Iowa Senator introduces bill to revitalize middle class, strengthen Social Security

March 29, 2012 | Alex Stone

senator tom harkin

Senator Tom Harkin

Today’s introduction of  the “Rebuild America Act” by Iowa Senator Tom Harkin would do more to help the American economy and revitalize the middle class than any bill currently before Congress.

This sweeping legislation would boost employment by investing in infrastructure upgrades, promote U.S. manufacturing, and end tax breaks that encourage U.S. firms to move production offshore. It would also have immediate and positive impacts for the middle class by increasing access to affordable, quality child care; establishing a fair national minimum wage; allowing all Americans to earn paid sick leave; and strengthening and protecting Social Security, among other things.

It’s clear this legislation would provide considerable help to the American middle class, but its provision to strengthen and protect Social Security is particularly noteworthy.

For Social Security beneficiaries, the “Rebuild America Act” would increase benefits by about $60/month for the average beneficiary – a boon for seniors, disabled workers and survivors living on fixed incomes. It would also change the way the Social Security Administration calculates benefits from the current CPI-W calculation to the CPI-E, which more accurately reflects inflationary cost increases faced by seniors.

To pay for these changes, and to ensure Social Security is solvent and soundly-financed well into the future, Senator Harkin proposes scrapping the cap – ensuring all Americans pay into Social Security at the same tax rate. That means high earners – who currently pay a much lower tax rate into Social Security than middle class earners – would pay the same rate of 6.2%.

current social security tax vs scrap the cap

Senator Harkin’s bill also creates a new bend point of 5% for income over the current wage cap, maintaining Social Security’s historic benefit-contribution link.

The “Rebuild America Act” is sweeping legislation that would address some of the most critical issues affecting middle class families today, and should be celebrated as such, but its provision to strengthen and protect Social Security should not go unnoticed.

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Posted in Retirement Security

Comments

  1. I would make the rich pay into social security but stop paying out benefits for anything above whatever you pay someone who makes $50,000 per year or so.

    • Alex Stone says:

      Steven,
      Social Security has received broad-based support for so many years in part because there is a direct benefit-contribution link — how much one receives in benefits is directly tied to how much one pays in. That being said, Social Security is highly progressive, and Senator Harkin’s bill proposes a change that would increase its progressivity by offering a proportionally higher benefit for lower-income earners, while also maintaining the benefit-contribution link with a new bend point for income above the current cap.
      -Alex

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