The 2020 presidential election is just weeks away, and the next president could very well decide the fate of Social Security.
With this popular and important entitlement program at risk of running short of funds, changes may need to be made in the next few years to fix its financial woes.
This doesn’t just mean looking at what Donald Trump or Joe Biden have planned.
Since the Vice President tends to have the ear of the President, it’s worth considering what Biden’s VP pick, Senator Kamala Harris, would do if given the chance.
Senator Harris has made her intentions clear when she introduced legislation in 2019 to expand the program.
Based on this legislation, called the Social Security Expansion Act, here are six changes Harris would likely advocate for.
1. Raising taxes
While Donald Trump has pledged to eliminate the payroll tax if reelected, Senator Harris would vote to raise it.
Payroll taxes are currently assessed on income up to an annual wage base limit, which is $137,700 as of 2020. Under the Social Security Expansion Act, these taxes would also be assessed on income above $250,000. The Act indicates this would make Social Security solvent until 2071, while under the current system its trust funds are expected to run dry in 2035.
Biden has also made a similar proposal, but with a higher threshold at which the additional taxes kick in. Under his plan, those who make $400,000 in income would be subject to the additional payroll tax.
2. Expanding benefits across the board
The Harris plan would also provide a larger benefit to some of the lowest income retirees. They’d receive an across the board benefits increase of around $1,342 annually. This benefits increase would apply to seniors earning less than $16,000 annually under the current rules.
3. Increasing Cost of Living Adjustments
Senator Harris has also voiced her support for increasing Cost of Living Adjustments, using the same mechanism to do so as Biden suggested in his economic plan. Specifically, both Biden and Harris want to make sure seniors get larger periodic raises by changing the financial index used to calculate them.
Currently, seniors get a COLA if the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) shows a year-over-year increase in prices. Biden and Harris both want to change this so the Consumer Price Index for the Elderly (CPI-E) is used to determine if benefits will go up and by what amount.
4. Improving the Social Security minimum benefit
Special Minimum Benefits should guarantee low income workers an income they can live on. However, the rules are outdated and no new retirees receive the Special Minimum Benefit, which is too small to live comfortably on anyway.
Both Biden and Harris want to change that by making it easier to qualify for it, increasing it, and indexing it so it equals 125% of the poverty line.
5. Restoring student benefits
Unmarried children with a disabled or deceased parent can receive benefits if they are under 18; are 18 or 19 and are full-time students in grade 12 or below; or are 18 or older but afflicted with a disability that began before age 22.
The Social Security Expansion Act would make these benefits available up to age 22 for children who are full-time students attending college or vocational school.
6. Combining the retirement and disability trust funds
There are currently two separate trust funds that support Social Security benefits — one that provides retirement and survivor benefits and the other that provides disability benefits. Harris would combine them. Harris believes doing so would better protect both senior citizens and disabled Americans.
Of course, it is not clear if these provisions could ever become law. The Biden/Harris ticket would need to be elected first, and they’d have to make their way into legislation that gets majority support from both branches of Congress. Still, with Biden and Harris in agreement on many key issues when it comes to Social Security, it’s apparent what types of policy changes might be on the table if the Democrats take the White House in November.
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Source: The Motley Fool