Social Security has sometimes been called "the third rail of American politics." The idea behind this reference is that -- like the third rail that provides electrical power to a train -- if you touch it, you'll die.
However, figures in both major political parties continue to back major changes to Social Security. Joe Biden's 2020 presidential campaign included several proposals to reform the popular federal program. Some of his ideas remain controversial. But here are three Social Security changes wanted by President Biden and many Republicans, too.
Image source: Official White House photo by Adam Schultz.
1. Increase the payroll tax cap
Social Security is on track to become insolvent by 2035. The problem is that more money is being spent on benefits than is being received in taxes. As a result, the program's trust funds will eventually be depleted. Biden wants to prevent this from happening. His primary proposal to avoid insolvency for Social Security is to increase the salary cap for the payroll tax funding the program.
In 2023, the maximum salary subject to Social Security payroll taxes will be $160,200, up from $147,000 in 2022. Biden would like to also make all annual income above $400,000 subject to this tax. The University of Maryland's Program for Public Consultation (PPC) estimates that this increase to the payroll tax cap would eliminate 61% of the projected Social Security shortfall.
This proposal is very popular with Democrats, with 88% support based on a September survey conducted by the PPC. It's also viewed favorably by many Republicans. The same survey found that 79% of respondents identifying with the GOP supported the idea.
2. Raise the minimum benefit
Biden also would like to "implement a true minimum benefit" for retirees who receive Social Security. During his presidential campaign, he proposed setting the minimum benefit for anyone who worked at least 30 years to 125% of the poverty level.
This idea gained solid bipartisan support in the PPC survey. More Democrats favored the idea than Republicans -- 71% and 59%, respectively. However, increasing the minimum benefit appears to be a winner politically.
The main downside of this proposal is that it will cost Social Security money. The PPC estimates that raising the minimum monthly benefit for all Americans who worked for at least 30 years would increase the federal program's projected shortfall by 7%.
3. Change how COLAs are calculated
The big story for Social Security this year has been the huge cost-of-living adjustment (COLA) announced for 2023. However, there's been criticism for quite a while that the way COLAs are calculated doesn't truly reflect the costs that seniors pay.
Biden wants to change that calculation method. In particular, he proposes replacing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) with the Consumer Price Index for the Elderly (CPI-E). The CPI-E is designed to represent the spending of Americans ages 62 and older. Using this inflation index could give Social Security recipients higher COLAs.
Democrats and Republicans appear to favor this change. The PPC survey found that 59% of Democrats and 55% of Republicans supported replacing the CPI-W with the CPI-E.
Like the proposal to increase the minimum Social Security benefit, though, there is a catch. The PPC estimates that using the CPI-E for COLA calculations would increase the projected shortfall for Social Security by 12%.
Could these changes be implemented in 2023?
Democrats will retain control of the U.S. Senate in 2023, while the GOP will control the U.S. House of Representatives. This means Congress probably won't pass many major pieces of legislation based on past periods when the two chambers were divided between the two major political parties.
But could these three Social Security changes with bipartisan support move forward next year? It's possible but not likely. The main challenge is that any Social Security reform bill from either party would likely include components that aren't viewed so favorably by the other side.
The Social Security payroll tax could be increased, the minimum benefit raised, and the COLA calculation method revised at some point in the future. However, 2023 probably won't be the year for these changes to be signed into law.
