The good news for retirees is that Democratic, Republican, and independent politicians are at least talking about how to preserve Social Security.
President Joe Biden was adamant in his State of the Union address last month about his support of Social Security. He declared emphatically, “If anyone tries to cut Social Security, I will stop them.”
The president also criticized some Republicans who he said want to allow the U.S. to default on its debt if major changes, including benefits cuts, aren’t on the table. But is Biden actually pushing a backdoor cut to Social Security benefits of his own?
The consequences of doing nothing
Republican Sen. Bill Cassidy of Louisiana didn’t accuse President Biden of wanting to cut Social Security benefits in a recent Senate Finance Committee hearing. However, the Louisiana Republican warned about the stark consequences of doing nothing.
Cassidy grilled Treasury Secretary Janet Yellen about the president’s proposed budget for fiscal year 2024. He noted that when Social Security “goes broke in nine years,” there will be a 24% benefit reduction for recipients.
Cassidy then criticized Biden’s budget, stating: “In the $4.5 trillion of taxes the President has proposed are any of those taxes going to shore up Social Security? The answer is of the $4.5 trillion in taxes he has proposed, not a dime is going to shore up Social Security.”
Yellen agreed that Social Security benefits are in danger of steep cuts if nothing is done. However, she responded that President Biden is ready to work with Congress to protect benefits. Cassidy countered that he and other senators have requested multiple times to meet with Biden. But he said that the president turned down those requests.
In a press release on March 9, 2023, responding to President Biden’s proposed budget, Cassidy stated:
Obama, Bush, and Clinton each had a serious plan [to address Social Security]. We’re less than a decade away from an automatic 24% benefit cut. Where is Joe Biden’s plan?
Backdoor benefits cut?
These kinds of exchanges frequently happen in Washington. In this case, several valid points were raised. Sen. Cassidy was correct that doing nothing to reform Social Security will result in major benefit cuts.
The program won’t completely “go broke in nine years,” as Cassidy stated. However, Social Security’s trust funds are running out of money. Ongoing payroll taxes will still be available to fund benefits, but not at current levels.
Cassidy’s time frame is correct, according to the nonpartisan Congressional Budget Office (CBO). Last year, Social Security’s trustees projected that the program would become insolvent in 2035. But the CBO’s latest estimates are that the trust funds will be depleted sooner — in 2032.
President Biden’s proposed budget doesn’t include any changes that would prevent Social Security from going insolvent, as Cassidy noted. Perhaps one could argue that the president is pushing a backdoor benefits cut since his fiscal plan doesn’t address the big issues facing Social Security, and doing nothing will lead to steep benefit reductions in the future. However, there’s no reason to believe that Biden wants any cuts to the federal program.
The president apparently hasn’t met with Sen. Cassidy and the bipartisan group of senators with whom he’s working to address Social Security. Biden has, though, met one-on-one with independent Sen. Bernie Sanders of Vermont to discuss ways to protect Social Security benefits.
Sanders wants to increase the payroll tax cap to help shore up the program financially. Biden could support this huge Social Security change since it’s similar to an idea he proposed during his presidential campaign in 2020.
The good and bad news for retirees
There’s good news and bad news for retirees with all of the political back and forth over Social Security. Let’s start with the bad news: There still is no consensus on what to do to fix the program. Benefit cuts will be required within the next decade if nothing is done.
The good news, however, is that at least Democratic, Republican, and independent politicians are talking about the problems Social Security faces. That’s much better than ignoring the issues. It’s good that all parties agree on the serious consequences of inaction. This should reduce the chances that a backdoor benefits cut, regardless of who’s in the White House over the next decade, will actually happen.
