I'm not sure if President Biden is a Rolling Stones fan. I suspect, though, that the president has heard the 1969 hit song, "You Can't Always Get What You Want." The premise of the song is one that every politician should keep in mind.
Biden wants to make several major changes to Social Security. The reality, though, is that he's unlikely to get everything he wants. But that doesn't mean he won't be at least partially successful. Here's the Social Security change Biden wants that's most likely to happen.
Image source: WhiteHouse.gov.
Dollars to doughnuts
Biden campaigned on a promise to "put Social Security on a path to long-run solvency." As of right now, the federal program's costs are projected to increase so much by 2035 that Social Security will only be able to pay 75% of scheduled benefits.
Cutting Social Security benefits is about as popular among Americans as a skunk at a wedding. The only alternative to benefit reductions, though, is to pull in more money to fund the program.
The president wants wealthier Americans to pay more taxes. Currently, only income up to $147,000 per year is taxed to help fund Social Security. Biden would like to also tax any income above $400,000 per year.
This proposal would create a "doughnut hole" where annual income between $147,000 and $400,000 wouldn't be taxed. Over time, though, this gap would disappear. That's because the maximum earnings amount subject to Social Security taxes increases every year while the $400,000 threshold wouldn't change.
Why this change is most likely to happen
Biden does want to make other changes to Social Security as well. He'd like to change the method that cost-of-living adjustments (COLAs) are calculated in a way that would benefit retirees. The president desires a higher minimum benefit for Social Security. He also wants to boost the benefits for the oldest Americans.
But these proposals aren't as likely to happen as the change to tax income above $400,000. There are two simple reasons why.
First, the increased taxes would help preserve full benefits for Social Security recipients. Everyone in Washington, D.C., knows that something must be done to generate additional funding. Biden's other ideas, though, would worsen the outlook for the program without more money coming in.
Second, the proposal to increase the salary cap for the payroll tax enjoys strong bipartisan support among Americans. A University of Maryland survey published in June 2022 found that 81% of respondents, including 88% of Democrats and 79% of Republicans, supported the change.
What it would mean for retirees
The clock is ticking for something to be done to preserve Social Security. Without action, major benefit cuts could be on the way within the next 13 years.
President Biden's proposed change to the payroll tax cap wouldn't completely solve the federal program's funding problems. However, it would go a long way toward doing so. The University of Maryland's Program for Public Consultation estimates that the change would eliminate 61% of the projected Social Security shortfall.
Sure, many Social Security recipients would no doubt love to also get the extra benefits associated with some of Biden's other proposals. But as the Rolling Stones sang, "You can't always get what you want. But if you try sometimes, well, you might find... you get what you need."
