One of the little talked about potential effects of the blue tsunami, which swept Democrats into Congress in the midterm elections, is if and how it will impact the country’s ailing Social Security system.
A recent report from the Social Security trustees estimates the retirement trust fund will run out of money and become insolvent as early as the fourth quarter of 2032, in about six years—which, if not addressed, would automatically trigger a cut in benefits to tens of millions of Americans.
Vermont Senator Bernie Sanders has been trying to rally his colleagues to come up with a way to avoid that crisis. When the 120th Congress reconvenes in January, Democrats will gain control of a number of committees, and Sanders, an independent who caucuses with the Democrats, expects to head Social Security.
“As the next chair of the Social Security Subcommittee, a top priority will be to expand Social Security benefits by at least $2,400 a year & extend Social Security’s solvency for generations,” Sanders posted on X. “How? By scrapping the cap & demanding that the wealthy pay their fair share of taxes,” he added.
Under Sanders’s previous “Social Security Expansion Act” proposal, Social Security recipients would receive an extra $200 per month—a so-called Bernie Bump.
That bump would not only raise benefits but also expand the annual cost-of-living adjustments (COLA), which are meant to keep pace with inflation and will increase payments by 3.6% in 2027.
“To pay for it, the earnings cap would be removed and include capital gains and dividends,” Robert Laura, a financial planner and founder of the Retirement Coaches Association, explained to Fast Company. “For 2027, earnings over $192,300 aren’t taxed for Social Security at all, implying the wealthiest Americans aren’t paying their fair share.”
However, according to Laura, completely scrapping the cap isn’t likely. But a more aggressive phased approach could be possible. Laura says a more realistic scenario would be a plan that moves the cap closer to $500,000 over three to five years—which wouldn’t solve Social Security’s problems, but could be part of a larger, multifaceted overhaul.
“The Bernie Bump is alive and well, but I wouldn’t make any plans to spend that extra money just yet,” Laura tells Fast Company.
That’s also because although Democrats will control both chambers of Congress, a majority isn’t the same as 60 votes in the Senate—and any bill would still need the president’s signature.
Some 71 million Americans—54 million retired workers and 9 million of their survivors and dependents—receive monthly Social Security benefits.
