The New Social Security Bill and Its Implications
As of February 2018, more than 62 million are receiving monthly Social Security payouts. And of this 62 million, more than 42 million are retired workers, of which 62% are dependent on their Social Security checks for more than half their monthly income. This means that if the Social Security program were not in place, the elderly poverty levels would be way higher than they are now. And this month, in April, three Senators introduced a new Social Security Bill.
What does the new Social Security bill propose?
Three Senators, Ron Wyden, Sherrod Brown and Bob Casey have introduced a new Social Security bill whose sole purpose is to provide more financial assistance to retired seniors. The bill is known as The Elder Poverty Relief Act and will focus on giving higher benefits to low-income beneficiaries who are currently either receiving Social Security or Supplemental Security Income or SSI. This Social Security bill proposes boosting the monthly payouts for three groups of people by about $85 per month or $1,020 per year. The payouts will also be subject to a 4% inflationary increase per year. This increase is targeted at:
- Social Security beneficiaries who are 82 years or older and SSI beneficiaries who have reached their full retirement age.
- Social Security as well as SSI beneficiaries who have been getting their checks for the last 20 years at least.
- Social Security beneficiaries who have reached their full retirement age but are getting low payouts (the Social Security bill puts that amount at $944 per month).
According to the Senators proposing the new Social Security bill, senior poverty rates would reduce by 25% by 2030. This would mean that about 420,000 seniors would be lifted out of poverty and another 14 million would get higher benefits payouts.
Flaws in the new Social Security bill
Despite its best intentions, there are some very serious flaws in this new Social Security bill. To understand what is wrong with the bill, we need to understand what is wrong with the Social Security system. It’s very simple – the Social Security system is running out of money. In the summer of 2017, the Social Security Board of Trustees released a report that revealed that by 2022, payouts to beneficiaries would be more than what would be collected in revenues for the Social Security program. And then, in another 12 years, by 2034, the programs $3 trillion is asset reserves would be used up.
Without the asset reserves in place, the program would need to cut payouts by up to 23% by 2034 to sustain Social Security benefits till 2091. So now, the problem is that the new Social Security bill will simply use up funds even faster than projected. And until the government works as a team to come up with a solution on how to make up for the $12.5 trillion long-term shortfall in the Social Security programs funds, this kind of a Social Security bill will not work.