Senate Tees Up Vote on a Social Security Boost for Millions

Senate Tees Up Vote on a Social Security Boost for Millions

Chuck Schumer
Sipa USA
By Yuval Rosenberg and Michael Rainey
Thursday, December 12, 2024

Happy Thursday! This morning, President-elect Donald Trump rang the opening bell at the New York Stock Exchange to chants of “USA! USA! USA!” after being named Time magazine’s person of the year for a second time. In his interview with Time, Trump said that he would pardon people convicted for their roles in the Jan. 6, 2021, insurrection within minutes or hours of taking office, adding that “a vast majority of them should not be in jail.”

Here’s what else is happening.

Schumer Tees Up Vote on a Social Security Boost for Millions

With just days left in the 118th Congress, Senate Majority Leader Chuck Schumer is pushing toward a vote on a bipartisan bill that would repeal federal policies that prevent about 2.8 million people from getting full Social Security benefits.

Schumer set up a Senate floor vote next week on the Social Security Fairness Act, a bill that would eliminate two federal rules that reduce Social Security payouts for workers or surviving spouses of workers who get pensions from jobs not covered by Social Security. Lawmakers and advocates say that workers in federal, state and local government jobs, including teachers, police officers and firefighters, have been unfairly hit by those rules.

“This is a chance for senators to do the right thing for our teachers and nurses and postal workers and law enforcement officers and firefighters,” Schumer said. “Americans deserve to see which side the senators are on when it comes to securing their well-earned retirement benefits.”

Some experts explain that the rules targeted by the bill were enacted to account for a formula that can make people with earnings outside of the Social Security system look like low-paid workers with no similar pension, who qualify for higher payouts.

The rules “were put in place to prevent windfall benefits to many workers who did not pay into Social Security for most, or all, of their careers that would otherwise allow them to essentially benefit from both Social Security and the state and local alternative,” the Committee for a Responsible Federal Budget (CRFB) said earlier this year.

But critics of the legislation have largely focused on its cost rather than its effects. The Congressional Budget Office has estimated that the bill would add $196 billion to deficits and would hasten the insolvency of Social Security’s trust funds by about six months.

Some lawmakers and budget watchers have argued that the concerns about these federal rules should be addressed as part of a larger Social Security reform effort aimed at shoring up the program’s finances.

“It is truly astonishing that at a time when we are just nine years away from the trust fund for the nation’s largest program being completely exhausted, lawmakers are about to consider speeding that up by six months. And add on top of that another $200 billion in new borrowing as a result,” said CRFB President Maya MacGuineas. “We are racing to our own fiscal demise.”

It’s not completely clear that the Senate will pass the bill, even though it has 62 co-sponsors in the chamber. Schumer said at a labor rally Wednesday that the legislation doesn’t have the backing of all Senate Democrats and he needs 15 Republicans to help clear a 60-vote threshold. The legislation passed the Republican-led House last month with broad bipartisan backing, 327-75, but that only happened after supporters of the bill used a discharge petition to force a vote.

The act has been reintroduced for years before gaining some momentum in this Congress. If the bill doesn’t pass the Senate, the new Congress that is sworn in next year would have to start over.

Number of the Day: $20,000

Some of Donald Trump’s economic advisers are considering an increase in the state and local tax deduction limit, doubling the current $10,000 cap to $20,000, as they hammer out plans for a major overhaul of the tax system. The increase could help win support for Trump’s tax policies from lawmakers representing high-tax states like New York, New Jersey and California, where the cap, which was created in the 2017 tax cut law, has long been seen as an unfair burden.

Stephen Moore, who co-founded the fiscally conservative Club for Growth and advised the presidential campaigns of Trump and Herman Cain, told Bloomberg that a full repeal of the SALT cap would go too far, effectively providing “the biggest tax cut for millionaires and billionaires ever.” Doubling the cap, on the other hand, “would solve the problem for middle-class families in blue states.”

The increase in the SALT cap may not win much support from lawmakers representing low-tax parts of the country, where the issue has less resonance. But it could come into play as Republicans look for ways to pick up every vote they can get in a narrowly divided House next year.

IRS Highlights $4.7 Billion in Recovered Funds as Republicans Eye Big Cuts

The IRS has recovered $4.7 billion from criminals and wealthy scofflaws thanks to new enforcement initiatives, the nation’s tax agency announced Thursday.

In its latest quarterly update, the IRS said it has recovered more than $1.3 billion from “high-income, high-wealth individuals” who failed to pay their tax debts or file their tax returns. Another $2.9 billion was recovered through investigations into criminal activities including drug trafficking and cybercrime, and about $475 million was recovered in criminal and civil cases that were connected to information provided by whistleblowers.

“The IRS continues to show dramatic progress on a wide array of the agency’s transformation efforts, producing real-world improvements to help taxpayers and businesses while also taking important steps in the law-enforcement and compliance arena to protect billions from ongoing schemes, ensure high-income individuals file returns and pay their taxes and penalties, and battle everything from terrorist financing to drug traffickers,” said IRS Commissioner Danny Werfel.

One eye on Trump: The IRS report comes shortly after President-elect Donald Trump announced his pick of former lawmaker Billy Long as the next head of the tax agency, even though Werfel’s term runs until 2027. The colorful Long worked for years as an auctioneer, and Trump said on social media that “Taxpayers and the wonderful employees of the IRS will love having Billy at the helm.” After leaving Congress in 2022, Long also worked as a consultant helping companies claim the Employee Retention Tax Credit, a fraud-plagued program created during the pandemic that has reportedly wasted billions of dollars in public funds.

Although Long has not been accused of any wrongdoing and has received backing from Republican lawmakers including Sen. Mike Crapo, who is expected to lead the Finance Committee in the next Congress, current Finance Committee Chair Ron Wyden, a Democrat, said his selection as the next IRS chief is “a bizarre choice” that should “set off alarm bells.”

“What’s most concerning is that Mr. Long left office and jumped into the scam-plagued industry involving the Employee Retention Tax Credit,” Wyden said. “These ERTC mills that have popped up over the last few years are essentially fraud on an industrial scale, conning small businesses and ripping off American taxpayers to the tune of billions of dollars.”

Also looming ahead for the IRS is the prospect of major budget cuts in the next GOP-controlled Congress. The IRS received $80 billion in extra funding over 10 years through the Inflation Reduction Act of 2022 to help boost enforcement and improve customer service, but those funds have already been reduced by $20 billion, with another $20 billion under threat. Some Republicans have questioned the need for the additional funding, and all of what remains could be on the chopping block.

Rep. Kevin Hern, a Republican from Oklahoma, said after the election that the results provided “a Republican mandate from the people and the voters that we need to rescind as much of that as possible.” Elon Musk, the billionaire industrialist who is helping run the informal “DOGE” cost-cutting effort in the incoming Trump administration, has gone a step further, recently asking if the IRS as a whole should be “deleted.”

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