Social Security Reform: Which Biden-Era Changes Are Most Likely To Happen?
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As The Motley Fool reported, Biden wants to make four main changes to Social Security: 1) raise more funds by increasing taxes on the wealthy; 2) boost benefits for older beneficiaries by 1% a year from ages 78 through 82 until aged beneficiaries receive a cumulative 5% increase; 3) raise the minimum benefit to 125% of the federal poverty level and 4) change the annual cost-of-living adjustment so it is based on the Consumer Price Index for the Elderly (CPI-E) instead of the current Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
So, which of these proposals is most likely to happen? A separate Motley Fool column published on Sept. 12 gave the nod to raising taxes on the wealthy, which is a popular idea for many (non-wealthy) Americans.
Under the current system, only income of up to $147,000 a year is taxed to help fund Social Security. Biden aims to raise that to more than $400,000 a year. His proposal is to create a “doughnut hole” where annual income between $147,000 and $400,000 would not initially be taxed. However, that would change over time under Biden’s plan, which calls for the maximum earnings amount subject to Social Security taxes to increase every year while the $400,000 threshold stays the same.
One reason this proposal is most likely to happen is that the extra tax revenue would help preserve full benefits for Social Security recipients — something Americans overwhelmingly support. Perhaps more importantly, this support comes from across the political aisle. Motley Fool cited a University of Maryland survey published in June 2022 which found that 88% of Democrats and 79% of Republicans support the change.
Biden’s other proposed changes are less likely to happen, according to The Motley Fool, although one of them has strong support from senior advocacy groups and certain lawmakers: the proposal to base the annual Social Security cost of living adjustment on CPI-E instead of CPI-W.
As previously reported by GOBankingRates, a bill introduced in June 2022 by U.S. Rep. Peter DeFazio (D-Ore.) and U.S. Sen. Bernie Sanders (I-Vt.) called the Social Security Expansion Act would boost every recipient’s monthly check by $200. It would also base the annual COLA on the CPI-E instead of CPI-W.
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