Social Security is finally in the spotlight.
Bernie Sanders, an Independent Senator from Vermont who was a presidential candidate in the 2016 campaign, reintroduced legislation on Wednesday that would extend and expand Social Security by raising the cap on taxes. Alongside Sanders were Democratic senators Cory Booker, Kirsten Gillibrand and Kamala Harris, all of whom announced they were running for president in 2020, as well as Oregon’s Democratic Sen. Jeff Merkley and Rep. Peter DeFazio.
The payroll tax cap is currently set at $132,900, which means earners are only taxed up to that amount. In other words, someone who earns $132,900 contributes the same amount to Social Security as a billionaire. Under Sanders’s proposal, the payroll tax also would be subject to any income over $250,000. The payroll tax would remain the same, at 12.4% (6.2% for employees and 6.2% for employers).
A separate tax would also be placed on individuals with investment income of more than $200,000 and couples earning more than $250,000 in investment income.
“We take Social Security for granted because it has been around for so many years,” he told MarketWatch. “But it is literally life or death for millions of people.”
The health of Social Security is a crucial issue for older Americans, especially considering so many of them rely on the program to fund the decades they spend in retirement. Almost nine out of 10 individuals 65 and older receive Social Security benefits, according to the Social Security Administration. More than a fifth of married couples, and 44% of unmarried people, rely on the funds for 90% or more of their income. The average Social Security benefit check is roughly $1,400 a month.
Earlier this month, John Larson, a Democratic Representative from Connecticut, sponsored the re-introduction of the Social Security 2100 Act, legislation that would also extend and expand the program by raising the income rate for benefits and use a consumer-price index specifically for the elderly, which accounts for health care spending in the household (Social Security currently uses CPI-W, which is adjusted for workers). Larson’s bill also increases the cap, to those who earn more than $400,000.
Many Americans, especially younger adults, wonder about the future of Social Security, and how likely it is they’ll see any benefits. The program is expected to become insolvent by 2034, but benefits would only be reduced if that were to happen — not disappear entirely. Social Security Administration officials said during a pensions event in December that Congress has never let it get to that point, and it likely won’t in 2034.
See: What you probably don’t know about Social Security
Sen. Sanders spoke with MarketWatch about Social Security, and his proposal:
MarketWatch: What do you envision as the future of Social Security?
Bernie Sanders: For many years now, we have had Republicans, led by former Speaker Paul Ryan and currently Mitch McConnell, and a lot of the media saying “look we are an aging population, we can’t afford to maintain Social Security, we are in one way or another going to have to cut it back” — maybe by changing CPI, maybe by raising the retirement age, maybe cutting back on benefits, whatever it may be. I think there has been a lot of misinformation about the status of Social Security, its financial condition and how we go forward into the future.
I look at this issue for a start by saying, does Social Security have a financial problem now? And the answer is it does. Right now, despite the fact there is $2.8 trillion in the trust fund — a lot of money — the fact is that trust fund will be depleted in 15 years. But having said that, that does not mean as people make it out to mean that there is no money to pay out Social Security benefits. Social Security would still be able to pay out 79% of the benefit owed to eligible Americans because of the revenue coming in every day. So we have a gap that we have to fill. That is number one, and that is absolutely doable.
Number two, as I look out into the world I see a lot of elderly people who are struggling economically. About 20% of seniors are trying to get by on less than $13,500 a year, which to me is impossible to even comprehend how anybody can do that. You have a lot of other seniors who are cutting their prescription drugs, pills, they’re unable to feed themselves properly. You go around the country and you find that the Meals on Wheels program has long waiting lists because people need at least one decent nutritious meal a day. So you have a lot of need out there and in my view Social Security benefits are too low, much too low. My Republican friends want to cut Social Security. I want to do two things: I want to expand Social Security benefits, make them stronger, provide more money for our seniors, especially the lower-income seniors, and I want to make sure that Social Security trust fund is solvent well beyond the next 15 years. Our legislation makes it solvent for the next 52 years.
We do that by lifting the cap. Right now, if you are a billionaire you pay exactly the same amount of Social Security taxes as somebody who makes $132,900 a year and that is absurd. Trump pays his entire Social Security tax contribution in half of one day and that is totally absurd. So you make the payroll tax more progressive by lifting the cap for people earning $250,000 a year, including capital gains, profits and dividends. When you do that you increase benefits, extend the life of Social Security for 52 years. I think that’s what the American people want and what we’re going to fight for.
Don’t miss: You’ll never live to 150 and other things to know about aging in America
MW: You mentioned lifting the cap and payroll taxes, so is it reasonable to also consider possibly lowering taxes for people making significantly less than that? How does it work for lower-income workers?
Sanders: There are a lot of ways you can approach it. Right now the approach we have taken, people are used to paying what they pay now for Social Security. Our proposal impacts the wealthiest 1.8% of income workers. So 98.2% of American people don’t pay a nickel more in taxes.
MW: And if nothing were to happen with Social Security, no legislation or anything like that, what do you think the trajectory would be for the program?
Sanders: I think something is going to happen, unless I am very mistaken. There is going to be legislation coming out of the Democratic House to expand Social Security benefits and extend the life of Social Security. It may be a little different than my approach, but I do believe something will come out. It will be widely supported by the Democratic caucus and I think you’re going to have some Republicans who are very nervous about voting against the expansion and extension of Social Security.
MW: Congressman Larson and others have recently introduced their bill also.
Sanders: Their bill is a different approach than mine but what they want to accomplish is similar.
MW: The past few years, or decade even, there hasn’t been too much talk about Social Security in Congress and it seems now there’s more attention being brought to the program. Do you think there’s a reason for that?
Sanders: You’re seeing that not just in Social Security but you’re seeing it in health care, a significant movement for Medicare for All, in terms of minimum wage, you’re seeing a significant movement to raise the minimum wage to $15 an hour. You’re seeing criminal justice, immigration — you’re seeing a growing progressive movement in this country, which is making demands on Congress to start protecting the working families, not just wealthy campaign contributors. For a number of years you had the ideology coming from right-wing Republicans, and some Democrats, that says okay, we are going to have to cut benefits. I suspect a few Republicans still believe that but between you and me, I don’t think they’ll be all that loud and all that strong about trying to cut Social Security benefits when we see such movement now to increasing benefits. I think they’ll see themselves on the wrong side of history.
Also see: Forget the Social Security increase, this is why seniors are in trouble
MW: What is the argument for being against expanding or extending Social Security?
Sanders: Needless to say, I don’t think there is a rational or strong argument. I think the arguments you hear and I hear: we have an aging population, there are fewer workers, our debt is growing and we cannot continue to spend this kind of money on programs like Social Security. The same arguments are being made for Medicare and Medicaid. And the counterargument to that is during a massive time of income and wealth inequality, when you have so many seniors who are hurting, so many working people who are hurting, that now is the time to demand that the wealthy start paying their fair share of taxes so that in this instance we can extend and expand Social Security and in other instances we can make public colleges and universities tuition-free and in other instances we can rebuild our crumbling infrastructure and provide health care to all.
All of these are wrapped up in the understanding that while people on top are doing phenomenally well and we have more income and wealth inequality than at any time since the 1920s, many of our people — the elderly, the children, the workers — are hurting.
MW: As far as upping the taxes for the wealthy, would they see any more of a benefit? What is the argument for them?
Sanders: The argument for them is to do the morally right thing, to understand that while their incomes are soaring, while their wealth is soaring, people in their communities cannot afford to purchase the prescription drugs they need or to keep their homes. The top 1% of the billionaire class has got to understand that they are part of America and they’ve got to help our country create an economy that works for all and benefits that protect the most vulnerable people in this country, including the elderly, including our veterans and including the children. That is the argument for them.
That if they simply want to be selfish and greedy, well I’m sorry, those days are over.
