(FinancialHealth.net) – Social Security’s rapid depletion is something lawmakers on both sides of the aisle have failed to address — until now. The Social Security Board of Trustees has said its reserves will be insolvent in 2035 if nothing is done.
Now, both Republicans and Democrats would like to pass laws in 2020 to deal with the threat to many Americans’ only income.
Social Security 2100 Act
Sponsored by Rep. John Larson (D-CT), the Social Security 2100 Act will allow the following changes:
- Provide a benefit increase of about 2%.
- Cut federal income taxes to the Social Security benefits of roughly 12 million people.
- Use a new formula to calculate the annual cost-of-living adjustment (COLA).
- Increase the payroll tax rate from 12.4% to 14.8% over the next 24 years.
- Impose the payroll tax on an annual income of over $400,000.
- Set the minimum benefit at 25% above the poverty line.
The bill is currently still in its first legislative stage in Congress.
TRUST Act
The Time to Rescue United States Trusts Act (TRUST Act) is a bipartisan bill that would shore up the federal trust funds in danger. It doesn’t only address Social Security funds; it also protects Medicare Part A and the Highway Trust Fund.
Unlike the Social Security 2100 Act, it doesn’t put forth specific policies. Instead, it allows House and Senate leadership to create “rescue committees” for each of the funds. The committees will then be tasked with finding solutions to prevent the funds from depleting.
On January 28, the Committee on Homeland Security and Governmental Affairs held a hearing on the bill, but a summary of the hearing has not been released yet.
Millions of Americans are counting on lawmakers to pass a law to save Social Security. Both the TRUST Act and Social Security 2100 Act would be good first steps. The clock is running out and Congress needs to act now.
~Here’s to Your Financial Health!
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