In the House of Representatives, Rep. Gwen Moore (D-WI) has introduced a bill intended to reduce poverty among elderly Americans by expanding Social Security payments. The “Social Security Enhancement and Protection Act,” as the bill is called, contains three main proposals to expand benefits and prevent retired Americans from falling into poverty due to low payments.
First, the bill would update Social Security’s “special minimum benefit,” a basic level that Social Security payments must be at or above for anyone who paid into the program for at least 30 years and has reached “full retirement age,” the age at which a person is eligible to claim their full benefits (usually 66 or 67, depending on one’s birth year). The legislation proposes to ensure that this level of benefits is always at or above the official poverty level in the United States, ensuring that everyone on Social Security remains above the poverty line. It also reduces the time requirement to receive the “special minimum benefit” from 30 years to 10.
Second, the bill would apply credits from childcare towards the eligibility timeline for parents of children under the age of six. This means that, for each year that a young child is in the home (up to five years), a year would be subtracted from the existing 30-year requirement to receive full benefits.
Finally, the bill calls for increasing a person’s Social Security payments by 5 percent after they have been retired for 20 years. The purpose of this caveat is to ensure that the oldest Americans, some of whom have depleted their existing nest eggs, will remain solvent. Instead of increasing the benefits overnight, the proposal would gradually increase payments by one percent per year after 16 years.
To pay for these changes, Moore proposes to eliminate the Social Security payroll tax cap, which specifies that Social Security taxes only need to be paid for up to $142,800 of income. Americans who make more than this amount per year do not owe further Social Security contributions; the bill would remove this caveat, ensuring a larger inflow of payments to the program – and, as a side effect, possibly saving it from its prospective insolvency in the next decade.
The plan also calls for a gradual increase in Social Security taxes for both employers and employees, from 6.2 percent now to 6.5 percent in 2027.
Trevor Filseth is a current and foreign affairs writer for the National Interest.