What happened to Social Security 2100?
At least there is some effort, but the Biden proposal for Social Security changes does not make the program solvent, modestly raises some benefits while further changing the basic concept of shared worker funding by requiring high earners to pay higher taxes for zero additional earned benefits. It asks less than 2% of wage earners to shoulder the entire burden of helping the program to survive.
And it does not place Social Security on an automatic sustainable course.
Summary: PWBM projects that Democratic presidential candidate Joe Biden’s Social Security reform plan would reduce the program’s conventional 75-year imbalance by 1.5 percent of current law taxable payroll, leaving a remaining imbalance equal to 2.0 percent of current law taxable payroll. We project that it would lower GDP by 0.6 percent in 2030 and 0.8 percent in 2050.
According to the Committee for a Responsible Federal Budget, “This (Biden) proposal would raise $800 billion to $1.04 trillion over a decade. It would also raise 1.92 percent of payroll over 75 years, which would close 60 percent of Social Security’s solvency gap.”
Future COLAs would use the CPI-E in place of the CPI-W, but that creates unrealistic expectations. The difference between the two measures are historically very small, typically less than one percent and occasionally the CPI-E is lower. It is projected to increase the shortfall by 15% over 75-years.
Why shouldn’t every worker participate in making the program sustainable? Why shouldn’t every worker receive some benefit based on their contributions?
Why should a single high income earner pay more in taxes and get nothing more in benefits while a two income family with the same income pay far less and receives more in benefits?
There are many changes (closing loopholes in political speak) possible that would fairly spread the cost. For example, why are health insurance premiums paid on a pre-tax basis under Section 125 of the IRC not taxed for FICA? Just doing that would cover 7% of the funding gap.
Or, include newly hired state and local workers in Social Security. That closes another 10% of funding shortfall using the Committee for a Responsible Federal Budget calculator.