On Wednesday, Social Security marked its 89th anniversary since President Franklin D. Roosevelt signed the program into law. However, the program’s future is now facing uncertainty as its trust funds are projected to run dry by 2035. Without action from Congress, beneficiaries could see a 17% across-the-board benefit cut by that time. Additionally, the trust fund that pays retirement benefits is expected to run out even sooner, in 2033, risking a 21% cut to those benefits.
Social Security has become a critical issue for voters in the upcoming presidential election. A recent CNBC poll found that it is one of the top or very important issues for voters in deciding which candidates to support. Social Security Commissioner Martin O’Malley expressed optimism about Congress’s willingness to address the program’s future and ensure its longevity for years to come.
Trump’s proposal to eliminate taxes on Social Security benefits has sparked debate among lawmakers. While some believe it could provide relief for seniors, others are concerned about the potential impact on federal deficits. A Democratic bill introduced earlier this year, the You Earned It, You Keep It Act, also aims to exclude Social Security benefits from gross income for federal income taxes. This move could save the average senior household nearly $560 per year, according to the Senior Citizens League.
However, the Committee for a Responsible Federal Budget has raised concerns about the financial implications of Trump’s proposal. They estimate that it could increase federal deficits by $1.6 trillion to $1.8 trillion through 2035 and worsen Social Security’s 75-year shortfall by 25%. Despite these concerns, Trump’s campaign has not provided a response to CNBC’s request for comment on the matter.
Rep. John Larson has put forward an alternative reform package, the Social Security 2100 Act, which aims to make benefits more generous and sustainable. The bill includes a 2% across-the-board benefit increase and additional targeted increases for lower-income seniors, widows, widowers, and students. It also seeks to eliminate rules that result in reduced benefits for certain public servants.
To finance these changes, the bill proposes raising the Social Security payroll tax thresholds for wealthy earners and applying a higher net investment income tax rate for those individuals. These provisions could extend the program’s ability to pay full benefits by 32 years, according to the Social Security Office of the Chief Actuary.
The Social Security 2100 Act has garnered support from 188 Democratic co-sponsors and is set to be reintroduced in the next session of Congress. Larson is hopeful that Democratic presidential candidate Kamala Harris and her running mate, Tim Walz, will back the bill. Harris has previously co-sponsored a similar bill aimed at improving benefits and increasing taxes on the wealthy, while Walz has supported Social Security reform efforts during his time in Congress and as governor of Minnesota.
While Republicans have proposed other changes to Social Security, such as raising the retirement age, Larson believes that a bipartisan compromise is necessary to ensure the program’s solvency. He emphasizes the importance of ensuring that wealthy earners pay their fair share to support the program and prevent benefit cuts for vulnerable populations.
In congressional hearings on Social Security reform, Republican lawmakers have expressed concerns about the costs associated with proposed changes. Rep. Jodey Arrington commended Larson for his dedication to addressing the program’s challenges but stressed the need for a collaborative approach to finding solutions.
As discussions on Social Security reform continue, the fate of the program remains uncertain. While there are differing opinions on how best to address its financial challenges, lawmakers like Larson are committed to finding a sustainable solution that ensures the program’s longevity for future generations.