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April 11, 2019 at 10:00 AM
Both Republicans and Democrats say they want to save Social Security, which is expected to deplete its reserves by 2034, but if Wednesday’s congressional hearing on the topic is any indication, they will have a hard time doing that.
Unlike the bipartisanship displayed in the House Ways and Means Committee’s unanimous passage of the SECURE Act, which makes changes to rules for private retirement plans, Wednesday’s Social Security subcommittee hearing on protecting and improving the program illustrated sharp differences between the two parties on how to accomplish that.
Democrats on the House Subcommittee on Social Security supported revenue increases included in the Social Security 2100 Act, sponsored by the subcommittee chairman, John Larson, D-Conn. It includes a gradual hike in the current payroll tax from 12.4% to 14.8% over the next 24 years and subjects annual income above $400,000 to the tax. This would create a “donut hole” in which income between the payroll tax ceiling — currently $132,900 — and $400,000 would not be subject to the tax.
To follow a conversation on the recent retirement bills, between ThinkAdvisor executive editor Ronald Pechtimaldjian and Washington Bureau Chief Melanie Waddell on Monday, April 29, register here:
The act would also merge the Old-Age and Survivors Trust Fund with the Disability Insurance Trust Fund, raise the minimum benefit to 25% above the poverty line, link cost-of-living adjustments to the Consumer Price Index for the Elderly and eliminate the taxation of Social Security benefits for those with non-Social Security income above $50,000 for singles and $100,000 for couples, up from $25,000 and $32,000 currently.
Republicans on the subcommittee, in contrast, opposed any hike in the payroll tax to fund Social Security and appeared open to program cuts.
“I’m not for raising more taxes on the American people,” said Rep. Jodey Arrington, R-Texas. Then, referring to the SECURE Act, which raises the age for required minimum distributions for IRA and 401(k) plans from 70-1/2 to 72 and passed the House Ways and Means Committee last week, Arrington suggested that Congress consider Social Security fixes that account for retirees living longer.
“We have to act now,” said Rep. Ron Estes, R-Texas, but he opposed any solution that caused “devastating tax increases,” which he said would slow the economy and hurt millennials and small businesses.
Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare and one of several people testifying at the hearing, noted that the payroll tax increase would not occur in one year but gradually over 24.
