Protecting and Preserving Social Security Act
- Bill Number
- S. 2614
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Social Welfare
- Status
- Introduced
- Latest Action
- 2025-07-31: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-03T20:54:29Z
AI-Generated Summary
Purpose
The "Protecting and Preserving Social Security Act" (S. 2614) aims to enhance the old-age, survivors, and disability insurance program under Social Security by improving how cost-of-living adjustments are calculated and by making the system fairer for contributions and benefits. It introduces measures to better reflect elderly spending patterns and gradually include higher earnings in the program's funding and payout formulas.
Key Provisions
- Title I: Cost-of-Living Increases
- Consumer Price Index for Elderly Consumers (Sec. 101): Directs the Bureau of Labor Statistics (part of the Department of Labor) to create and publish a new index, called the CPI-E, starting after the year of enactment. This index tracks changes in typical spending by people aged 62 and older. Funds are authorized as needed to implement it.
- Use of CPI-E for Benefit Adjustments (Sec. 102): Replaces the standard Consumer Price Index with the CPI-E for calculating annual cost-of-living adjustments (COLAs) to Social Security benefits. This applies to both current law and rules from before 1979. Increases from these adjustments won't count as income when determining eligibility for Supplemental Security Income (SSI, a needs-based program for low-income elderly, disabled, or blind people) or Medicaid (health coverage for low-income individuals). The change takes effect for adjustments starting in the second year after enactment.
- Title II: Contribution and Benefit Fairness
- Including Higher Wages in Contributions (Sec. 201(a)): Starting in 2026, gradually taxes a portion of wages above the annual contribution and benefit base (CBB, the current earnings cap for Social Security taxes, set at $168,600 in 2024) under the Internal Revenue Code. The taxable portion phases down over time: 86% in 2026, decreasing by about 14-15% each year to 0% after 2031. Similar changes apply to the Social Security Act for crediting these wages toward benefits.
- Including Higher Self-Employment Income in Contributions (Sec. 201(b)): Applies the same phase-in percentages to self-employment income above the CBB, starting for tax years in 2026. This affects both tax rules and benefit crediting.
- Incorporating Surplus Earnings into Benefits (Sec. 202): Modifies how primary insurance amounts (PIA, the base monthly benefit amount) are calculated by adding "surplus average indexed monthly earnings" (surplus AIME, earnings above the CBB adjusted for inflation and wage growth). This includes:
- 3% of surplus AIME up to a new "bend point" (thresholds that determine benefit levels; the initial 2026 bend point is $8,933, indexed to wages thereafter).
- 0.25% on amounts above that bend point, combined with the CBB.
Applies to people becoming eligible for benefits or dying after 2025. "Basic" AIME (earnings up to the CBB) remains calculated as before.
Significant Changes to Existing Law
- Shifts COLA calculations from the general Consumer Price Index (which covers all consumers) to the CPI-E, potentially leading to higher adjustments since elderly spending (e.g., on healthcare) often rises faster.
- Ends the full exemption of earnings above the CBB from Social Security taxes and benefit credits by 2032, but through a temporary phase-in rather than an immediate full lift of the cap.
- Alters the benefit formula to make it more progressive by adding low replacement rates (3% and 0.25%) for high earners' surplus earnings, unlike the current formula's higher rates (90% for low earners, dropping to 15% for those above the second bend point) only on basic earnings.
- Ensures these changes don't affect other federal programs' adjustments tied to Social Security COLAs.
Potential Impacts
- On Citizens: Seniors and disabled individuals may receive larger annual benefit increases due to the CPI-E, helping offset rising costs like medical care. Higher earners will pay more in Social Security taxes initially (2026-2031) but see slightly higher benefits later, promoting fairness between contributions and payouts. Low-income recipients won't lose SSI or Medicaid access from benefit hikes.
- On Government Agencies: The Social Security Administration (SSA) will handle new benefit calculations and COLAs; the Internal Revenue Service (IRS) will adjust tax withholding and reporting for higher earnings; the Bureau of Labor Statistics will develop and maintain the CPI-E, requiring new resources.
- On International Relations: Minimal direct impact, as this is a domestic social insurance program.
- Broader Effects: Could boost Social Security revenue short-term from additional taxes on high earners, potentially delaying trust fund depletion (projected around 2035 without changes). Long-term, full inclusion of surplus earnings by 2032 might stabilize funding but increase benefit costs.
Main Stakeholders Affected
- Social Security Beneficiaries: Primarily older adults (62+), survivors of deceased workers, and disabled workers, who gain from improved COLAs and potential benefit boosts.
- High-Income Workers and Self-Employed Individuals: Face temporary higher payroll taxes (up to 86% of earnings above the CBB in 2026) but eventual benefit credits for those earnings.
- Low-Income Recipients: Protected from losing SSI or Medicaid due to COLA increases.
- Federal Agencies: SSA (benefit administration), IRS (tax collection), and Department of Labor (index creation).
- Taxpayers and Employers: Indirectly affected through payroll tax changes, with employers sharing the wage tax burden.
Notable Legal, Constitutional, or Political Implications
- Legal: Amends core sections of the Social Security Act (Title II) and Internal Revenue Code, requiring coordination between agencies for implementation. The phase-in avoids abrupt changes, reducing legal challenges, but could invite lawsuits over retroactivity or indexing methods.
- Constitutional: No major issues; it involves Congress's taxing and spending powers under Article I. The progressive adjustments align with equal protection principles by aiding vulnerable groups without discriminating.
- Political: Addresses long-debated Social Security solvency and equity concerns (e.g., the "cap" favoring high earners) without cutting benefits or raising the retirement age, appealing to reform advocates. Sponsored by Democrats (Hirono, Smith, Merkley), it may spark partisan debate on fiscal impacts, with potential to extend program viability amid aging demographics. Referred to the Senate Finance Committee, its passage could influence midterm elections or broader entitlement reforms.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. Smith, Tina [D-MN], Sen. Merkley, Jeff [D-OR]
Recent Actions
- 2025-07-31: Read twice and referred to the Committee on Finance.
- 2025-07-31: Introduced in Senate
Bill Versions
- Protecting and Preserving Social Security Act — issued 2025-07-31 — PDF (16 pages)