President Joe Biden is considering a significant change to Social Security in order to fully fund the program for another 75 years.
Pres. Joe Biden considers changes to Social Security. (Photo: CNN)
Biden’s Social Security Proposal
While Biden has promised not to cut benefits, he may be open to revising the program in ways that do not reduce payments. Biden recently met privately with Senator Bernie Sanders to discuss Social Security, and it appears that he may support Sanders’ proposal to raise the payroll tax cap that funds Social Security, according to a published article in The Motley Fool.
Currently, income above $160,200 is not subject to this payroll tax, but Sanders has proposed taxing all income above $250,000. Biden has previously proposed a similar plan on Social Security, with a threshold of $400,000. However, this would require him to renege on his pledge not to increase taxes on Americans with household incomes below $400,000.
In addition to raising the payroll tax cap, Sanders has also proposed increasing Social Security benefits by $2,400 per year. Social Security’s chief actuary, Stephen Goss, has confirmed that this proposal would fully fund the program for the next 75 years while allowing all scheduled benefits to be paid out.
In contrast, Biden’s proposal to increase the payroll tax cap to $400,000 would only delay Social Security’s insolvency until 2044, after which Social Security recipients would face an 11% benefit reduction.
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Changes to Social Security
Changes to Social Security will be necessary to avoid insolvency. Last year, Social Security’s trustees projected that the combined trust funds for the program would be depleted by 2035, but the Congressional Budget Office now estimates that this could happen as early as 2033.
Social Security recipients will face at least a 20% benefit cut if no changes are made. Other potential ways to avoid steep benefits cuts include raising the retirement age or the payroll tax percentage, according to a recently published article in Yahoo News.
While it remains to be seen whether President Biden will support Senator Sanders’ proposal, he has acknowledged that changes to Social Security are necessary. Major changes to the program are on the way, and it is crucial to find a solution to fully fund Social Security for the next 75 years.
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