The government has less than ten years to fix Social Security, with no major party commitment, despite millions losing benefits.
(Credit: Britannica)
Social Security under Kamala Harris: The government has less than ten years to fix Social Security. There has been no will from either major party to deal with the problem, even though millions of Americans will lose benefits if they don’t.
People are paying more attention to Vice President Kamala Harris now that she is the front-runner in the 2024 election. Many people are interested in what a Harris president might mean for retirees.
Although Harris and the previous president Donald Trump have pledged to preserve Social Security, they haven’t provided many details about how they would make changes to the program thus far.
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In his capacity as a senator, Harris co-sponsored the Social Security Expansion Act, which modified the methodology used to determine annual cost-of-living adjustments (COLAs) and enhanced payments for certain recipients. Additionally, it would have meant higher system contributions from wealthier Americans.
On Capitol Hill, bipartisan support would be necessary for a significant revamp of Social Security. However, a Harris administration might advocate for the following:
The government of Vice President Joe Biden says that “the highest-income Americans will pay their fair share” to fix the budget problem. If Harris follows a similar path, she will likely push for raising the payroll tax to cover higher wages.
According to News Nation Now, the main way that Social Security gets its money right now is from a payroll tax that is set at $168,600 for 2024. Income above that amount is not taxed.
In his reform package, Biden proposed extending the payroll tax to income over $400,000. Harris co-sponsored a bill in 2019 that would have extended the tax to income over $250,000.
According to a 2022 survey, there is widespread support for abolishing the tax cap, with 79% of Republicans and 88% of Democrats supporting the $400,000 idea.
According to the Peter G. Peterson Foundation, some who oppose the proposal claim that eliminating the taxable maximum could make it less likely that people’s retirement payments will be based on how much they contribute in Social Security taxes. Concerns have also been raised that this modification would skew decisions about labor supply more than the payroll tax does now.
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Not to mention, Biden has not followed through on his pledge to increase taxes on the affluent throughout the 2020 campaign.
Every year, Social Security payments are looked at and changed to account for inflation. A cost-of-living adjustment (COLA) based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is often what comes out of the calculation every year.
Some people say that a different measure would be better for older people, even though the CPI-W shows how average Americans spend their money.
Senate Democrats sponsored a bill earlier this year that would incorporate the Consumer Price Index for Elderly Consumers (CPI-E) into the COLA calculation. The senators claimed that because medical expenditures are given a higher weight than other costs, the CPI-E is a better representation of the true costs faced by older persons.
Although altering the COLA computation won’t address the long-term financial problem, doing so might result in a larger yearly benefit boost because it often increases more quickly than the CPI-W index.
Harris supported the reform, as seen by her 2019 legislation calling for it.
The amount of money received by an individual if they begin receiving retirement benefits at their regular retirement age is known as the main insurance amount (PIA). It is determined by taking an individual’s average monthly earnings and indexing them for inflation. This serves as a kind of career summary.
The 2020 Biden-Harris plan would have increased benefits for elderly recipients if it had been put into effect. According to the Penn Wharton Budget Model, under that approach, the benefit would progressively rise between the ages of 78 and 82, then reach 5% by the age of 82 and beyond.
Because benefits are mostly determined by an employee’s earnings throughout their employment, lower lifetime earnings translate into lesser benefits. A floor known as the “special minimum benefit” is in place for people with incredibly low incomes.
The Biden-Harris 2020 plan proposed raising the special minimum benefit for long-term low-earners with employment histories spanning 10 to 30 years from 5% to 50%. In 2019, Harris co-sponsored a bill that increased the minimum benefit, which would change based on an individual’s length of employment.
Of the 64 million Social Security users in 2019, about 32,000 were eligible for the minimal benefit.
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