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?
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2 comments:
You really need to explain your reasoning here. Why should Social Security subsidize divorce. The contributions have created future revenue steams. It should be treated as an asset, and divided in the divorce settlement - done.
Social Security was created by politicians. Before three years into its inception, Congress made changes to the benefit by paying benefits in 1940 instead of the legislated year of 1941. They then delayed the automatic payroll tax from 2% to 6% by 1950 because they thought it would harm he economy.
Changes made to increase benefits were done in the 50's. Over the decades many changes were made; the 1977 OASI benefit formula was enacted effectively cutting future benefits. Full retirement age from 65 to 67 was passed in 1983, yet would take three decades to begin.
Now we have more politicians wanting to add benefits or increase benefit to a program that clearly is insolvent in terms of "honesty" and is clearly "Immoral" based on enslaving future generations who as yet have not voice.
I think the best thing to do is pass all these nice benefits and see what happens. I have absolutely no faith that one politician understands social security and nearly as much faith that both the SSA and CBO are competent to do perform the analysis.
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