Social Security is one of America’s most popular programs, with 86% of Americans reporting a positive view of it, according to a survey commissioned by the University of Maryland’s Program for Public Consultation.
Unfortunately, many are worried about its future, with over half of the survey’s respondents saying they’ve heard about its financial troubles. Those concerns center on the fact the Social Security Trust Fund is expected to run dry in 2035, leaving the program only able to pay benefits out of incoming revenue and necessitating a 17% cut to promised payments.
Americans have some thoughts on how to fix this situation, though. In fact, 53% would support reducing benefits for the top 40% of earners, a move that would reduce the coming shortfall by 23%. The big question, though, is whether this would be a good solution or cause more problems than it solves.
Cutting benefits for rich people could have some big downsides
It’s very tempting to think taking Social Security benefits away from the rich would solve all of the program’s woes — but here are a few reasons why that may not be the case.
The first big argument against this option comes from Social Security’s creator, Franklin D. Roosevelt, who made it very clear he wanted the benefits to be earned and universal to establish broad support for the program.
That’s why Roosevelt funded Social Security with payroll taxes and gave all workers benefits equal to a percentage of them. “With those [payroll] taxes in there, no damn politician can ever scrap my Social Security program,” he famously said.
If the top 40% of earners lost promised benefits after paying into the system, the 86% approval rating for Social Security could disappear quickly. This large population of wealthier individuals is often well-connected and politically active. Many would likely stop supporting Social Security and would express their opinion at the ballot box, putting its future in peril.
Changing the rules for benefits is a slippery slope
There’s also another problem to be concerned about. The definition of who is “rich” enough to lose Social Security benefits would always be up for debate.
Just look at how Social Security benefits get taxed for an example of this phenomenon. When taxes were introduced on benefits by 1983 amendments to the program, fewer than 10% of retirees owed them. Now, in 2024, the Senior Citizens League suggests nearly half of all households collecting Social Security will be taxed on part of their benefits.
Since slicing the benefits of just the top 40% of Americans won’t fix the shortfall entirely, there’s a very real risk that once that door opens, a growing number of people will find themselves facing benefit cuts. At the very least, they’ll have reason to fear that potential outcome since it happened to their higher-earning peers who spent decades paying in.
The good news for those concerned about these risks is that lawmakers from both sides of the aisle have promised not to cut Social Security. The bad news is that something must be done because otherwise automatic cuts are on the horizon.
There are various proposals out there, ranging from raising the full retirement age to taxing wealthy people on more of their income (since there’s currently a cap on the amount of wages subject to Social Security tax). Politicians will likely have to find some combination of these solutions and draft a bill that both sides can agree upon.
Whatever lawmakers do, though, it’s likely they’ll make changes slowly, as the last major reforms to Social Security passed in 1983 are still in the process of phasing in and will be until 2026. So, those concerned about modifications to the program may not have to worry about that happening for a very long time.
