Something unexpectedly hopeful has happened in the 2012 lame duck session of Congress: Senator Mark Begic, a Democrat from Arkansas, has introduced a Social Security reform bill that would raise the current cap on payroll taxes—a logical solvency solution that, until now, had all but disappeared from the discussion. The Washington Post reports that Begic’s bill would:
…lift the current payroll tax cap, which exempts wages in excess of a certain amount ($110,100 this year) from the tax. In turn, it would give high earners, who would pay more, additional benefits upon retirement, just as benefits increase as wages do for workers below the cap. […]
It also increases benefits across-the-board. While Bowles-Simpson and Domenici-Rivlin adopt a stingier “chained CPI” measure for inflation, Begich adopts “CPI-E,” or a measure that specifically captures inflation in goods that seniors buy.
Due to deteriorated health and other considerations, goods seniors buy tend to be more expensive than those younger people purchase. Begich’s CPI-E change would mean, effectively, a 4.5 percent benefit increase for the program’s beneficiaries, including not just seniors but their designated survivors and disabled Americans as well.
According to Think Progress:
The Congressional Research Service ran the numbers back in 2010 and concluded that eliminating the payroll tax cap — while also paying out the new benefits to wealthier Americans in accordance with their new taxes — would eliminate 95 percent of the trust fund’s shortfall over the next 75 years.
Begich may not hit that goal exactly, depending on how the legislation is written. In particular, his change to CPI-E also lifts the overall benefit level, on top of the changes in CRS’ scenario. But his reform would probably come very close.
Begich’s bill may not be a perfect solution, and it may not get any traction at all in the 2012 lame-duck Congress, but it’s refreshing to see this idea on the table. And it’s a sign that Democrats, perhaps buoyed by the results of the 2012 election, are willing to tackle the big issues and stand up to the no-tax-increases-ever Republicans who have dominated the political dialogue and shut down any discussion of the most logical solution of all.