Janet Yellen says Biden ‘doesn’t have a plan’ to extend Social Security’s solvency beyond 2033 — but he has ‘principles’ and wants to work with Congress. Should Americans be concerned?
The issue of Social Security’s long-term financing shortfall has been a subject of intense discussion in America.
A report from the Social Security Board of Trustees last year projected that the federal program's trust funds will be depleted in 2033. After this point, there will only be enough to cover around 80% of the scheduled benefits unless Congress takes action.
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During a U.S. Senate Finance Committee hearing, Senator Bill Cassidy, M.D. (R-LA) questioned Treasury Secretary Janet Yellen regarding President Joe Biden's lack of a detailed strategy to tackle the impending insolvency of Social Security. Since the president's budget proposal includes tax hikes for the wealthy, Cassidy was wondering how much higher the rate would have to go to solve the Social Security issue as well.
Yellen's response took many by surprise.
“The president doesn’t have a plan,” she said. “He has principles. He wants to work with Congress to find a way to protect Social Security and extend its solvency beyond 2034.”
Cassidy was not content with Yellen’s response.
“If the president wishes to work with Congress, why does he continually demagogue Republicans on anything that doesn't exactly line up to what apparently suits his re-election?” he asked. “There’s going to be a 23 – 25% cut for those receiving benefits now, which will double the rate of poverty among the elderly — double the rate of poverty among the elderly — in eight years, and he doesn’t have a plan. Madam Secretary, how can he justify not having a plan when he’s been in office for three years already?”
It's worth noting that the presumptive Republican presidential nominee Donald Trump hasn't presented the public with a detailed plan for Social Security either.
Biden’s principles
To be sure, Biden’s budget includes several principles aimed at protecting and strengthening Social Security.
The first principle is “no benefit cuts.” The president has made it clear that he is firmly against any reductions in benefits and rejects proposals for the privatization of Social Security.
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Moreover, Biden seeks to extend the program's solvency by requiring the highest-income Americans to contribute their fair share of Social Security taxes. This approach is built on the belief that the financial burden of supporting Social Security should be more equitably distributed, particularly given that middle-class and lower-income Americans currently pay Social Security taxes on all of their earnings, while higher-income Americans do not on their entire income. Right now, the Social Security wage base — the maximum amount of earnings that are subject to the Social Security payroll tax in a given year — stands at $168,600.
Additionally, Biden's budget aims to improve financial security for seniors and people with disabilities by supporting efforts to enhance both Social Security and Supplemental Security Income benefits for those most in need. The plan also includes investing in the Social Security Administration (SSA) itself, by increasing staffing and modernizing information technology to ensure that Americans can more easily access the benefits they have earned.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
