President Joe Biden’s tenure has administration passed substantial increases in Cost of Living Adjustments (COLA) for Social Security benefits, aiming to tackle the pressing issue of inflation impacting seniors and beneficiaries nationwide.
Under Biden’s leadership, these Social Security benefit increases far exceed those seen during the preceding Trump administration.
From 2017 to 2021, COLA increments under President Donald Trump ranged modestly between 1.3% and 2.8%.
In contrast, President Biden’s administration has adopted a progressive stance, culminating in a robust 5.9% increase in 2022 and a strong 4.7% increase in 2023.
These adjustments are pivotal for millions relying on Social Security as a primary source of retirement income, reflecting Biden’s proactive approach to safeguarding seniors’ financial well-being amidst rising living costs.
Advocates for retirees have lauded the administration’s efforts, noting that these generous increases offer critical relief amid escalating expenses for essentials such as housing and healthcare. This proactive measure not only bolsters economic security but also underscores Biden’s commitment to upholding Social Security as a vital safety net.
Meanwhile, as debates over Social Security intensify on Capitol Hill, Democratic and Republican lawmakers present divergent approaches to its future.
“Lawmakers could choose (1) to increase revenues to the OASI Trust Fund, (2) to reduce cost through modification of the OASI program benefit levels or eligibility requirements, or (3) to use a combination of methods to strengthen the financial condition of the OASI Trust Fund,” said the trustee’s report.
Democrats advocate expanding benefits and protecting Social Security as a cornerstone of economic security, proposing adjustments to benefit formulas and rejecting privatization efforts. They emphasize the program’s role in reducing income inequality and supporting vulnerable populations through enhanced benefits and improved disability insurance.
In contrast, Republicans favor a more conservative approach, prioritizing fiscal responsibility and individual accountability.
GOP proposals include gradual increases in the retirement age and consideration of privatization through personal retirement accounts. Republicans say they seek market-based solutions and oppose tax increases to fund Social Security, advocating for cost-control measures and means-testing benefits based on income or wealth.
The debate underscores broader ideological divides regarding the government’s role in retirement security and economic fairness.
Democrats aim to strengthen Social Security’s long-term solvency through progressive revenue solutions, such as adjusting income caps on Social Security taxes. In contrast, Republicans stress market efficiencies and reducing government involvement, believing these approaches will ensure program sustainability without burdening taxpayers.
As policymakers navigate these differing visions, the challenge remains finding common ground that preserves Social Security’s integrity while meeting the needs of future retirees.
The decision made by voters in the upcoming presidential election will shape retirement security in America for years to come, influencing millions relying on Social Security as a crucial lifeline in their retirement years because the program will automatically cut benefits by up to 25 percent unless Congress acts to replenish a surplus that will be depleted in 2033.
According to a timetable laid out by the Social Security Administration’s Board of Trustees, if Congress does nothing, the agency will run short of funds and that means almost 60 million people would see their benefits automatically cut.
“Social Security is the most far-reaching and important act of social and economic justice that the United States has ever enacted, and shoring up these depleted Social Security reserve funds should be an immediate national priority,” said Lisa McCormick, an advocate for eliminating the cap on income subject to FICA taxation.
McCormick has been a vocal proponent of “scrapping the cap” on taxable earnings, a move that would require very wealthy Americans to contribute to Social Security at the same tax rate as the rest of the population.
“The way to fix this problem is by eliminating the cap on taxable income. This action alone would put Social Security on a solid financial foundation, ensuring that benefits remain secure, even if they are increased or the retirement age is lowered,” said McCormick. “If we ‘scrap the cap’ very wealthy Americans would contribute to Social Security at the same tax rate as the rest of us and the system would again be financially stable.”
“While 94 percent of U.S. workers shell out payroll taxes on every dollar in their paycheck, the very richest Americans avoid contributions to Social Security on most of their money due to the program’s cap on taxable earnings,” said McCormick.
McCormick said that if underpaid full-time working Americans can struggle with economic pressures, it seems obvious that Los Angeles Lakers star player LeBron James could afford to pay the same rate of Social Security taxes as every American who makes less than $168,600.
“LeBron James is paid over $40 million to play 82 basketball games each year. LeBron’s FICA tax rate is 0.021 percent. That isn’t really fair,” said McCormick. “LeBron is done paying into Social Security during the first quarter of the first game. For the rest of that game, the next 81 games, right through baseball, football & even hockey season, he doesn’t pay another dime.”
“Americans could add $475 billion in revenue to the Social Security trust fund each year by making everyone with income over $170,000 –the rich– pay the same tax rate as everyone with income up to $168,600 –you,” said McCormick, who earned four of ten votes cast in the 2018 Democratic primary election against US Senator Bob Menendez.
Social Security currently provides benefits to more than 66 million recipients. The Congressional Budget Office (CBO) estimates that about 78 million people, or about 20% of the U.S. population, will receive benefits from the Old-Age and Survivors Insurance (OASI) Trust Fund in 2032.
The CBO and the trustees of the Social Security and Medicare trusts have both raised alarms about how soon Social Security will become “insolvent.” Insolvency in this context refers to the point at which the trust fund will be depleted, and payments would come solely from income generated by payroll tax and income tax on benefits.
To recap, in just over eight years, 60 million people will face a 21 to 25 percent cut in benefits if lawmakers don’t do something and while higher earners pay taxes only on the first $168,600 of the income they receive, Republicans say they will not impose payroll taxes on excess wealth earned by the richest Americans.
Republicans would prefer to raise the retirement age or cut benefits for retirees, and most Democrats do not want to do that.