What is the Social Security Expansion Act?
The Social Security Expansion Act was introduced on June 9 by U.S. Representative Peter DeFazio (D-Ore.) and U.S. Senator Bernie Sanders (I-Vt.) Under the terms of the bill, anyone who currently receives Social Security or will turn 62 in 2023 will be eligible to receive an extra $200 a month in benefits.
The bill would be beneficial for a couple of reasons. First, the Social Security Administration recently announced that Americans will stop receiving their full Social Security benefits in about 13 years if Congress doesn’t act now. This is due to the assumption that Social Security funds will run dry by 2035.
Second, America is facing a period of historically high inflation that has a particularly big impact on people with fixed incomes. Consider that this year’s Cost of Living Adjustment (COLA) of 5.9 percent is based on inflation numbers from 2021. Since then, inflation has gone well over 8 percent, which means that Social Security recipients are actually losing money.
What Does the New Bill Aim to Change?
The purpose of the Social Security Expansion Act is to ease the financial strain on older adults by boosting their monthly check. The average Social Security check is $1,658, which means $200 a month would give a 12 percent increase. This money can then be used to pay for increased fuel, utilities, groceries and more.
But there's more. The Social Security Expansion Act also makes several changes to the program itself. This new bill would:
Extend the solvency of Social Security for 75 years.
Under the bill, the wealthiest American households would have to pay their fair share of taxes. Currently, this is not the case because of the earnings cap on Social Security taxes. As an example, a person who is making $10 million a year pays the same into Social Security as a person making $147,000. The Social Security Expansion Act would lift this cap.
Increase Cost of Living Adjustments (COLAs).
The new bill would more accurately measure the spending patterns for older adults by adopting the Consumer Price Index for the Elderly (CPI-E). Older Americans, for the most part, are not spending their money on TVs and gadgets - they’re spending it on health care and prescription medications.
Improve the Special Minimum Benefit for Social Security recipients.
The Social Security Expansion Act would also help low-income workers stay out of poverty by updating the Special Minimum Benefit. Currently, the number of beneficiaries receiving this special minimum has declined because wage growth typically exceeds price growth.
So what do you think about this new bill? Are you in favor of it or not? Even if the Social Security Expansion Act doesn’t pass Congress, it’s hopeful that some changes will be made to ensure the needs of beneficiaries. Let us know your thoughts!