According to a recent annual report from the program’s trustees, Social Security may not be able to provide full payments in just 13 years.
If Congress doesn’t amend the programme sooner, only 80% of compensation will be payable in 2035.
Generally speaking, tightening the programme will need either tax increases, benefit reductions, or a combination of both. Democrats have floated a number of plans to raise taxes and expand benefits, including a House bill they intend to put to a vote this year. Republicans have stated that they disagree with their proposals.
Despite the impasse in Washington, the University of Maryland’s Program for Public Consultation concluded that a number of reforms may be acceptable to public voters who lean either Republican or Democrat.
Between April 11 and May 15, the programme polled 2,545 registered voters as part of a public consultation.
According to Steven Kull, director of the Program for Public Consultation at the University of Maryland, the questions were laid out as a simulation of policymaking.
One at a time, the possibilities were discussed, each with a pro and con argument that had been examined by specialists on both sides of the issue. Each option has gradations and potential effects on the program’s deficit.
According to Kull, respondents tended to spread out their options to include some budget cuts and some revenue gains. Most people didn’t max out either side.
Following are the top seven fixes listed by Americans as being willing to be implemented:
Slashing benefits for people who earn the most money
- Democrats in favor: 86%
- Republicans in favor: 78%
- Share in favor: 81%
Even though they probably have more options for financing their retirement, such as pensions and savings, wealthier retirees typically receive more substantial benefits. Another strategy to assist close the program’s funding gap is to apply means testing on benefits for people with specific levels of wealth or income.
By doing this, the benefits received by the top 20 percent of earners would be reduced, and the shortfall would be reduced by 11 percent.
Raising the cap on Social Security payroll taxes
- Democrats in favor: 88%
- Republicans in favor: 79%
- Share in favor: 81%
According to Kull, the one plan that had “overwhelming bipartisan support” was raising the payroll tax cap.
In 2022, Social Security payroll taxes are levied on income up to a cap of $147,000; this cap is changed annually. Therefore, those with high incomes may only pay Social Security payroll taxes during certain months of the year.
Rep. John Larson, D-Conn., has a Democratic proposal called Social Security 2100: A Sacred Trust that would reapply those payroll taxes to salaries above $400,000. Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have also introduced a bill that would impose additional taxes on capital gains, net investment income, and company income in addition to a $250,000 threshold.
Researchers predict that if the threshold at which Social Security payroll taxes are reapplied to income over $400,000 were raised, 61 percent of the shortfall would be eliminated. With the slogan “Scrap the Cap,” the initiative has gained broad favour.
Raising the retirement age gradually
- Democrats in favor: 76%
- Republicans in favor: 75%
- Share in favor: 75%
Your retirement age is when you are eligible to receive all of the benefits you have accrued depending on your work history. The 1983 retirement age increases are still being implemented gradually today. Full retirement age is 67 for those who were born in 1960 or later.
Some contend that the retirement age need to be increased once more since more people work and live longer lives. The Social Security expansion movement, however, is adamantly opposed to this benefit reduction. The Democratic plans in Washington overwhelmingly reject this modification.
The shortage would be reduced by around 14% as a result of this action.
An increase in the minimum benefit
- Democrats in favor: 71%
- Republicans in favor: 59%
- Share in favor: 64%
Living on the minimum benefit might be challenging for those whose only source of retirement income is Social Security benefits. A bill put out by Sanders and Warren would adjust the minimum benefit to 125 percent of the federal poverty level. Similar to this, Larson’s proposal would increase the minimum benefit.
With that adjustment, the minimum benefit for someone with 30 years of service would rise to $1,341 from $951, increasing the shortfall by 7%.
Calculations for cost of living adjustments being changed
- Democrats in favor: 59%
- Republicans in favor: 55%
- Share in favor: 55%
Currently, Social Security benefits are modified annually based on a portion of the Consumer Price Index, which tracks changes in the prices consumers pay over time. Benefits increased by a record 5.9 percent in 2022, and benefits are expected to rise even further in 2023.
However, many contend that the CPI-W, or Consumer Price Index for Urban Wage Earners and Clerical Workers, is not the best indicator of the expenses paid by retirees. All Democratic ideas propose for substituting the Consumer Price Index for the Elderly, or CPI-E, for that metric.
The difference would result in a 12 percent increase in the deficit.
Implementing a higher payroll tax
- Democrats in favor: 78%
- Republicans in favor: 70%
- Share in favor: 73%
Raising the 6.2 percent tax rates that companies and employees currently pay each other might significantly affect the program’s viability. According to the study, increasing that to 6.5 percent would help reduce the shortage by 16 percent.
Rep. John Larson, D-Conn., first introduced the Social Security 2100 Act, which called for increasing the payroll tax rate for both employees and employers from its current 6.2 percent to 7.4 percent apiece. Over the course of more than 20 years, such adjustment would have been implemented gradually. According to the idea, this would cost the typical worker earning $50,000 just 50 cents more per week.
Republicans scoffed at the idea of passing on higher tax rates to future generations, despite Larson’s comparison to the price of a coffee. The payroll tax rate is no longer raised under the Social Security 2100 Act.
Benefits for beneficiaries over 80 years old are being increased
- Democrats in favor: 56%
- Republicans in favor: 53%
- Share in favor: 53%
The shortfall would grow by 5% if benefits for beneficiaries over 80 were increased by 5%. Benefit hikes would undoubtedly not solve the program’s budgetary problems. However, they might contribute to making sure retirees can support themselves financially during their retirement.
According to Kull, the study does not intend to support any one political position.
“We don’t take a position except the position that the public should be heard,” Kull said.
“The public very strongly wants this,” he stated.