In recent weeks, partisan debate over Social Security has intensified. Both Democrats and Republicans have been accusing each other of either wanting to undermine or fix the program.
Bleak Situation
A bipartisan solution for Social Security reform seems bleak due to the current political hostility. However, the only suggestion with minimal bipartisan support involves increasing the full retirement age to receive Social Security benefits. A pair of Republican lawmakers raised concerns about the Social Security debate last week, intensifying the rhetoric.
During a Senate Finance Committee hearing, U.S. Sen. Bill Cassidy (R-La.) accused Treasury Secretary Janet Yellen of being dishonest about President Joe Biden's interest in collaborating with lawmakers on Social Security reform, according to Reuters. In another hearing, Sen. Mitt Romney (R-Utah) confronted Shalanda Young, director of the White House Office of Management and Budget (OMB), about Biden's fiscal 2024 budget proposal.
Romney accused Young of being “simply wrong” and “not honest” for suggesting that current members of Congress want to reduce Social Security and Medicare. These accusations have only added to the partisan bickering surrounding Social Security reform and the challenges of achieving bipartisan solutions.
To mitigate the upcoming insolvency of Social Security's Old-Age and Survivors Insurance (OASI) Trust Fund, which funds roughly 20-25% of Social Security benefits, some suggest raising the Full Retirement Age (FRA). The trust fund is projected to run out of funds by the mid-2030s, forcing Social Security to rely only on payroll taxes for funding.
Potential Benefits and Pitfalls
Raising the FRA could encourage more seniors to wait longer to claim Social Security benefits, resulting in bigger monthly payments. As a result, the Social Security Administration will have fewer benefits to pay out. There is bipartisan support among registered voters for raising the full retirement age, but not necessarily up to age 70. A survey of over 2,500 registered voters by the University of Maryland's Program for Public Consultation in 2022 found that 75% of respondents supported raising the retirement age gradually from 67 to 68, removing an estimated 14% of the funding gap. The support was evenly divided between Republicans (75%) and Democrats (76%).
Other bipartisan solutions supported by voters include expanding wages subject to Social Security payroll tax, increasing Social Security withholding, and decreasing benefits for high-income earners.
However, raising the full retirement age has drawn criticism from Social Security advocates and lawmakers due to the potential financial burden on seniors who are already struggling to make ends meet. As a result, there is no clear consensus on how to reform Social Security and ensure its long-term sustainability.
The National Committee to Preserve Social Security and Medicare (NCPSSM) warns that increasing the Full Retirement Age (FRA) to 70 would substantially reduce benefits for individuals retiring before the new FRA. However, representatives for Cassidy and King argue that their proposal would not cut benefits for current Social Security recipients and that many could even receive increased benefits.
This article was produced and syndicated by Wealth of Geeks.