hearings indicated those tax proposals were nonstarters. In their meeting last week, Republican House leaders emphasized the negative effects higher payroll taxes may have on small businesses.
Rep. John Larson, D-Conn., and other lawmakers discuss the Social Security 2100 Act, which would include increased minimum benefits, on Capitol Hill on Oct. 26, 2021.
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“If you think taxing the wealthy is going to save Social Security, you’re wrong,” Sen. Lindsey Graham, R-S.C., said at the June Senate hearing.
Instead, Graham, who recently received his own first Social Security check, said the wealthier may have to take a “little less” in benefits. In addition, the retirement age will likely need to be raised for younger people who are living longer, he said.
“If you asked me to take a little less to save Social Security for people who need it more than I do, count me in,” Graham said. “It’s going to take that kind of commitment from all of us.”
At the House meeting last week, Rep. Jodey Arrington, R-Texas, asked, “Can we do this as Republicans only through reconciliation or some other mechanism?”
The answer is no. And that also goes for proposals put forward by Democrats.
At the Senate hearing, Republican leaders like Sen. Mitt Romney, R-Utah, emphasized the need for bipartisanship. “If we don’t come up with a bipartisan solution, we will not save it,” Romney said.
Romney has proposed a bipartisan bill called the TRUST Act that would create bipartisan committees to come up with changes to resolve the program’s woes. Advocates for expanding the program complain that could lead to decisions to benefit cuts that happen behind closed doors.
Sen. Rick Scott, R-Florida, has also received pushback on his proposal that would sunset the program every five years.
“I’ve proposed that Congress rightly review these programs,” Scott said at the Senate hearing.
“I’m never going to support cuts to Social Security, Medicare or Medicaid,” he said.
Still, the biggest challenge will be getting both sides of the aisle to agree on reforms.
In a statement after last week’s House hearing, Larson invited Republicans to join in supporting his proposal aimed at protecting benefits and improving the program. “I encourage my Republican colleagues to join us in our efforts to help America’s seniors, children and people with disabilities,” Larson said.
Serious discussions between the parties — rather than battling proposals — will be necessary to get something done, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.
“To get real progress, it’s going to require people sitting down across the table from each other and talking through what these issues look like and what potential bipartisan solutions are,” he said.
Source : CNBC