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House Republicans unveiled a plan this week that calls for raising the Social Security retirement age. Meanwhile, Democrats and defenders of the program are stepping up calls to tax the wealthy to increase benefits.
“On the right, there’s a line in the sand against raising taxes,” said Emerson Sprick, associate director of economic policy at the Bipartisan Policy Center.
“And there’s this idea on the left that we’re going to tackle this problem and not touch the benefits,” he said.
Both Social Security and Medicare face impending bankruptcy dates, while the number of seniors who rely on these programs is expected to grow.
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The trust funds that Social Security relies on to pay benefits could be depleted within the next decade. For retirees, this could equate to a 23% reduction in benefits. For the average dual-income couple, that would reduce benefits by $17,400, the Committee for a Responsible Federal Budget estimated.
The Medicare Hospital Insurance Trust Fund, which covers Medicare Part A, could face insolvency in 2031.
Meanwhile, the Congressional Budget Office now projects that public debt will rise to 166% of gross domestic product by 2054, up from about 97% by fiscal 2023.
This week, the Republican Study Committee, a large group of conservative House Republicans, released a 2025 budget proposal that includes significant reforms to Social Security and Medicare.
President Joe Biden, in his own recent budget proposal, also outlined sweeping changes he hopes will be made to these programs.
Changes to Social Security and Medicare will need to be bipartisan.
“Any kind of lasting policy with a realistic chance of passing Congress would have to include aspects of both budgets,” Sprick said.
The Republican budget foresees raising the retirement age
Republican Budget Study Committee Calls for “Making Social Security Solvency Again.”
The reforms will be phased in and “do not affect any seniors in or near retirement,” according to the plan. Ultimately, the goal of the changes is to make the Social Security retirement trust fund “sustainably solvent.”
The Republican budget proposal calls for “modest adjustments” to the retirement age to reflect longer life expectancies, though it did not specify how high the age could be raised. Social Security’s full retirement age — when beneficiaries can receive 100 percent of the benefits they’ve earned — is currently 67 for people born in 1960 or later.
The plan also calls for reducing full retirement age benefits for high earners, while limiting and phasing out “supplemental benefits” for spouses and dependents of those beneficiaries. The budget does not specify the income thresholds to which these changes will apply.
“There’s a lot of willingness and openness on the part of Republicans to cut Social Security for high-income people,” Sprick said.
The Republican budget proposal would restructure Medicare so that beneficiaries receive premium subsidies they can use to pay through either federal traditional Medicare plans or private Medicare Advantage plans. The amount of subsidies will be based on a benchmark that will be chosen after testing several options, according to the plan.
Biden’s proposal opposes benefit cuts
Biden’s budget outlines ways the president wants to address the looming funding shortfalls currently facing both Social Security and Medicare.
“No cuts to benefits,” says the budget on Social Security. Efforts to privatize the program have also been ruled out.
To help repair the Social Security shortfall, Biden’s budget calls for “the highest-income Americans to pay their fair share.”
“Under my plan, no one making less than $400,000 would pay an extra penny in federal taxes,” Biden said during his State of the Union address earlier this month.
The president’s budget proposal also calls for improving Social Security and Supplemental Security Income benefits for retirees and people with disabilities who “face the greatest challenges making ends meet.”
Biden’s budget also aims to shore up Medicare in line with changes he previously proposed. This includes raising the Medicare tax rate on earned and unearned income from 3.8% to 5% for those earning over $400,000.
The parties exchange blows on proposals
Biden’s plan does not specify how he would restore Social Security’s solvency with the proposed combination of tax increases and benefit increases. This led House Republicans to state in their budget proposal that “President Biden’s plan would cut income by 23% in 2033,” in reference to the program’s current projected expiration date.
“We could permanently extend the life of the Medicare trust fund — without reducing benefits — if congressional Republicans agree to the president’s historic budget proposal to raise taxes on the wealthy,” White House spokesman Robin Patterson said in a statement. “The president’s budget also clearly states his principles for strengthening Social Security.”
Democrats, on the other hand, complained that the Republican budget proposal would lead to $1.5 trillion in cuts to benefits, including raising the retirement age.
“Knowing that these cuts are unpopular with the American people, [Republican Study Committee] does not reveal how many years they would raise the age or how they would ‘suspend’ other benefits,” Rep. John Larson, D-Conn., ranking member of the Social Security Ways and Means Subcommittee, said in a statement.