During presidential elections, Social Security has always been one of the main issues people talk about. This year is no different. The subject has been brought up more than normal this year because, according to data from the Congressional Research Service, the Social Security Trust Funds will run out of money no later than 2035.
Not having enough money in the Trust Funds is not a new problem. In fact, politicians and experts have been worried about the program’s finances for years.
The reality of the Social Security financing crisis
The method is called “pay-as-you-go,” and it works like this: people who are working now pay taxes on their income, which helps retirees and other people who are eligible. One problem with the system is that there are now more recipients of benefits than workers to pay for them.
To pay for benefits, the program has been taking money from the Trust. This doesn’t mean that benefits would stop if the Trust ran out, but if Congress doesn’t move soon, they will only be able to pay out 83% of benefits.
Solutions to the program’s shortfall
To fix the program’s gap, both Republicans and Democrats have come up with ideas, and they’ve used the general election to get their points across.
In general, Republicans want to cut benefits and raise the retirement age to 70, but former President Donald Trump doesn’t seem to follow the party line. During the campaign, he made it clear that he would not “cut one penny from Social Security” or raise the retiring age.
Democrats, like Vice President Kamala Harris, want to strengthen the program and make “millionaires and billionaires pay their fair share in taxes.”
Even though the party doesn’t have a full plan, the many bills they’ve introduced to raise taxes on the rich or tax a larger portion of income (in 2024, the most that Social Security payroll taxes can be raised is $168,000) can give people who are thinking about voting an idea of what they can expect.
An economist at the Economic Policy Institute named Monique Morrissey said, “People are shocked to learn that rich people don’t pay taxes above [the cap].”
One bill that President Biden put forward to close the gap would have taxed all income over $400,000 for Social Security. Families whose income is between the cap and this amount would be exempt, and the program would get more money.
But Morrissey believes that it’s not enough and that all income should be taxed. He says, “The Democrats need to break that promise [that they won’t raise taxes on people making less than $400,000].” When people see that their taxes are going to something that helps them, they are happy to pay more.
Tax hikes, especially for the wealthy, are generally not liked by most people. That’s why politicians don’t like to put forward plans that include tax hikes. The head of the Retirement Security Project at the Brookings Institution, Gopi Shah Goda, supports a mixed approach. He says, “It’s perfectly reasonable to think about solving a problem with some mix of revenue increases as well as benefit reductions.”
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