President Joe Biden has proposed sweeping reforms to improve US social security. Several people in America count on Social Security benefits to support them financially, when they are retired, disabled, or when a loved one passes away.
Social security in the US is supposed to be in trouble, and President Biden has proposed ideal plans that help to strengthen social security in the US.
During the campaign for the presidential election, Joe Biden put forward a plan that helps to strengthen social security in the US. According to Biden, the plans he had then would strengthen social security in the coming generations, and he promised to implement those when he wins the presidency.
Among the four plans proposed by Biden, two stand out, strengthening social security.
The most significant social security reform plan that Biden has proposed would directly address income inequality. The reform brings in a substantial amount of additional revenue.
The people who earn between $0.001 and $160,200 are subject to a payroll tax of social security this year. Nearly 94% of employees in America earn less than $1600, 200, which is the limit for taxable income. The remaining people who earn an income above the maximum limit of $16,200 are not subject to the payroll tax.
In Joe Biden’s proposal, the earned income would remain free between the maximum taxable earning cap and $40,000, and the payroll tax would be restored on earned income over that threshold. This will eventually close down in the coming years because the maximum taxable earnings limit continues to rise over time with inflation.
The annual cost-of-living adjustment for social security has been calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). However, this price-measuring index is primarily concerned with the spending patterns of urban wage earners and clerical workers or those who ordinarily do not receive social security benefits.
Instead of using the system of CPI-W to determine the annual cost-of-living adjustment for social security, Biden prefers to use the Consumer Price Index for the Elderly.
Also Read: Elon Musk Sends Subtle Message to Disenchanted Tesla Shareholders
In 2022, millions of eligible Americans have received social security benefits. Among these Americans, most of them are retired people. Even if these retirees are getting their social security benefits, the sector is in serious trouble.
According to the 2022 Trustees Report, social security has created its biggest financial gap until 2096.
Since 1985, a hole in long-term finance has been predicted in each trustee’s report.
The troubles in the social security system are mostly due to population changes. The low birth rates and rising income disparity are two of the major reasons that paved the way for the demographic shifts in the US.
The Old-Age and Survivors Insurance Trust Fund’s (OASI) capital holding is expected to be exhausted in 2034 based on the reports from last year. Each month, retired workers and beneficiaries of deceased workers are paid social security benefits by the OASI Trust. The trustees think a 23% benefit cut across the board would be required to maintain payouts until 2096. This is possible if this extra income were to run out in the next 12 years.
As Biden and other Congressmen have sweeping reforms for social security, there is absolutely no chance that Social security would go bankrupt. But the only concern is that they can’t be sure about the amount of money that will be paid out in social security benefits to retired workers in 12 years.
According to Joe Biden, he needs the help of newly elected political representatives to implement the plans he had for improving these social security benefits. And that would be the biggest challenge that Biden has to face this year.
The 118th Congress formed in the US a few days back has the majority of Republicans. It is a huge concern that these republicans will stand for Joe Biden’s new reform policies.
As we said earlier, the US is in serious trouble with social security benefits and Biden has certain plans to improve the system. Likewise, the majority of republicans in the newly formed congress also have their ideas to fix this trouble.
Biden’s proposal suggested raising more payroll tax and adding more benefits to low-earning workers. Meanwhile, the republicans are suggesting increasing the age of retirement and using the Chained CPI as the inflationary measure. The solutions that both Biden and the Republicans have would help the US social security system to improve.
To implement the policies proposed by Joe Biden, Senate votes are a must. To change the nation’s retirement scheme as Biden proposed, 60 votes are required in the upper house of Congress. So, to change the social security system Biden needs to have support from both parties which is challenging for him. The newly formed Congress has a majority of Republicans and so it’s very doubtful for Biden to make his social security reforms a reality.
