Representative John Larson of Connecticut, a Democrat, has reintroduced a revised version of the Social Security 2100 Act, formerly known as “A Sacred Trust,” with a modification aimed at providing a more substantial safeguard against inflation through the cost-of-living adjustment (COLA) mechanism. The bill, presented again on July 12, entails extending the payroll tax to cover annual wages exceeding $400,000 and broadening the net investment income tax scope.
This year’s iteration of the H.R. 4853 bill, titled the Social Security 2100 Act, introduces a novel approach to calculating COLAs for Social Security benefits. According to Mary Johnson, a policy analyst specializing in Social Security and Medicare for The Senior Citizens League, previous versions of Larson’s bill connected the yearly COLA to the Consumer Price Index for the Elderly (CPI-E). However, concerns arose in 2021 and 2022 when the prices of oil-based products surged to unprecedented levels, causing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to surpass the CPI-E, consequently resulting in a higher COLA than what the CPI-E would have yielded. The discrepancy led to a reevaluation of the approach.
Johnson stated that the revised Social Security 2100 Act addresses the concern by specifying that the COLA will be calculated using the higher index. The Senior Citizens League firmly supports this legislative amendment, as it aims to enhance Social Security benefits to ensure an adequate income for recipients while extending the program’s solvency by approximately 32 years, according to the Social Security Office of the Chief Actuary.
Several other advocacy groups dedicated to Social Security have expressed their approval of the bill’s reintroduction. Nancy Altman, President of Social Security Works, lauded the new version as even more favorable than its predecessor, as it generates more revenue and proposes both general and targeted increases in benefits.
The bill achieves this by introducing a tax on net investment income and wage income. Starting in 2025, Section 203 of the Affordable Care Act creates a new tax of 12.4% on net investment income. This tax goes into the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds and has an unadjusted threshold of $400,000.
Max Richtman, President and CEO of the National Association to Preserve Social Security and Medicare, commended Larson’s bill for its sensible approach to ensuring the program’s trust fund remains solvent for decades while granting seniors much-needed benefit enhancements. The bill incorporates a more accurate COLA calculation formula. It seeks to abolish the unpopular Windfall Elimination Provision and Government Pension Offset, which can decrease benefits for certain public employees not subject to Social Security taxes.
Additionally, Richtman highlighted that the bill calls for a fairer distribution of the financial burden by having wealthier individuals contribute more through payroll taxes. Despite the positive reception, Richtman and Altman acknowledge that the passage of Larson’s bill is not imminent.
The legislation is yet to proceed beyond the House Ways & Means Social Security subcommittee or the full committee.
Furthermore, the limited legislative days in September are expected to be preoccupied with budgetary concerns and avoiding a government shutdown. Richtman noted that House Majority Leader Kevin McCarthy and his Republican colleagues can demonstrate their commitment by bringing the Social Security 2100 Act to a vote alongside the Republican Social Security plan detailed in the Republican Study Committee budget.
In the interim, Richtman assured that advocacy groups would persist in garnering grassroots support for the improvements outlined in Rep. Larson’s bill, and the protection and enhancement of Social Security are likely to remain pivotal topics in the upcoming 2024 campaign.