Social Security missing from Biden’s budget plan
WASHINGTON — President Joe Biden campaigned for the White House on a plan to shore up Social Security’s finances over the coming decades and increase benefits for the lowestearning retirees, all by raising taxes on people earning more than $400,000 a year.
An independent analysis estimated that the idea would have lifted 360,000 older adults out of poverty immediately.
That proposal has vanished from Biden’s governing agenda, even though the program has become a focal point in a brewing battle over raising the nation’s debt limit. The president has spent months warning that Republican lawmakers plan to gut Social Security and has positioned himself as the program’s champion who will protect benefits for generations of retirees.
The budget Biden proposed Thursday detailed trillions of dollars in new federal spending programs, offset by tax increases on high earners and corporations. The White House billed one of those tax increases as a way to extend the solvency of another popular program for retirees, Medicare, by 25 years, when combined with new efforts to save the government money on prescription drug costs.
Yet just like Biden’s previous budgets, his latest proposal made no mention of any tax or spending increases linked to Social Security, which is set to exhaust its trust fund in just over a decade. At that point, the government will need to borrow additional money or reduce benefits for retirees.
Biden’s 2020 campaign plan appears to be a casualty of messaging and policy considerations, including an unwillingness by administration officials to muddle what they see as a winning argument that casts the president as the protector of a cherished program and congressional Republicans as its foil.
That position is based in part on history: Presidents and candidates for the White House have struggled for decades to sell voters and lawmakers on plans to change the program.
Tax increases worrisome
But some of Biden’s advisers also see a limit to the amount of tax increases that the public is willing to digest. The budget he released Thursday, for the 2024 fiscal year, includes about $5 trillion in plans to raise taxes on corporations and high earners, largely to help pay for big new federal programs for child care, prekindergarten, paid leave and other priorities that he failed to get passed while Democrats controlled Congress. By piling another tax on top of that, Biden would risk sharply raising the top marginal tax rate for high earners.
Perhaps as a result, Biden and his aides have shifted from saying his latest budget would show his commitment to strengthening the program to saying it would simply protect it.
“You’ll see that my budget will invest in America, lower costs, protect and strengthen Social Security and Medicare,” Biden said last month in Maryland.
On Thursday, when the president formally unveiled the budget in Philadelphia, his message focused purely on protection.
“I guarantee you I will protect Social Security and Medicare without any change,” Biden said.
The president proposed a raft of changes to Social Security during the 2020 campaign, aimed at enhancing and stabilizing the program. The 12.4 percent payroll tax that helps fund the program applies to income up to about $160,000 a year. Biden proposed to lift that cap for incomes above $400,000 a year, effectively forcing high earners to pay significantly more in payroll taxes.
His plan directed some of those new revenues toward extending the life of Social Security’s main trust fund, which is projected to be depleted in 2034. It put the rest of the revenues toward expanding benefits for certain retirees, like lower-income workers, widows and widowers. Researchers at the Urban Institute estimated that those increased benefits would pull 360,000 seniors out of poverty right away and 2 million out of poverty in 2065.
“The Biden Plan will protect Social Security for the millions of Americans who depend on the program,” Biden’s campaign team wrote on his campaign website.
The plan was a response to a broader challenge that economists and budget experts across the partisan spectrum have increasingly sought to highlight: the growing struggle faced by a wide swath of American workers in affording a stable and secure retirement.
‘Stable financial footing’
To improve America’s retirement system, “the most important policy change is to put Social Security and Medicare on stable financial footing,” two academic economists who have served in Democratic administrations, Martin N. Baily and Benjamin Harris, wrote in a new book, “The Retirement Challenge.”
Baily was the chair of the White House Council of Eco-* nomic Advisers under President Bill Clinton. Harris is an assistant Treasury secretary under Biden and was an architect of his campaign economic platform, though he wrote his portions of the retirement book as a professor at Northwestern University. “The hardest policy shift is also the most important: increasing payroll tax revenues,” they wrote in the book.
Publicly, administration officials say they are protecting the program by not cutting it.
“I would love to be in the part of the debate where we can have serious discussions about proposals,” Shalanda Young, the White House budget director, said Thursday. “The No. 1 threat to Social Security and benefits for folks like my 94-year-old grandmother is those on the other side of the aisle who said they want to cut benefits. That’s why this budget takes the position that that is not on the table.”
Budget hawks attacked Biden for failing to go further. They said his inaction left the program vulnerable to an acrossthe-board benefit cut of as much as 20 percent if the trust fund runs out of money in 2034.
“By failing to suggest increases in Social Security revenues or adjustments and reforms to future benefits in his budget, the president is implicitly endorsing the 20 percent benefit cut plan while claiming to be the protector of the program and attacking those who suggest we make changes,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget in Washington.
Republicans criticized Biden’s budget, saying it spends and taxes too much. They have refused to lift the nation’s statutory borrowing limit unless the president agrees to steep cuts in federal spending.
But they were largely silent on his lack of a Social Security plan: Speaker Kevin McCarthy of California and other Republican leaders, under withering attacks from the president, have vowed not to touch the program as part of budget talks.