Social Security is a topic that resonates with many Americans. A 2020 AARP survey revealed that a staggering 96% of Americans support this federal program. While there’s a broad consensus on its importance, the path to its reform is unclear. One of the changes proposed by Joe Biden might, however, find favor with many.
Biden’s Proposed Social Security Change
During his 2020 presidential campaign, Biden put forth several Social Security reforms. He advocated for a higher minimum guaranteed benefit and increased payments for those who had been beneficiaries for over two decades. He also suggested revising the metric for annual cost-of-living adjustments (COLAs).
But the most significant change Biden proposed was adjusting the payroll tax cap. Previously, payroll taxes, which fund Social Security, were capped at wages up to $137,700. As of now, this cap stands at $160,200. Biden’s proposal seeks to apply the payroll tax to all incomes exceeding $400,000.
While Biden hasn’t aggressively pushed for these changes since becoming president, he did hint at a similar approach in his 2024 fiscal year budget. This proposal aims to extend Medicare’s solvency by increasing payroll taxes on incomes over $400,000.
This change, if implemented, could have a profound impact on Social Security’s future. A 2022 study by the University of Maryland’s Program for Public Consultation (PPC) found that this adjustment could address 61% of the projected Social Security deficit.
Public Opinion on the Proposal
Is this payroll tax cap increase something you’d support? If you believe so, you’re in the majority. The PPC’s research also delved into public opinion on potential Social Security reforms. Their findings? A whopping 80% of respondents supported making more wages subject to the payroll tax. This idea garnered bipartisan approval, with 86% of Democrats and 77% of Republicans in favor.
This widespread support isn’t surprising. A March 2023 survey by The Associated Press-NORC Center for Public Affairs Research showed that 79% of Americans are against reducing Social Security benefits. Revenue needs to increase to maintain benefits, which is precisely what Biden’s proposal aims to achieve.
While there are other suggestions to increase Social Security revenue, such as raising the payroll tax rate or removing the cap entirely, these proposals would impact a larger segment of the population than Biden’s proposal.
The Road Ahead
Despite the public’s consensus on Social Security reform, Washington remains divided. Some policymakers advocate raising the full retirement age, while others suggest reducing benefits for the wealthiest. If no changes are made, projections from the Congressional Budget Office indicate that by 2034, Social Security benefits might face significant reductions.
However, given Social Security’s immense popularity, it’s unlikely that any representative would risk the public’s ire by allowing such drastic cuts. This shared sentiment might be the one thing everyone in Washington agrees on.
The bottom line is that even though many Americans lag behind in retirement savings, understanding and optimizing Social Security benefits can provide a much-needed boost to their savings. With proposed changes like Biden’s, there’s hope for a more secure re