The House Ways and Means Committee on July 25 held a hearing on a Democratic proposal to increase both benefits and taxes related to Social Security, which Chairman Richard Neal (D-MA) said "more than meets" funding challenges and is at least a "conversation piece" regarding the future of the program. The hearing continued the long-running partisan debate over whether Social Security solvency should be achieved through increased taxes or benefit cuts, and extended that debate to which option would be more detrimental to the Millennial generation.

Rep. John Larson (D-CT) sponsored the Social Security 2100 Act (H.R. 1902) to increase benefits and cost of living adjustments, gradually increase the payroll tax rate to 14.8% from 12.4%, and impose the tax on earnings over $400,000 per year.

In an opening statement, Chairman Neal noted that the last serious GOP overhaul proposal was the Bush Administration push for privatization, and said reform in the eyes of Republicans generally involves benefit cuts, which are avoided under Larson's bill. He said Social Security will be increasingly important to Millennials "who are increasingly squeezed by stagnating wages, disappearing pensions, and so many other financial pressures," and who often lack savings on which to survive if they experience a life-changing disability. Ranking Member Kevin Brady (R-TX) said the Larson plan is expected to cost nearly $19 trillion, that its tax increases would be devastating to Millennials graduating with student debt, and that the focus should be on the "best safety net" — a good-paying job.

Witnesses at the hearing were:

• Stephen C. Goss, Chief Actuary, Social Security Administration
• Nancy J. Altman, President, Social Security Works
• Kelly Brozyna, Member, Job Creators Network's National Women's Coalition
• Abigail Zapote, Executive Director, Latinos for a Secure Retirement
• Shaun Castle, Deputy Executive Director, Paralyzed Veterans of America

Goss said legislation is needed to address imbalances in future cost and financing to avoid depletion of the combined reserves of the OASI and DI Trust Funds in 2035, after which revenue would only cover 80% of promised benefits.

Altman supported Larson's bill, saying restoring Social Security to actuarial balance without benefit cuts "is an important step to restoring that intangible benefit of security." Zapote also spoke in favor of the bill for: using the Consumer Price Index for the Elderly (CPIE) when projecting the cost-of-living adjustments; raising the income floor for the vulnerable elderly through a minimum benefit; ensuring that increased benefits won't count as income when determining the eligibility to Medicaid, CHIP and SSI; and including income above $400K when calculating benefits and taxes.

Brozyna warned against raising taxes on young workers and risk-taking entrepreneurs.

Castle urged policymakers who are preoccupied with the long-term health of the Social Security program not to "overlook Social Security's role as a sustaining foundation for millions of people with disabilities." He said Larson's bill meets most of the principles his group has endorsed for addressing the long-term health of Social Security, ensuring the long-term solvency of the Social Security OASI, and DI programs without any benefit cuts but through changes to the wage base covered by the FICA payroll contributions tax.

Q&A

During questioning, Chairman Neal asked whether there is public support for expanding Social Security. Altman said polls suggest there is overwhelming opposition to benefit cuts. The Chairman also tried to gauge Millennial support for the program, and some witnesses from that generation described it as a lifeline.

Rep. Brady cited Joint Committee on Taxation estimates that Larson's plan will subject workers with poverty-level earnings to a tax hike of nearly 1,000% over the next decade. He asked Brozyna about the effects on small businesses. She said, under the proposal's tax increases, established companies would not increase hires and would cut compensation or hire contractors. Brozyna also supported Brady's notion that increased taxes would be devastating to Millennials already struggling to pay their bills.

Rep. Vern Buchanan (R-FL) picked up on Chairman Neal's comment that the Larson bill is a "conversation piece" regarding the future of Social Security. In response to his questioning, Brozyna again warned that small businesses facing a Social Security-related tax hike would cut employment and pass increased costs onto consumers.

Rep. Lloyd Doggett (D-TX) said Republicans supported the deficit-increasing Tax Cuts and Jobs Act (TCJA), and now support benefit cuts for entitlement programs. Similar, Rep. Mike Thompson (D-CA) was incredulous that Republicans who supported what he said was the $2.5 trillion TCJA tax cut that benefits the richest Americans and corporations would express concern for young workers in the context of Social Security.

Rep. Earl Blumenauer (D-OR) said lawmakers will ultimately not allow the 20% cut in Social Security benefits forecast for post-2035 and said the serious conversation over how to forestall that hasn't really begun. He called Social Security the "ironclad, inflation-protected," best social insurance and retirement insurance available.

Testimony is here.

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