When Americans line up to vote in the upcoming election, they'll be considering a number of key issues -- and Social Security's fate is one of them. In a recent poll by Data for Progress, a progressive think tank, preventing cuts to Social Security benefits ranked highly among voters' priorities, with 54% stating that protecting that income stream is crucial. Meanwhile, 29% said universal healthcare is top a concern, while 26% said raising the minimum wage is a major issue they'll be looking at when they hit the polls .
This data certainly sends a very clear message: Americans value Social Security and want to make sure their benefits aren't at risk of disappearing. But how worried should the public really be?
Is Social Security really in danger?
Social Security's primary revenue source is payroll taxes. Right now, workers pay that tax on up to $137,700 of earnings, and that threshold changes annually.
In the coming years, Social Security is anticipating a revenue shortfall as baby boomers leave the workforce in droves and too few younger workers come in to take their place. The program, thankfully, has trust funds it can tap to keep up with its scheduled benefits, but once those funds run out of money, benefit cuts will be on the table.
Before the COVID-19 pandemic, Social Security's Trustees estimated that the program's trust funds would be depleted by 2035. But that date may be pushed up thanks to the ongoing unemployment crisis.
Since March, tens of millions of Americans have lost their jobs, and so Social Security has lost a large amount of payroll tax revenue. At the same time, President Trump just signed an executive order calling for the deferment of payroll taxes from September through December of 2020. If those taxes are paid later on, it won't hurt Social Security too much, but if those deferred taxes are ultimately forgiven -- which the presidents says is his ultimate goal -- it could mean that the program depletes its trust funds much, much sooner than 2035.
Meanwhile, 21% of married seniors and around 45% of unmarried seniors rely on Social Security for 90% of their income or more. Slashing Social Security benefits would therefore put a lot of seniors at risk of dipping below the poverty line, and that's a scary thought.
Lawmakers are, of course, invested in preventing that scenario, and so a number of proposals have already been introduced to save Social Security from insolvency. One idea is to raise the wage cap of $137,700 to a higher level, or even eliminate that cap altogether, so that Social Security is able to collect more payroll tax revenue. Another idea is to raise full retirement age, or the age at which seniors are entitled to their full monthly Social Security benefit based on their respective earnings records.
Democratic candidate Joe Biden wants to see more payroll taxes imposed on higher earners to generate additional revenue for Social Security. Meanwhile, President Trump has hinted for years that he's interested in Social Security reforms, and the fact that he's looking to forgive four months' worth of payroll taxes is a sign that Social Security beneficiaries may not fare all that well if he's reelected. Either way, we can expect Social Security to be a hot-button issue as we slowly but surely inch closer to November.