Overview
Title
To amend title II of the Social Security Act and the Internal Revenue Code of 1986 to make improvements in the old-age, survivors, and disability insurance program.
ELI5 AI
The Protecting and Preserving Social Security Act is a plan to make Social Security better by changing how they figure out money for older people, and they're making sure that people who work and earn a lot after 2024 get the right amount of benefits.
Summary AI
The bill S. 4877, known as the "Protecting and Preserving Social Security Act," aims to improve Social Security programs by introducing several key changes. It proposes the creation of a new Consumer Price Index for Elderly Consumers to better calculate cost-of-living increases for seniors. Additionally, it seeks to modify how wages and self-employment earnings above a certain base are determined for Social Security purposes starting in 2025. The bill also suggests including surplus earnings in the formula to calculate Social Security benefits, impacting individuals becoming eligible for these benefits after 2024.
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AnalysisAI
General Summary of the Bill
The "Protecting and Preserving Social Security Act," introduced in the 118th Congress, seeks to amend portions of the Social Security Act and the Internal Revenue Code. The bill aims to make the system fairer and more reflective of the needs of the elderly population. Key changes include adjustments to how cost-of-living increases are calculated, incorporating a new Consumer Price Index focused on elderly consumers. The bill also proposes revising how wages and self-employment incomes above certain thresholds are calculated for Social Security contributions and benefits after 2024. Additionally, it seeks to integrate surplus earnings into the Social Security benefit formula, altering how benefits are determined for individuals becoming eligible after 2024.
Summary of Significant Issues
One major issue with the bill is the vagueness in funding allocation for the Consumer Price Index for Elderly Consumers. The allocation of 'such sums as are necessary' allows for potential financial mismanagement or waste if not properly overseen. Furthermore, defining the new Consumer Price Index specifically for the elderly may not align with broader indices, leading to potential inconsistencies.
The complex language used in sections dealing with the calculation of wages and self-employment income could confuse many individuals. The introduction of new and undefined terms related to Social Security benefits calculations may further complicate understanding for those affected.
Impact on the Public
The bill's impact on the general public hinges on the effectiveness of its intended reforms. If implemented successfully, using a Consumer Price Index tailored for elderly consumers might ensure that cost-of-living adjustments more accurately reflect the expenses of older Americans. This could protect against inflation more effectively than the current indices, potentially improving the financial security of seniors on Social Security.
However, the complexity of some provisions may lead to confusion among beneficiaries and taxpayers. The intricate calculations for wage contributions and surplus earnings might make it difficult for individuals to fully comprehend their tax obligations and expectations for future benefits. This could lead to misunderstandings about how much to expect from their Social Security.
Impact on Specific Stakeholders
Seniors, particularly those on fixed incomes, stand to benefit from more precise cost-of-living adjustments. Accurately reflecting their spending patterns in these adjustments could lead to more stable purchasing power over time. However, this benefit could be undermined if the funding and oversight issues related to the index are not carefully managed.
Taxpayers and wage earners in general may face challenges understanding the changes due to the technical language and intricate calculations required under the new rules. There could also be perceived inequities due to the selected percentage rates in surplus earnings calculations, affecting public sentiment towards these changes.
Ultimately, the intended benefits of the bill may only be realized if the execution is transparent and straightforward, ensuring that all stakeholders are aware of how changes affect them. Without clear communication and oversight, the reforms could generate more confusion than improvement among those reliant on Social Security.
Financial Assessment
The bill titled S. 4877, also referred to as the "Protecting and Preserving Social Security Act," includes several financial elements that warrant discussion. These elements revolve around appropriations, cost-of-living calculations, and modifications in how Social Security benefits are determined.
Appropriations and Allocations
One of the primary financial aspects of the bill involves the authorization of appropriations to implement the new Consumer Price Index for Elderly Consumers. The bill authorizes such sums as are deemed necessary to carry out this implementation. This language is open-ended and may result in financial management issues, as it does not specify a cap or limit on spending. Such vagueness could lead to potential mismanagement or wasteful spending due to a lack of specific financial oversight measures.
Impact on Social Security Calculations
The bill introduces changes to how cost-of-living increases are calculated for beneficiaries. By adopting the Consumer Price Index for Elderly Consumers, the amendments intend to better reflect the spending patterns of seniors. However, this switch could lead to inconsistencies, as it specifically refers to this index rather than aligning with broader indices used for other purposes. This specificity might cause discontinuities when applying these calculations across different legal or legislative contexts.
Moreover, section 102 outlines that any adjustments made by this section are excluded from other legal provisions. This exclusion could create legal or administrative conflicts, particularly when aligning the Social Security adjustments with other laws that rely on similar indices for cost-of-living updates.
Treatment of Surplus Earnings
The bill also modifies how surplus earnings are included in Social Security benefit calculations, impacting those who become eligible for benefits after 2024. It specifies how to determine surplus average indexed monthly earnings by using predefined percentages, such as 3 percent and 0.25 percent. These percentages may seem arbitrary or unjustified to those affected, as the bill does not provide clear rationalization for selecting these specific rates. This lack of explanation could lead to perceptions of inequity or unfairness.
Complexity and Clarity
Overall, the financial references in the bill introduce a layer of complexity that may be difficult for the average person to navigate. The determination of wages above the contribution and benefit base and the use of intricate language related to "basic" and "surplus" average indexed monthly earnings may confuse beneficiaries. Clarity in financial language is crucial for ensuring individuals understand how changes affect their Social Security contributions and benefits.
In summary, while the bill aims to optimize the Social Security system, it raises concerns about open-ended appropriations and introduces complex and potentially confusing financial calculations that require further clarification and justification.
Issues
The authorization of appropriations for the Consumer Price Index for Elderly Consumers is vague, as it allows for 'such sums as are necessary,' potentially leading to financial mismanagement or wasteful spending without proper oversight. (Section 101)
The specific definition of 'Consumer Price Index' as the 'Consumer Price Index for Elderly Consumers (CPIāE)' may not align with broader cost-of-living indices, which could lead to inconsistencies in application across different legal and legislative contexts. (Section 102)
The calculations of cost-of-living adjustments exclude the effects of the adjustments made by section 102 of the Protecting and Preserving Social Security Act from other laws, which could lead to legal or administrative conflicts. (Section 102)
The language regarding 'not be regarded as income or resources for any subsequent month' in SSI and Medicaid eligibility might lead to implementation challenges and confusion among recipients. (Section 102)
The determination of wages and self-employment income above the contribution and benefit base involves complex language and varying percentages for different years, making it difficult for individuals to understand the impact on their taxes or Social Security contributions. (Section 201)
The technical nature of the language regarding 'basic average indexed monthly earnings' and 'surplus average indexed monthly earnings' introduces new, undefined terms that could cause confusion among beneficiaries trying to understand their Social Security benefits. (Section 202)
The arbitrary selection of specific percentage rates (e.g., 3% and 0.25%) used in the surplus earnings calculations lacks justification, which may appear unclear or unfair to individuals affected by these changes. (Section 202)
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title and table of contents Read Opens in new tab
Summary AI
The Protecting and Preserving Social Security Act introduces measures to adjust Social Security benefits, including cost-of-living increases specifically calculated for elderly consumers and changes to how wages and self-employment income are considered after 2024 to ensure fairness in contributions and benefits.
101. Consumer Price Index for Elderly Consumers Read Opens in new tab
Summary AI
The Bureau of Labor Statistics must create and publish a monthly index called the "Consumer Price Index for Elderly Consumers," which tracks spending changes typical for people aged 62 and older in the U.S. This requirement starts after a specified date, and funding will be provided as needed to support this initiative.
102. Computation of cost-of-living increases Read Opens in new tab
Summary AI
The section modifies the Social Security Act to use the Consumer Price Index for Elderly Consumers (CPIāE) when calculating cost-of-living adjustments for Social Security benefits, ensuring that this change does not impact other laws or eligibility for Supplemental Security Income and Medicaid. It will come into effect for computations made in quarters ending on or after September 30, two years after the Act is passed.
201. Determination of wages and self-employment income above contribution and benefit base after 2024 Read Opens in new tab
Summary AI
The section outlines changes to tax law and Social Security affecting how wages and self-employment income above a certain limitāknown as the contribution and benefit baseāare calculated for taxes after 2024. It introduces a table of decreasing percentages applied to income surpassing this limit each year from 2025 to 2030; starting from 86% in 2025 and eventually reaching 0% after 2030, for both wages and self-employment income.
202. Inclusion of surplus earnings in Social Security benefit formula Read Opens in new tab
Summary AI
The section proposes changes to how Social Security calculates benefits by including surplus earnings in the formula. It introduces a new component, Surplus Average Indexed Monthly Earnings (AIME), which will affect the primary insurance amounts for individuals becoming eligible for benefits after 2024, with specific provisions for how these earnings are calculated and adjusted.
Money References
- ā (1) IN GENERAL.āSection 215(a)(1)(A) of the Social Security Act (42 U.S.C. 415(a)(1)(A)) is amendedā (A) in clauses (i), (ii), and (iii), by inserting ābasicā before āaverage indexed monthly earningsā each place it appears; (B) in clause (ii), by striking āandā at the end; and (C) by inserting after clause (iii) the following new clauses: ā(iv) 3 percent of the individualās surplus average indexed monthly earnings to the extent such surplus average indexed monthly earnings do not exceed the excess of the amount established for purposes of this clause by subparagraph (B) over 1ā12 of the contribution and benefit base for the last of such individualās computation base years, and ā(v) 0.25 percent of the sum of the individualās surplus average indexed monthly earnings plus 1ā12 of the contribution and benefit base for the last of such individualās computation base years, to the extent such sum exceeds the amount established for purposes of clause (iv) by subparagraph (B).ā. (2) BEND POINT FOR SURPLUS EARNINGS.āSection 215(a)(1)(B) of such Act (42 U.S.C. 415(a)(1)(B)) is amendedā (A) in clause (ii), by striking āthe amounts so establishedā and inserting āthe amounts established for purposes of clauses (i) and (ii) of subparagraph (A)ā; (B) by redesignating clause (iii) as clause (v); (C) in clause (v) (as redesignated), by inserting āor (iv) ā after āclause (ii)ā; and (D) by inserting after clause (ii) the following new clauses: ā(iii) For individuals who initially become eligible for old-age or disability insurance benefits, or who die (before becoming eligible for such benefits), in the calendar year 2023, the amount established for purposes of clause (iv) of subparagraph (A) shall be $8,933.