Bill in Congress aims to lift Social Security beneficiaries out of poverty – Community News
Social Security

Bill in Congress aims to lift Social Security beneficiaries out of poverty

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First, it would update the so-called special minimum benefit – a minimum for low earners – to 100% of the current poverty level. This would apply to individuals who have paid Social Security for at least 30 years and claim benefits when they reach full retirement age (usually 66 or 67, depending on when they were born). Benefits would be adjusted to include workers with at least 10 but less than 30 years of employment.

In addition, Moore is calling for childcare credits to be applied to future programs for parents of children under age 6. Those parents would get a credit for every year a child under that age is in the house, for a maximum of five years. That time would count towards the 30 years needed for the special minimum benefit.

The bill also proposes to increase the monthly checks for all beneficiaries by 5% once they are 20 years into retirement. That increase would be phased in from the moment beneficiaries reach age 16.

Student benefits would be extended to children of deceased and disabled workers so that they can continue to raise money until age 26 as long as they attend college or vocational school. Currently, benefits are only paid for those children up to the age of 18.

Moore’s plan also calls for changes to help pay for the expanded benefits.

That includes phasing out the Social Security payroll tax, which currently only applies to wages up to $142,800.

At the same time, the plan also calls for a gradual increase in the rate at which both employers and employees pay taxes to 6.5%, from the current rate of 6.2%, over six years.

“My proposal would help us ensure that Social Security is doing what it is meant to do: protecting all older Americans from spending their retirement years in deep poverty,” Moore said in a statement.

Challenges to Social Security Reform

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Other social security proposals from Democrats have also sought to establish minimum benefits to keep people out of poverty.

That includes five platforms of the Democratic presidential candidates from the most recent election: President Joe Biden, Secretary of Transportation Pete Buttigieg, Senator Amy Klobuchar of Minnesota, Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts.

Those plans were more fully fleshed out than those in the previous presidential election, where Hillary Clinton’s platform was limited to establishing credits for health care providers, said Karen E. Smith, a senior fellow at the Urban Institute, a think tank in Washington, DC.

Rep. John Larson, D-Conn., also introduced a bill to increase benefits.

Notably, those other proposals usually set the minimum benefit at 125% of the federal poverty level, rather than 100%.

However you choose to redistribute benefits, you can eradicate poverty and still future cohorts have higher benefits than current beneficiaries.

Karen E. Smith

senior fellow at the Municipal Institute

One problem with the proposals is how well they actually address poverty, Smith said. For example, only new beneficiaries can access the higher minimum benefits. At the same time, if a 20-year increase is introduced, it could be biased against higher income earners because they tend to live longer, she said.

While those plans bring greater benefits to some beneficiaries, they also aim to address the program’s solvency issues, albeit to varying degrees.

Because Social Security trust funds have about 10 years left — at which point benefits will be reduced — “they have to deal with it,” Smith said of Washington’s leaders.

“It’s really a debate in Congress that we need to have that hasn’t happened yet,” Smith said.

Meanwhile, steps can be taken to eradicate poverty at relatively low cost.

“No matter how you want to redistribute the benefits, you can eradicate poverty and yet future cohorts will have higher benefits than current beneficiaries,” Smith said.

Admittedly, passing Social Security legislation in the near future may be out of reach.

But another change — the reform of supplemental security income benefits — could now be more easily passed by Congress and would inevitably help the poor targeted by these benefits, Smith said.

In 2021, the maximum monthly SSI benefit is $794 per person, or $1,191 per married couple with both individuals eligible for the program.

One Senate bill calls for those monthly benefits to be increased to 100% of the federal poverty level, which would result in a 31% increase in income.

“Increasing the SSI benefits really helps poor people,” Smith said. “That would be a big improvement.”

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