Everything You Need to Know about the
Social Security Reform Act

 

Social Security’s Future is in Trouble

With every paycheck, Americans pay taxes on their hard-earned wages with the promise that Social Security will provide benefits in the future.  But this promise is in trouble. 

For years, the Social Security Board of Trustees has said that the program is on an unsustainable path.  This year, the Trustees report warned that workers will face a 21% benefit cut starting in 2034 if Congress doesn’t reform the program. 

 

Why Social Security Doesn’t Work “As Is”

Social Security was established in 1935, but a lot has changed since then.  People are living longer, more women are working, and families are having fewer children.  And the program hasn’t kept pace with changes. 

The number of workers paying Social Security taxes per each retiree receiving benefits has dropped from 16 in 1950 to under three today.   That shrinking ratio puts significant pressure on workers. 

To make matters worse, the tax burden on workers has increased.  When Social Security started, workers and employees each paid 1% on the first $3,000 of earnings.  Today, they each pay 6.2% on the first $118,500 of earnings – and this still is not enough to keep Social Security solvent.  In fact, since 2010 Social Security has paid more in benefits each year than it’s taken in through taxes.

Clearly we cannot tax our way to fixing Social Security.  The problem isn’t revenue.  The problem is that the program has become outdated.  And if no action is taken, Social Security will not be able to pay full benefits starting in 2034. 

 

What We Can Do to Permanently Fix Social Security

As Chairman of the Ways and Means Social Security Subcommittee, I’m fully committed to ensuring that Social Security is there not just for current retirees, but for today’s workers who are paying into Social Security.  My plan will do that by modernizing Social Security, rewarding work, and improving retirement security.  And as a fiscal conservative, I believe it’s important – and possible – to fix Social Security without raising taxes

The Social Security Reform Act accomplishes all of these goals.  What’s more, it actually cuts taxes that seniors pay on their Social Security benefits.

The Social Security Reform Act of 2016 ensures Social Security will be there when Americans need it by:

  • Modernizing how benefits are calculated to increase benefits for lower income workers while slowing the growth of benefits for higher income workers. 

  • Gradually updating the full retirement age at which workers can claim benefits. The new retirement age better reflects Americans’ longer life expectancy while maintaining the age for early retirement.

  • Ensuring benefits keep up with changes in the economy by using a more accurate measure of inflation for the annual Cost-of-Living-Adjustment.

  • Protecting the most vulnerable Americans by increasing benefits for lower-income earners and raising the minimum benefit for those who earned less over the course of long careers.

  • Promoting flexibility and choice for workers by eliminating the Retirement Earnings Test for everyone. This allows workers to receive benefits—without a penalty—while they are working, or fully delay retirement and wait to receive benefits. For those who delay claiming benefits, they can receive increases in a partial lump sum or add it all to their monthly check.

  • Encouraging saving for retirement by phasing out Social Security’s tax on benefits for workers who continue to receive income after they retire or stop working due to a disability.

  • Targeting benefits for those most in need by limiting the size of benefits for spouses and children of high-income earners.

  • Treating all workers fairly when their Social Security benefits are calculated by using the same, proportional formula that looks at all of an individual’s earnings over the course of his or her career.

All of these ideas are commonsense solutions to get this important program back on track.  And we must get it back on track soon.  Americans want, need, and deserve to be able to count on Social Security.  



Bipartisan Ideas Included in My Plan

Below is a list of provisions in my plan, along with highlights from other Members of Congress who have offered ideas in the same spirit:

 My Plan Provision Proposals With Similar Ideas 
   Increasing progressivity of Social Security benefit formula  
Bipartisan Policy Center (2016) 
Congressional Budget Office (2015)
Bipartisan Policy Center (2010)
Bowles-Simpson (2010)
   Annualized formula
Bipartisan Policy Center (2016)
Congressional Budget Office (2015)
   Proportional approach to replacing the
   Windfall Elimination Provision 
 (WEP)

Bipartisan Policy Center (2016) 
   Raise full retirement age
Bipartisan Policy Center (2016)
Congressional Budget Office (2015)
Bowles-Simpson (2010)
Congressional Budget Office (2009)
  More accurate cost-of-living adjustment (COLA)
Bipartisan Policy Center (2016)
Congressional Budget Office (2015)
President Obama’s Budget (FY 2014)
Bipartisan Policy Center (2010)
Bowles-Simpson (2010)
Congressional Budget Office (2009)
   Cap nonworking spouse and child’s benefits 
Bipartisan Policy Center (2016)
Congressional Budget Office (2015)
Congressional Budget Office (2009)
   Minimum benefit 
Rep. Larson, D-CT (
H.R. 1391, 114th)
Rep. Moore, D-WI (H.R. 1756, 114th)
Bipartisan Policy Center (2016)
Congressional Budget Office (2015)
Bipartisan Policy Center (2010)
Bowles-Simpson (2010)
Congressional Budget Office (2009)
   Reducing taxation of Social Security benefits 
Rep. Larson, D-CT (
H.R. 1391, 114th) 
   Benefit bump for long time beneficiaries
Rep. Moore, D-WI (
H.R. 1756, 114th)
Bipartisan Policy Center (2010)
Bowles-Simpson (2010)
   End 7-year limitation for disabled surviving spouses
Rep. Lowey, D-NY (104th-
114th)

   Benefits for disabled surviving spouses
Rep. Moore, D-WI (
H.R. 1756, 114th)
Bipartisan Policy Center (2010)
Bowles-Simpson (2010)
   Waive two-year duration of divorce requirement
Rep. Lowey, D-NY (
104th-114th)

   Require kids to attend school 
Congressional Budget Office
(2009)
 
 
*CBO listings indicate proposal was in the CBO Budget Options
 


 

Learn More

My plan in detail

Read the bill

Read the Social Security Chief Actuary letter

 

In the News

Forbes: At Last: A New Social Security Reform Plan  

Washington Examiner: Key GOP lawmaker introduces Social Security reform plan

Bipartisan Policy Center: New Bill Has Potential to Put Social Security on Sustainable Path

Committee for a Responsible Federal Budget: Johnson Introduces Social Security Solvency Legislation

Association of Mature American Citizens (AMAC): LETTER OF SUPPORT