Democratic Sens. Patty Murray (WA) and Mark Begich (AK) have introduced the “Retirement and Income Security Enhancements Act,” the acronym for which comes out to – you guessed it – RAISE.
SSA’s Office of the Chief Actuary has posted their analysis of the bill. The following bullet points taken from the OACT memo give the policy highlights:
- Allow divorced individuals to receive benefits based on the former spouse’s earnings after 5 years of marriage (at a reduced rate), rather than 10 years under current law.
- Make survivors’ benefits equal 75 percent of the former couple’s total benefit, rather than 50-66 percent as under current law.
- Allow children of deceased or disabled worker to collect benefits through age 23, rather the current age of 18.
- Apply a 4-percent surtax on earnings above $400,000, coupled with a nominal benefit increase in exchange for these higher taxes.
My thoughts: The first two provision are pretty decent, targeted ways to increase benefits. I’ve experimented with lowering the marriage threshold for receiving divorced spouse benefits and it hits low earners pretty effectively, though the rationale for paying a lifetime of benefits based on a marriage of five years is obviously pretty thin. Increasing spousal benefits also makes sense and is a staple of many reform proposals. I don’t have strong feelings one way or the other about extending child benefits, with the (again fairly obvious) point that, at age 23, you’re not exactly a child anymore.
With regard to the surtaxes on high earners, I would make this (I think) pretty important point: the same tax increase can only pay for one thing. Then-Sen. Barack Obama proposed a similar “donut hole” tax increase back in 2008. I wasn’t a fan, but at least Sen. Obama would have used the proceeds to extend Social Security’s solvency.
Now, in fairly typical manner, that same tax increase has been harnessed to increase benefits rather than fill the $10 financing hole Social Security is looking at. More specifically, the Murray-Begich plan would come close to tapping out high earners for tax increases while reducing Social Security’s long-term financing gap by a whopping 3.6 percent.
Sure, it would help some people but what do Sens. Murray and Begich propose we do to make Social Security solvent for everyone?