Congressman Peter DeFazio has again proposed a series of law changes to shore up the Social Security system while also increasing benefits to retired people.
He said Friday he proposed the legislation as a defensive move to protect Social Security as budget-cutting discussions heat up in Congress.
Social Security is the biggest holder of federal debt, even ahead of China, DeFazio said.
The system does have a long-term solvency problem, and he believes the way to fix it is to make Social Security taxation more fair.
The 4th District Democrat proposed three bills.
One would prevent the government from “raiding the trust fund,” in DeFazio’s words. What he meant was to keep the Social Security fund separate from the federal budget.
In the past couple of decades, Social Security funds not needed to pay benefits have been lent to the government in return for bonds. This made the federal deficit seem smaller than it was, an accounting trick DeFazio wants to prevent.
But the system announced recently it no longer had a current surplus but instead was beginning to draw down its trust fund of U.S. bonds, expected to be depleted in about 2035.
Another DeFazio bill would collect Social Security taxes on income over $250,000 at the rate of 6.2 percent. This would leave untaxed any income between $108,600, the current maximum amount subject to FICA (Social Security) tax, and $250,000.
But the current cutoff is indexed for inflation, so eventually the untaxed portion would disappear, making all income subject to the tax.
In another bill, DeFazio proposes to change the formula by which Social Security benefits are adjusted for inflation. He would base the adjustment mainly on items most seniors pay, such as utilities and prescription drugs.
Under the current formula, there has been no raise the last two years.
He has proposed these measures since 2007, without luck. He said he had 77 cosponsors this year. Asked if any Republicans were among them, he wasn’t sure but said, “I suspect not.”