The future of Social Security could be a big campaign issue during the 2024 presidential elections, as candidates offer up reform proposals to a program that will lose a major funding source within the next decade.
That funding source is the Old Age and Survivors Insurance (OASI) Trust Fund, which will become depleted as early as 2032 or 2033. When the fund runs dry, Social Security benefits would have to be funded solely through payroll taxes, which cover only about 77% of current benefits.
Most reform proposals focus on a few key areas, according to a blog on the website of Clark Schaefer Hackett, an advisory and accounting firm. These include raising the retirement age, increasing the Social Security payroll tax, changing the benefits formula and implementing “means testing” that would reduce or eliminate Social Security benefits for wealthy and/or high-income retirees.
No matter what form the changes take, many experts say something must be done to either bolster or pare down Social Security for future generations.
“The longer we push this out, it becomes more difficult to try to protect everyone that receives the benefits,” Tax Foundation economist Alex Durante told CNBC. “It’s important that we tackle this sooner rather than later.”
But this is tricky ground for presidential candidates because Social Security reform is an unpopular idea among U.S. seniors — and they carry a lot of weight in elections. As CNBC reported, the two leading Republican candidates — former President Donald Trump and Florida Gov. Ron DeSantis — have said they have no plans to touch Social Security.
“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security to help pay for Joe Biden’s reckless spending spree,” Trump wrote in a January post on his Truth Social platform.
A couple of months later, DeSantis told Fox News: “We’re not going to mess with Social Security as Republicans.”
But other candidates take a different stance. Former Vice President Mike Pence, who formally entered the race on Wednesday, said earlier this year that he supports instituting private savings accounts for Social Security recipients. In doing so, he revived a privatization idea that was trotted out during the Bush II administration — and was quickly shot down.
“If Bush couldn’t do it then, despite a great effort, that’s not happening now,” former Bush II White House advisor Andrew Biggs, who is now a senior fellow at the American Enterprise Institute, told CNBC.
Another GOP presidential candidate, former South Carolina Gov. Nikki Haley, has proposed changing the retirement age for Americans currently in their 20s and limiting benefits for wealthier seniors, CNN reported.
“What you would do is, for those in their 20s coming into the system, we would change the retirement age so that it matches life expectancy,” Haley told Fox News in March.
President Joe Biden, the heavy favorite to once again win the Democratic nomination, has unveiled a four-point plan for reforming Social Security that is heavily geared toward bolstering the program, Motley Fool reported.
Among Biden’s proposals: increase payroll taxes on high earnings; change the way annual cost-of-living adjustments are calculated; gradually increase the primary insurance amount for older beneficiaries; and increase the special minimum benefit.
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