Proposals to expand Social Security got more congressional support this week from Democrats who are apparently nervous about the mid-term 2014 elections, since some prognosticators predict that Republicans are likely to win enough seats to give them a winning majority in the U.S. Senate.
As the saying goes, the best defense is a good offense. So that could explain why Sens. Patty Murray, D-Wash., and Mark Begich, D-Alaska, yesterday announced a Social Security reform measure that expands the program, flying in the face of proposals from Republicans to reform Social Security by shrinking it.
The proposal from Murray and Begich is called the Retirement and Income Security Enhancements Act, or RAISE. Beginning in 2015, the RAISE Act would do four things:
Levy a 2 percent payroll tax rate on earnings over $400,000. The bill would also give these high earners Social Security credits for paying these taxes, which would raise their Social Security payments, although it is unclear by how much. Nancy Altman, co-director of Social Security Works, says, "There has been a principle from the beginning that the more you contribute, the higher your benefit. It sounds like they are keeping that principle."
Improve benefits for divorced people. Currently, a divorced spouse is only entitled to receive benefits under the former spouse's earnings if the couple were married for 10 years. Beginning in 2016, this proposal would phase in eligibility for those married from five to 10 years. For example, those married nine years would get 90 percent of benefits. The same formula would apply to survivors benefits for divorced spouses.
Enhance survivor benefits when both spouses are eligible for workers benefits. This alternative benefit calculation would equal 75 percent of the sum of the survivor's own worker benefit plus the Primary Insurance Amount, or PIA, of the deceased spouse. It would be paid only if it were greater than what the current calculation would pay. This benefit would be available to surviving spouses on the rolls at the beginning of 2016 and those becoming eligible after 2016.
Extend benefits for young adults. Under current law, children of retired, disabled or deceased workers are no longer eligible for benefits after age 18, or 19 if they are still in high school. Beginning in 2016, this provision would extend benefits to full-time students until age 23.
Altman thinks that even though this proposal doesn't resolve Social Security's shortfall -- it only keeps the program solvent through 2034, an extra year -- it could win support across the aisle. "Expanding Social Security is both good policy given the squeeze on middle-class families, and it is also good politics because Tea Party members support Social Security the same way that union members support Social Security. Issues like abortion and gun control polarize the nation, but polls show that 70 or 80 percent of people support Social Security, and it is more important than ever."