Liberal Democrats want to fix Social Security by raising taxes

November 21, 2012

Congress' left flank is pushing back against the notion that liberals simply want to leave entitlements alone. That's not so, says Rep. Keith Ellison (D-Minn.), co-chair of the House Progressive Caucus. Yes, progressives oppose benefit cuts to entitlement programs. But they also want to shore up the finances for entitlement programs, "strengthening Social Security, Medicare and Medicaid for generations to come," Ellison said. And one of their major fixes would expanding the Social Security payroll tax.


Rep. Keith Ellison (D-Minn.), co-chair of the House Progressive Caucus. (Alex Brandon/Associated Press)

Ellison singled out two items from the House Progressive Caucus's 2013 budget that aim to funnel more revenue towards these entitlement programs, which would "raise the cap on Social Security contributions from the wealthiest Americans and provide seniors with cheaper drugs through negotiated drug prices under Medicare," he explained. 

This would effectively mean that Social Security payroll taxes for top earners would go up. "Today, earnings above $110,100 are exempted from payroll tax contributions. This budget corrects this inequity by requiring the top 6 percent of all earners to pay the same rate on all their wages as the bottom 94 percent now do," the House Progressive budget says. That would generate $1.4 trillion in revenue over the next 10 years, according to the Congressional Budget Office.  

The House progressives' other proposal would change a provision in Medicare Part D that prevents the government from negotiating directly with pharmaceutical companies on drug prices. The CBO estimates that change would raise about $156 billion over 10 years — a significantly smaller chunk of change than the Social Security tax expansion.

In fact, some Democrats in the Senate are pushing the same Social Security reform idea: As my colleague Dylan reported last week, Sen. Mark Begich (D-Ala.) recently introduced a bill that would similarly eliminate the Social Security payroll tax cap, which he describes as a "tax loophole" for higher-income Americans, using the new revenue to improve the program's solvency and increase benefits for older Americans.   

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