Today, people who are earning $1 million in 2022 stop contributing to Social Security. Those who are earning $2 million stopped contributing in January. Those earning $500,000 will stop contributing this spring.
Most people don't know this, because most of us—94 percent of workers—contribute all year long. The overwhelming majority of workers see 6.2 percent deducted from every paycheck, all year long. Not the wealthiest. They essentially get a pay raise: A 6.2 percent increase in their take-home once they have earned $147,000. Millionaire earners just got theirs.
That increase in take-home pay adds up to literally billions of dollars that are staying in the pockets of Tucker Carlson, Joe Rogan, and other millionaires instead of being held in trust by our Social Security system for the benefit of all of us.
As income inequality has spiked, the pay of those at the top has grown, while the income of most working families has stagnated or even declined. The fact that billionaires are not paying their fair share should cause outrage. During the course of the pandemic, the wealth of billionaires has increased by $2.1 trillion. And the number of billionaires grew from 614 to 745. Those 745 people together own more wealth than half the American population!
It is wrong that minimum wage workers contribute to Social Security all year long while Laura Ingraham and other plutocrats stop contributing in January each year.
The least that Congress should do is eliminate the cap on Social Security contributions. It is wrong that minimum wage workers contribute to Social Security all year long while Laura Ingraham and other plutocrats stop contributing in January each year.
Democrats want to eliminate the cap. During his campaign for president, President Joe Biden proposed gradually eliminating the cap, in addition to expanding Social Security's earned benefits. Biden would require those earning over $400,000 to contribute to Social Security on those earnings at the same rate as virtually all workers. Eventually, as the current cap increased, the gap between the current cap and $400,000 would disappear.
The Chairman of the House Social Security subcommittee, Representative John Larson (D-CT), is the sponsor of H.R. 5723, Social Security 2100: A Sacred Trust, which is co-sponsored by over 200 of his colleagues. The 2100 Act expands benefits in a number of important ways. It pays for every penny of benefit increases while cutting Social Security's projected shortfall by phasing out the cap on earnings. Like President Biden's plan, it starts with those earning over $400,000.
Other policymakers have proposed phasing out the cap on Social Security contributions faster. The Social Security Expansion Act, sponsored by Senator Bernie Sanders (I-VT) and Representative Peter DeFazio (D-OR), starts with those earning over $250,000. The Strengthening Social Security Act, sponsored by Rep. Linda Sánchez (D-CA), would require everyone earning over the cap to begin contributing more, fully phased in over five years.
All of these proposals expand benefits while phasing out the cap on contributions. Another element all these bills have in common is that they have no Republican co-sponsors.
Essentially every Democrat, from Senator Elizabeth Warren (D-MA) to Senator Joe Manchin (D-WV), supports requiring the wealthy to pay their fair share into Social Security. But not a single Republican member of Congress agrees that the wealthy should pay even the same rate as lower income workers, much less more!
Phasing out the cap simply makes everyone pay the same rate. Only 3.6 percent of Social Security's revenue is progressive. Congress should increase that 3.6 percent by just a few percentage points by dedicating a new source of progressive revenue to Social Security—the estate tax, a tax on wealth, a surtax on millionaires and billionaires, or a financial transactions tax, to name just a few possible sources.
Although only a few policymakers have yet proposed a new progressive source, the Democratic Party is at least prepared to require the wealthy to pay the same rate as everyone else. Not so the Republicans.
What does the Republican Party want to do instead? A recent plan released by Senator Rick Scott (R-FL) tells us. Scott, head of the National Republican Senatorial Committee, is the perpetrator of the largest Medicare fraud in history, and his just-released plan shows that his hostility to seniors and our earned benefits is still going strong.
He proposes nothing to expand Social Security or even to eliminate its projected long-range shortfall. What does he propose instead? An indirect cut to Social Security's modest, earned benefits.
Scott's plan states that "All Americans should pay some income tax to have skin in the game." Currently, half of Americans do not pay income taxes. That includes many retirees, particularly those who live largely on their earned Social Security benefits. Indeed, for about one-quarter of seniors, Social Security benefits are 90 percent or more of their income. For them, Scott's proposed tax increase is a de facto Social Security cut—and the consequences would be devastating.
In addition, under Scott's plan "All federal legislation sunsets in 5 years. If a law is worth keeping, Congress can pass it again." That includes the Social Security Act. Every five years, Social Security and Medicare's future would be subjected to Congressional horse trading and hostage taking, the way the debt ceiling is now.
Removing the cap on Social Security contributions, along with adding progressive revenue, will eliminate the shortfall and allow us to expand benefits.
Scott ignores the fact that Social Security is a pension plan. It is deferred compensation. Not only would the Republican plan put everyone's retirement income, life insurance and disability insurance—all earned Social Security benefits—at risk; such a sunset clause would needlessly subject beneficiaries to stress and uncertainty.
But Scott doesn't ignore Social Security's shortfall completely. He uses it cynically as a political sword. Instead of proposing to eliminate the shortfall, he lies about it. He calls on his colleagues to "issue a report every year telling the public what they plan to do when Social Security and Medicare go bankrupt." But Social Security and Medicare can't go bankrupt any more than the US Marines can go broke. In fact, Social Security is more conservatively funded than the Marines, whose salaries and equipment are deficit-financed. Social Security, in contrast, has its own dedicated revenue.
After 2034, Social Security is projected to have enough revenue to pay only 78 cents on the dollar. Obviously, that is not acceptable. But Social Security certainly won't run out of money, as Scott cynically implies.
Removing the cap on Social Security contributions, along with adding progressive revenue, will eliminate the shortfall and allow us to expand benefits. But Scott's plan is silent on removing the cap (or any other tax increase on the wealthy). That gives away the game.
Republicans love to cry crocodile tears about Social Security's shortfall, but they refuse to raise a single penny of revenue from their wealthy donors. Instead, they want to cut benefits—either directly, or through a sneaky backdoor method as proposed by the head of the National Republican Senatorial Committee.
Democrats must make this contrast between the two parties clear to voters before November's midterm elections. It is time to vote on legislation to protect and expand Social Security benefits, and pay for it by requiring the wealthy to start paying their fair share. Make every Member of Congress go on the record, and show the American people whose side they truly are on.
Nancy J. Altman