(UPDATED 1:15 p.m. Tuesday) It took years for U.S. Rep. John B. Larson to formulate his proposal to strengthen Social Security, but the rollout of the legislation at a senior center in his hometown of East Hartford on Monday didn’t necessarily go as planned.
Larson spent more than 30 minutes trying to explain his plan. He told the silver-haired crowd that his plan, which is still being finalized as legislation, would make sure the Social Security Trust Fund is solvent past 2033.
But there were continued interruption and the conversation strayed several times off topic to things such as Obamacare.
Larson passed out fact sheets and explained that his plan would include a two percent average increase in payments for beneficiaries and then the cost-of-living increase would be based on the actual expenses elderly citizens incur. It would also cap the amount someone is taxed on their Social Security benefits.
Currently, Social Security benefits are taxed if a beneficiary’s income exceeds $25,000 a year, or $32,000 for a married couple. Larson’s plan would raise those income thresholds to $50,000 for individuals and $100,000 for married couples, thus providing a tax break.
Larson would pay for his plan by gradually increasing the contribution employers and workers pay by one percent, which averages out to about 50 cents per week. That would start in 2037. He also would starting levying payroll taxes on incomes above $400,000 for the first time in order to shore up the Social Security fund. At the moment, people with incomes above $117,000 don’t pay the payroll tax. This cap has exempted wealthier individuals from contributing to the trust fund. People earning $117,000 or less would continue to pay payroll taxes.
The plan would leave a carve-out with no payroll tax liability for people earning $117,000 to $400,000.
Lastly, Larson would help improve the rate of return to the Social Security Trust Fund by borrowing an idea from former Social Security Commissioner Robert Ball and Social Security Works Co-Director Nancy Altman. The plan would gradually invest up to 25 percent of the trust fund assets into a broad-based, diversified index fund. The investments will be based on the full faith and trust of the American government, Larson said.
A man interrupted to dispute the credibility of the federal government.
“Why? Have you ever not gotten your Social Security?” Larson asked the man.
“Don’t answer my question with a question,” the man replied.
“Oh boy, here we go,” Larson said.
Another man got up to ask “why don’t they just pay back the money they borrowed out of Social Security?”
The question received some cheers.
“Well, that’s always a great question,” Larson said. “Why don’t they pay back the money that they took out of Social Security?”
Larson said the Social Security fund in terms of what you paid into it is solvent through the year 2033, but over the course of the history of Social Security it has taken on a lot of responsibility, including disability and survivors insurance.
“The trust fund is nothing more than the full faith and trust of the United States government and it has never defaulted or never not paid back the fund,” Larson said.
The man disagreed.
Larson tried to move on, but the discussion continued to deteriorate.
“Where are you going to get the money for welfare people coming to this state,” one woman asked. “They get paid better than seniors.”
Another woman stepped into say that in order for the system to work you have to have people working, and there are millions of Americans without jobs at the moment. Those people are not paying in, and that adds to the problem.
“If we could only get our counterparts in Congress to act,” Larson said, referring to the Republicans.
One man shouted out “that’s bologna” while the other half of the crowd shouted that it was true.
“It is absolutely the truth,” Larson said.
The man went on to rant that “you’re waiting for us all here to die.”
Another man got up to ask exactly how Larson planned to get this through a Republican-controlled House.
“They say the longest journey begins with the first step,” Larson said. “I think you have to talk about the responsibility and lay it out. Otherwise, not to discuss it, not to put it into the form of a bill, not to have people be able to talk about it, means it gets swept under the rug.”
EDITOR’S NOTE: This story has been edited to clarify that Rep. Larson’s plan would shore up Social Security by charging payroll taxes on incomes above $400,000 for the first time while continuing to levy payroll taxes on incomes $117,000 or below.