Texas Congressman Sam Johnson, chairman of the Social Security subcommittee, is proposing several significant reforms designed to bring the retirement system back to fiscal health and boost benefits for the poorest recipients.
The bill put forward by Texas’ Sam Johnson, the chairman of the subcommittee on Social Security, would reduce costs by changing the benefits formula to reduce payments progressively for high earners. It would also gradually raise the full retirement age from 67 to 69 for people who are today 49 or younger. Lastly, it would change the inflation metric used to calculate benefits to one that shows lower inflation, essentially slowing the growth in benefits, and eliminate cost of living adjustments for high earners.
On the flipside, it would increase benefits for lower-income workers, and raise the minimum benefit for low-earners who worked full careers.
Johnson called the plan the “start of a fact-based conversation” on how to fix Social Security’s finances.
Social Security’s trust funds for retirement and disability payments are projected to run out by 2034 if Congress doesn’t take action. At that point, beneficiaries would see an immediate cut in benefits of about a fifth.
Johnson’s is one version of reform to stave off that possibility. This summer, a bipartisan group of lawmakers also put forward legislation that would improve Social Security’s finances in part by raising payroll taxes.
President-elect Trump has suggested that he wants to crack down on waste and fraud in Social Security, but isn’t interested in a broad overhaul of the retirement program.
Congressional Democrats, meanwhile, have moved to the left on Social Security, with key lawmakers favoring an increase in benefits for some groups, rather than any reductions.
Congress hasn’t even tried to deal with the fiscal cliff Social Security finds itself on, preferring to let the problem fester. No politician really wants to deal with the issue unless he absolutely has to and then it becomes a game of blaming one side or the other for trying to destroy the program.
Unfortunately, with Trump showing little interest in serious reform, these proposals aren’t going anywhere. Besides, the new president’s plate is going to be plenty full enough and an epic fight over Social Security would take up time and energy better spent on taxes, immigration, and health insurance reform.
It may seem that 2034 is a long way away, but the problem is, the closer we get to that date the harder it will be to save Social Security. The time to address its problems is now when relatively painless proposals can work to push back the date of collapse while fixing nagging problems that have made the program untenable in the past.