Social Security Expansion Act: Warren, Sanders Proposal Would Increase Benefits $2,400 Annually — But Is Unlikely To Pass

Election 2020 Debate, Charleston, USA - 25 Feb 2020
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On June 9, several prominent senators introduced a bill in the House that would expand Social Security benefits by $2,400 a year and fully fund it for the next 75 years past the year 2096, “all without raising taxes by one penny on over 93% of American households.”

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Senators Bernie Sanders (D-VT), Elizabeth Warren (D-MA), Cory Booker (D-NJ), Chris Van Hollen (D-MD), Kirsten Gillibrand (D-NY), Jeff Merkley (D-OR), Alex Padilla (D-CA) and Sheldon Whitehouse (D-RI) introduced the legislation following the recent release of an annual report by the Trustees of the Social Security and Medicare trust funds that showed Social Security currently has a $2.85 trillion surplus and can pay out every benefit owed to every eligible recipient until the year 2034, according to a statement.

“Social Security is an economic lifeline for millions of Americans, but many seniors are struggling with rising costs,” Warren said in the statement. “I’m working with Senator Sanders to expand Social Security and extend its solvency by making the wealthy pay their fair share, so everyone can retire with dignity.”

The new legislation, the Social Security Expansion Act, would raise the earnings caps on Social Security taxes, as earnings are taxed up to $147,000 a year.

“This legislation would lift this cap and subject all income above $250,000 to the Social Security payroll tax,” according to a fact sheet.

Retire Comfortably

“Our job must be to expand Social Security so that every senior citizen in America can retire with the dignity they deserve and every person with a disability can live with the security they need,” Sanders said in the statement. “I am very proud that the Social Security Administration has estimated that our legislation to expand Social Security benefits by $2,400 a year will fully fund Social Security for the next 75 years by applying the payroll tax on all income — including capital gains — above $250,000 a year.”

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In addition, under this bill, Social Security benefits for current and existing recipients would be increased by $200 a month. It would also increase the cost-of-living adjustments (COLA) by measuring the spending patterns for seniors by adopting the Consumer Price Index for the Elderly (CPI-E).

The proposal would also update the Special Minimum Benefit to make it increase and index the benefit level so that it is equal to 125% of the poverty line or about $17,000 for a single worker who had worked their full career. The bill would restore student benefits up to age 22 for children of disabled or deceased workers, if the child is a full-time student in a college or vocational school, as wellt.

Retire Comfortably

According to the fact sheet, one in every seven seniors rely on Social Security for more than 90% of their income, and half of Americans 55 and older have no retirement savings. In addition, the average Social Security benefit is only $1,540 a month. Social Security is not going broke.

“Social Security has a $2.85 trillion surplus in its trust fund and can pay every promised benefit to every eligible American until the year 2035. After that, the Social Security Administration estimates that there will be enough funding available to pay 80% of promised benefits,” the fact sheet stated.

Treasury Secretary Janet Yellen said in a statement on the Social Security report that it “shows an improvement in the financial position of Social Security and Medicare, reflecting the strong economic recovery and growth in the last year. However, in the coming decades it will be vital for Congress to take steps to put Social Security and Medicare on solid financial footing for the long term.”

The proposal has the support of 52 groups, including AFL-CIO, Physicians for a National Health Program — Washington and the American Federation of Teachers.

However, the bill is extremely unlikely to come to fruition due to a lack of bipartisan support, as CNBC reported that some Republican leaders “were quick to take issue with the plan.”

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“This bill has no chance whatsoever of receiving a single Republican vote in either House,” Senator Mitt Romney said. “So it will not be passed.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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