Political disputes over Social Security have been going on for decades, so it shouldn’t be surprising that many Democrats and Republicans are at loggerheads over the future direction of the program. But that doesn’t mean there is always disagreement on ways to change it.
The vast majority of Americans agree that Social Security provides a vital service to seniors. A 2020 survey of 1,441 U.S. adults conducted by AARP found that Social Security enjoys more than 90% support among Democrats, Republicans and independents. Nearly all of them said they regard it as either the most important government program or an important one compared with other government programs.
Among lawmakers, there is also general agreement on changes that could be made to Social Security to help it become more financially stable without necessarily sacrificing the financial security of recipients. Here’s a look at five changes that enjoy bipartisan support, and how they might work.
Raise the Social Security Payroll Tax
The current Social Security payroll tax is 12.4% of wages — 6.2% from employees and 6.2% from employers. These percentages have been in place since 1990, according to the Social Security Administration, and many people want to see them change. More than 70% of Americans — including 70% of Republicans and 78% of Democrats — support increasing the tax rate, Motley Fool reported. Raising the tax rate to 6.5% for both parties would eliminate 16% of the budgetary shortfall, according to estimates from the University of Maryland.
Reduce Benefits for the Wealthy
Wealthy retirees typically receive more generous Social Security benefits because they paid more into the system when they were working. At the same time, they also have more assets tied up in pensions, savings, stocks and other financial instruments. As CNBC reported, more than 80% of Americans support reducing benefits for the wealthy so more of the money can go to lower-income seniors, according to a survey conducted by the University of Maryland’s Program for Public Consultation.
Support is bipartisan, with 86% of Democrats and 78% of Republicans favoring such a proposal. Reducing the amount of benefits for the top 20% of earners would cut Social Security’s funding shortfall by 11%.
Tax More Wages To Help Fund Social Security
More than 80% of Americans (79% of Republicans and 88% of Democrats) are in favor of applying the Social Security payroll tax to more wages. Currently, the payroll tax only applies to the first $160,200 in earnings. Any wages above that are not subject to Social Security payroll taxes. Taxing all wages above $400,000 would eliminate 61% of the budgetary shortfall. Motley Fool reported.
Raise the Retirement Age
While this proposal has been criticized by some senior advocates, the University of Maryland survey found that it enjoys 76% support from Democrats and 75% support from Republicans. Raising Social Security’s full retirement age — currently 66 or 67 years old, depending on your birth year — would reduce the funding shortfall by an estimated 14%.
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Change the Way Cost-of-Living Adjustments Are Calculated
Every year, Social Security benefits are adjusted based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Many Social Security advocates believe a better measure is the Consumer Price Index for the Elderly (CPI-E), which puts a greater emphasis on healthcare costs rather than just consumer prices. This change has support from 59% of Democrats and 55% of Republicans. However, such a move would increase the funding shortfall by an estimated 12%.
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