Options Dwindling For Passing Social Security Fairness Act

Despite bipartisan support, the Social Security Fairness Act remains in limbo due to a lack of consensus on how to fund the expansion of benefits. While some lawmakers propose raising the payroll tax, others oppose any tax increases and advocate for alternative funding mechanisms. As time runs out, the prospects of passing the bill before the end of the current congressional session appear increasingly uncertain.

Key Provisions of the Social Security Fairness Act

The Social Security Fairness Act seeks to address several long-standing inequities in the Social Security system, including:

• Contribution Limit: Raises the cap on income subject to the Social Security payroll tax to ensure higher earners contribute more.
• Early Retirement Penalty: Eliminates the reduction in benefits for individuals who claim Social Security before full retirement age.
• Delayed Retirement Credits: Increases the monthly benefit for those who delay claiming Social Security beyond full retirement age.

Options for Funding the Expansion

The primary challenge facing the Social Security Fairness Act is determining how to fund the estimated $2 trillion cost of the expansion. The two main funding options under consideration are:

• Raising the Payroll Tax: This would involve increasing the percentage of income subject to the 6.2% payroll tax, potentially impacting both employers and employees.
• Alternative Funding Mechanisms: Some lawmakers have proposed exploring alternative funding sources, such as a value-added tax (VAT) or dedicating a portion of federal revenue to Social Security.

Perspectives on Funding Options

Lawmakers are divided over which funding option to pursue. Those in favor of raising the payroll tax argue that it is a fair and sustainable way to ensure the long-term solvency of Social Security.

Opponents of a tax increase point to the potential burden it would place on employers and workers. They favor exploring alternative funding mechanisms that do not directly increase the tax burden.

Political Impasse and Impending Deadline

The political impasse over funding has led to an uncertain future for the Social Security Fairness Act. With the current congressional session scheduled to end in December 2022, time is running out for lawmakers to reach a consensus.

If the bill is not passed before the end of the session, it will need to be reintroduced in the next Congress, potentially delaying its implementation for years.

Research and Analysis

According to a recent study by the Congressional Research Service, raising the payroll tax would be the most direct and reliable way to fund the Social Security Fairness Act. However, it also acknowledges the potential economic impact on employers and workers.

An analysis by the Center on Budget and Policy Priorities argues that alternative funding mechanisms, such as a VAT or dedicating a portion of federal revenue, should be considered to avoid increasing the payroll tax burden.

Conclusion

The Social Security Fairness Act faces significant hurdles before it can become law. While there is bipartisan support for addressing inequities in the current system, the lack of consensus on funding has stalled progress.

As time runs out, it remains uncertain whether lawmakers can reach an agreement on how to fund the expansion. The future of the Social Security Fairness Act hangs in the balance, with implications for the long-term stability of the Social Security system and the benefits millions of Americans rely on.

The broader implications of this issue are significant. If the Social Security Fairness Act is not passed, millions of Americans could face lower retirement benefits than they deserve. Additionally, the ongoing political impasse highlights the challenges of addressing long-term challenges facing the Social Security system in a fiscally responsible manner.