House Republicans slam Larson’s plan to reform Social Security
Washington – Rep. John Larson wants to reform Social Security, improving the program’s benefits and solvency, but is facing steep resistance from the GOP.
For years, as a member of the minority party, Larson could not get traction on his ambitious plan. But after Democrats won control of the U.S. House last year, everything changed and Larson expects his Social Security 2100 Act to pass the chamber after Congress returns from its summer break in September.
But like many things in Washington, D.C., Larson’s signature bill has fallen prey to the deep partisanship that has plunged much of the U.S. government into gridlock.
More than 210 House Democrats have co-sponsored Larson’s bill, but not a single Republican.
GOP lawmakers say Larson’s plan will impose new, hurtful taxes on millennials and the nation’s small businesses, especially self-employed people like farmers and day-care providers who don’t split their Social Security tax liability with an employer.
“Regrettably, this is not a Social Security reform bill, it’s just Washington pinching more of your paycheck, seizing more of what you earn,” said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee.
Brady also called Larson’s bill “a secret $19 trillion tax increase on workers and small businesses.”
Meanwhile, Larson and his Democratic supporters say the legislation is a much needed fix to the Social Security program, which would be forced to begin cutting benefits in 2035 if nothing is done. They also say their proposed increase in the Social Security tax is nominal, especially since it would be paired with an increase in benefits and a new tax break.
“Yes, they will pay more and they will get more for that extra dollar,” Larson said.
He also said the increase in today’s 12.4% Social Security tax would be “the lowest increase in the history of the program.”
Social Security taxes are imposed on a worker’s pay and usually split so that an employee and his employer each pay half the levy.
The original Social Security Act was signed into law by President Franklin D. Roosevelt in 1935, and its payroll tax was initially 2%.
The tax was increased as the eligibility age was lowered to 62, the program was expanded to cover the disabled and others, to provide benefits to spouses and children of retired workers, and to cover cost-of-living increases.
But there hasn’t been an increase in the Social Security tax since 1990. That is posing a problem, especially since about 10,000 baby boomers retire every day.
Actuaries predict the trust fund that holds revenues from Social Security taxes and pays benefits will run dry in 2035. At that point, the program will have to rely only on money coming in, which won’t be enough to fund full benefits. Retirees would receive only 80 percent of their monthly Social Security check and further reductions would come down the road.
However, the program’s actuaries estimate Larson’s bill would extend solvency into the next century.
The Social Security 2100 Act would also change the way cost-of-living adjustments are made. Instead of being tied to the Consumer Price Index, they would be tied to an experimental Consumer Price Index for the Elderly which focuses exclusively on the living expenses of retirees.
Larson’s bill also would give older Americans a break on their taxes by increasing the income threshold above which Social Security benefits are taxed. That threshold would be raised from $25,000 to $50,000 for single filers and from $32,000 to $100,000 for joint filers.
Low-income workers would be guaranteed a Social Security monthly payment at least 25 percent over the federal poverty level.
Less than a latte
The GOP lauds Larson’s attempt to increase the solvency of the program, but has slammed the lawmaker’s plan to pay for all of this.
Under Larson’s bill, the Social Security tax rate would gradually rise by .1% each year from its current 12.4% to 14.8% over the course of 25 years.
And there’s another way Larson would raise money for the Social Security program.
Social Security taxes are not withheld from a person’s wages after that employee reaches a certain amount of earnings — $132,900 this year. Larson would reinstate the Social Security tax on anyone whose earnings rise above $400,000, creating a “doughnut hole” where earnings between $132,900 and $400,000 do not face payroll taxes.
Yet it wasn’t the high earners, but rather low wage earners that Republicans on the Ways and Means Committee focused on in a hearing on Larson’s bill last week.
Brady said millennials would get “ripped off” since they would not get back as much money as they put in over the years.
“To give your grandma a mere $32 more a month in her Social Security, a lower-earning grandchild would pay over $53,000 in higher payroll taxes,” Brady said. “Middle-class young people will pay even more.”
Witnesses at the hearing were also divided as to whether the plan would help or hurt younger workers.
Kelly Brozyna, founder and president of the Colorado Business Development Foundation, said she is concerned about how the bill would impact people like her daughter, Katherine, a recent college graduate who lives in Boston. Her daughter earns about $45,000 per year.
However, Abigail Zapote, executive director of Latinos for a Secure Retirement, said the Social Security 2100 Act will help Latino families and their younger members who are often tasked with caring for older relatives.
“As a millennial, I am willing to pay the additional tax to ensure that my generation and future generations also have the same, or dare I say better, benefits and equity than generations do today,” Zapote said.
Larson said his Republican colleagues exaggerate the impact of his proposed Social Security tax increase, which he has often said would be less than the cost of a Starbucks latte.
“For someone making $50,000 a year, it’s 50 cents a week,” he said.
He was defended by fellow Ways and Means Democrats, like Rep. Mike Thompson, D-Calif., who said Republicans have “faux concern about young workers.”
Thompson also said GOP lawmakers “discount that Larson has a way to pay for his bill” while Republicans “did not have a mechanism for paying their tax cut bill.”
Thompson, Larson and other Democrats also say the GOP hasn’t offered an alternative plan to keep Social Security solvent.
“When it comes down to paying for it, they say ‘Oh your plan is too costly,’ but they have no plan,” Larson said.
To Larson, the GOP would like to see the Social Security program face cuts “because they don’t come up with another plan.”
While a partisan divide yawns over Larson’s bill, the lawmaker said “there’s wide bipartisan support outside Congress,” for his proposal.
And the Democratic lawmaker is also hoping for support from the nation’s top Republican, who resides in the White House.
He told GOP lawmakers at the hearing that President Donald Trump faced down 16 other Republican presidential candidates during a 2016 debate to defend Social Security, vowing “I’m not going to cut it.”
Opposition by House Republicans to the Social Security 2100 Act won’t derail it because there are enough Democrats in that chamber to pass Larson’s legislation.
The trouble will come in the GOP-held Senate. Larson said he has spoken about his bill with some Senate Republicans, including Susan Collins of Maine, “but they have yet to endorse it.”
Correction: Aug. 5, 2019. An earlier version of this story incorrectly described Larson’s plan to increase the Social Security tax rate. His plan calls for an increase of .1 % per year, not .01%.
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