Social Security is in jeopardy. Many know it, including the program’s trustees, who recently stated that Social Security would become bankrupt one year earlier than predicted.
The president is also aware that something must be done to ensure the viability of Social Security. While his administration has not yet suggested substantial Social Security reforms, Joe Biden has previously stated that he intends to make significant changes to Social Security. And there’s reason to anticipate that the majority of Americans will support it. Two polls, one in 2023 and one last year demonstrate that Americans support one of the president’s proposals to reform Social Security.
Biden’s Plan is Relatively Simple
During the presidential election, Biden advocated various increases in Social Security benefits. He planned, for example, to increase payments for elderly Americans who had been retired for at least 20 years. He also proposed raising the minimum benefit, allowing surviving spouses to earn larger benefits, and eliminating fines for public-sector workers.
The most significant difference in Biden’s plan for Social Security was that the government should tax Americans with high wages in the same way that it taxes middle-class families. He specifically recommended raising the payroll tax maximum to $400,000; this limit is presently set at $160,200.
So far, Biden has yet to propose a strategy that includes this modification. He did, however, include a comparable notion for Medicare in his proposed budget for 2023. To help protect the federal healthcare program, Biden proposed a tax hike on all yearly earnings exceeding $400,000 per year.
What Americans Believe
NORC Center for Public Affairs Research did a study and found out that many Americans agree with the president’s ideas regarding Social Security. Although this survey did not expressly ask about lifting the Social Security payroll tax ceiling, the White House was likely pleased with the replies to other questions.
For example, 79% of those questioned oppose lowering Social Security payments, and three-quarters of those polled opposed extending the full retirement age from 67 to 70. This is consistent with Biden’s pledge to avoid any cutbacks to Social Security.
When asked if raising taxes on those earning more than $400,000 would help pay for Medicare, 58% of Americans supported the concept, with another 19% undecided. This does not imply that a similar proportion of Americans would support raising the payroll tax maximum to $400,000 to help fund Social Security. If he sticks with the idea, the president has a good chance of gaining popular support.
Another study performed last year by the University of Maryland’s Program for Public Consultation (PPC) also looked promising for Biden. According to the PPC poll, 81% of respondents approved taxing all income above $400,000 to fund Social Security. More importantly, the plan was supported by Republicans and Democrats, with 79% of Republicans and 88% of Democrats in favor.
More modifications are required.
At this moment, raising the payroll tax ceiling is one of the most likely improvements to preserve Social Security benefits. However, this approach will not secure the program’s long-term viability.
According to the Social Security Administration, increasing the payroll tax maximum to $400,000 beginning in 2024 would remove approximately 64% of the estimated Social Security shortfall. This estimate is similar to last year’s PPC forecast, which said that the modification would lower the program’s shortfall by 61%.
The good news for seniors is that several more options are available to keep Social Security from going bankrupt in 2034. It’s also a good indicator that leaders from all major political parties are at least discussing how to keep the program going.
While agreement on the appropriate measures has yet to be reached, a bipartisan proposal to improve Social Security remains viable. Meanwhile, Americans approaching retirement should save as much as possible and look for other methods to increase their retirement income.