Social Security: Where do Democrats and Republicans stand

Share

(NewsNation) — Social Security recipients will see their benefits cut in roughly a decade if Congress doesn’t take action, but Democrats and Republicans have yet to agree on a solution.

So far, former President Donald Trump and Vice President Kamala Harris have tip-toed around the politically fraught topic, with each promising not to cut benefits.

That position is popular across the political spectrum but doesn’t address the program’s looming financial shortfall.

Democratic lawmakers on Capitol Hill have recently introduced multiple bills that would fix part of the solvency issue by expanding the payroll tax to high earners. Congressional Republicans have criticized that plan while offering few specific alternatives.

“Will [Republicans] go behind closed doors and have a package that has some cuts? Or will they do it out in the open and do what the Democrats want to do? I think that’s what’s really at stake,” said Nancy Altman, president of Social Security Works, a progressive advocacy group in favor of expanding the system.

Here’s what each party has put forward on Social Security recently.

What Democrats have called for

Lift the payroll tax cap

Democrats want to address the Social Security shortfall by extending the payroll tax to those with higher incomes.

The Social Security 2100 Act, sponsored by Representative John Larson, D-Conn., would subject income above $400,000 to Social Security payroll taxes — the program’s main funding source. Today, the 6.2% tax only applies up to $168,600.

The proposal mirrors the Biden-Harris administration’s plan, which called for extending solvency “by asking the highest-income Americans to pay their fair share.”

2022 poll of registered voters suggests lifting the payroll cap to include higher wages would have broad support, with 79% of Republicans and 88% of Democrats in favor.

Critics of the plan, like Brian Riedl at the conservative Manhattan Institute, point out that uncapping the payroll tax would still result in a deficit after just five years. He said the plan would “dramatically raise taxes not just on the rich but also the upper middle class.”

Other Democratic-backed legislation introduced by Senator Bernie Sanders, I-Vt., sets the income threshold lower, imposing the payroll tax on earnings above $250,000. As a senator, Harris co-sponsored that legislation.

Boost in benefits and changes to the COLA formula

Larson’s bill, which has the support of most House Democrats, would increase benefits by 2% across the board for all Social Security beneficiaries. It would also boost benefits specifically for lower-income seniors, as well as widows and widowers.

If passed, the plan would tweak how the government calculates the annual cost-of-living-adjustment (COLA) to ensure the formula accounts for the Consumer Price Index for Elderly Consumers (CPI-E). That index weighs health care costs more heavily, which could mean higher annual bumps for retirees.

To pay for those changes, the legislation would extend the payroll tax to include incomes above $400,000 and add an additional 12.4% net investment income tax (NIIT) for taxpayers making over $400,000.

Eliminate federal income taxes on Social Security

Earlier this year, Representative Angie Craig, D-Minn., introduced a bill to eliminate federal taxes on Social Security benefits for seniors.

Today, individuals who earn above $25,000 pay income tax on up to 50% of their Social Security retirement benefits. For seniors who earn above $34,000, an additional 35% of benefits are taxable. Nine states also collect taxes on Social Security.

Like other proposals, the legislation addresses revenue concerns by extending the payroll tax, in this case to incomes above $250,000.

So far, none of the bills have gained much traction in Congress.

What Republicans have called for

Republicans have been less upfront about their vision for Social Security but insist they won’t cut benefits for seniors.

On the campaign trail, Trump has vowed not to slash benefits or raise the retirement age. The official Republican Party Platform adopted at the Republican National Convention echoed those promises.

Trump has also called for an end to federal taxes on Social Security benefits but hasn’t explained how he would address the subsequent revenue shortfall.

“There’s some ideas floating out there, but not something actually being introduced into Congress,” Richard Johnson, a senior fellow at the Urban Institute, said of the GOP’s approach to Social Security.

For now, the most comprehensive GOP plan comes from the Republican Study Committee’s (RSC) 2025 budget proposal.

The RSC, which comprises nearly 80% of all House Republicans, proposed raising the retirement age for those not near retirement “to account for increases in life expectancy.” The plan would also “limit and phase out auxiliary benefits for high-income earners” who are not near retirement.

In the proposal, Republican lawmakers blasted the “reckless spending policies” of President Biden and Congressional Democrats, arguing that their political opponents would accelerate Social Security benefits cuts for seniors.

The GOP lawmakers said the Democrats’ payroll tax plan would eliminate job opportunities in the U.S. and “fail to make Social Security solvent.”

Instead, the RSC said its budget would address concerns by increasing payroll tax revenues through “pro-growth tax reform” and “pro-growth energy policy that lifts wages” as well as “regulatory reforms that increase economic growth.”

Read more

Local News