America has decided. But the outcome of the decision still isn't fully known.
I'm referring, of course, to the congressional elections held last Tuesday. The control of the U.S. Senate was still in doubt as of the time of this writing. The GOP appears likely to have a slim majority in the U.S. House of Representatives. However, that's not a foregone conclusion just yet.
Meanwhile, the clock continues to tick before Social Security's trust fund runs out of money. Whatever the final votes show, the pressure for Congress to do something to bolster the federal program will increase over the next two years. What Social Security changes could be in store after the November elections?
Image source: Getty Images.
What Democrats would like to do
We only have to look at President Biden's 2020 campaign platform and bills put forward in the current congressional session to know what Democrats would like to do about Social Security. One key area where they're on the same page is to raise the payroll tax cap.
In 2020, then-candidate Biden proposed applying payroll taxes used to fund Social Security to all income above $400,000. Currently, the maximum cap for payroll taxes is $147,000.
Other Democrats also like this general idea. For example, the Social Security 2100 Act authored by Rep. John Larson of Connecticut includes the same proposal. The Social Security Expansion Act sponsored by Sen. Elizabeth Warren of Massachusetts, Rep. Peter DeFazio of Oregon, and Sen. Bernie Sanders, the Vermont independent, would increase the payroll tax threshold to $250,000.
Currently, all workers pay 6.2% and their employers pay another 6.2% to fund Social Security. The Social Security Expansion Act would increase the tax rate to 12.4% on investment and business income made by millionaires and billionaires.
Democrats also want to increase Social Security benefits in various ways. One especially popular proposal is to change how cost-of-living adjustments (COLAs) are calculated by switching to an inflation metric focused on the costs of seniors. Other plans feature increases to the minimum benefits for Social Security recipients.
What Republicans would like to do
Several major Social Security changes are included in the 2023 budget proposed by the Republican Study Committee (RSC) caucus, which includes over 150 current GOP members of Congress. The idea that would make the biggest impact on preserving Social Security benefits is to increase the full retirement age (FRA).
The RSC caucus would like to gradually increase the Social Security FRA to 70 by three months per year through 2040. This proposal wouldn't impact any current Social Security recipient or anyone who is already age 55 or over.
Another component in the RSC's 2023 budget impacting Social Security is to eliminate penalties for early retirees who would prefer to continue working. The RSC also proposes increasing the minimum benefit for low-income recipients.
Some in the GOP have more controversial ideas. Sen. Ron Johnson of Wisconsin has suggested that Social Security should be reauthorized by Congress on an annual basis. Sen. Rick Scott of Florida has proposed the reauthorization of the federal program every five years.
The most likely Social Security changes
So what are the most likely Social Security changes on the way after the November elections? There probably won't be any changes to the program -- at least not in the next Congress.
When one political party doesn't hold the White House as well as majorities in both chambers of Congress, major reforms usually don't happen. Fixing Social Security will require some compromises. With a divided government probably on the way and a presidential election in 2024, neither Democrats nor Republicans are likely to have a spirit of compromise.
To be sure, significant changes will be needed to Social Security within the next 13 years or less to keep the program from going insolvent. But it will almost certainly require some degree of cooperation between the two major political parties to push those changes through. For now, the status quo for Social Security appears to be the most probable scenario for the next couple of years.
