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7 changes Americans are willing to make to fix Social Security — including one with 'overwhelming bipartisan support' [1]

['Lorie Konish']

Date: 2022-08-03

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1. Raising the Social Security payroll tax cap

Share in support: 81%

81% Democrats in support: 88%

88% Republicans in support: 79% Raising the payroll tax cap is the one proposal that got "overwhelming bipartisan support," according to Kull. In 2022, Social Security payroll taxes are applied on up to $147,000 in income, a level that is adjusted each year. That means high earners may pay Social Security payroll taxes for just part of the year. However, one Democratic proposal — Social Security 2100: A Sacred Trust put forward by Rep. John Larson, D-Conn. — calls for reapplying those payroll taxes for wages of $400,000 and up. Another bill proposed by Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., calls for a $250,000 threshold, plus additional taxes on capital gains, and net investment and business income. Increasing the level of income at which Social Security payroll taxes are reapplied to income of more than $400,000 would eliminate 61% of the shortfall, researchers estimate. The proposal is popular with the public, having earned its own slogan, "Scrap the Cap."

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2. Reducing benefits for high earners

Share in support: 81%

81% Democrats in support: 86%

86% Republicans in support: 78% Wealthier retirees generally receive more generous benefits, even though they likely have more ways to fund their retirements, such as through pensions and savings. Means testing benefits for those with certain wealth or income could be another way to help reduce the program's shortfall. This would reduce the amount of benefits the top 20% of earners receive, and would reduce the shortfall by 11%.

3. Gradually raising the retirement age

Share in support: 75%

75% Democrats in support: 76%

76% Republicans in support: 75% Your retirement age is when you stand to get the full benefits you earned based on your work record. Increases to the retirement age that were enacted in 1983 are still getting phased in today. For people born in 1960 or later, the full retirement age is 67. As many people work and live longer, some argue that the retirement age should be raised again. However, advocates for expanding Social Security are firmly against this benefit cut. Washington Democrats' proposals largely exclude this change. Such a move would reduce an estimated 14% of the shortfall.

4. Increasing the payroll tax

Share in support: 73%

73% Democrats in support: 78%

78% Republicans in support: 70% Currently, employers and employees each pay a tax of 6.2% of wages, and raising those rates could have a big impact on the program's solvency. The simulation called for raising that to 6.5%, which would help eliminate 16% of the shortfall. A previous version of the Social Security 2100 Act put forward by Rep. John Larson, D-Conn., proposed raising payroll tax rates for both workers and employers up to 7.4% each from its current 6.2%. That change would have been phased in gradually over more than 20 years. This would cost just 50 cents more per week for the average worker who earns $50,000, according to the proposal. While Larson compared it to the cost of a cup of coffee, Republicans bristled at the prospect of passing down higher tax rates to younger generations. The new Social Security 2100 Act no longer increases the payroll tax rate.

5. Raising the minimum benefit

Share in support: 64%

64% Democrats in support: 71%

71% Republicans in support: 59% For people who rely solely on Social Security benefits for income in retirement, surviving on the minimum benefit can be difficult. Sanders and Warren have proposed a bill that calls for making the minimum benefit indexed to 125% of the federal poverty line. Likewise, Larson's bill also seeks to raise the minimum benefit. That change would bring the minimum benefit for someone who has worked for 30 years up to $1,341 from $951, thereby increasing the shortfall by 7%.

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6. Changing cost-of-living adjustment calculations

Share in support: 55%

55% Democrats in support: 59%

59% Republicans in support: 55% Social Security benefits are currently adjusted every year based on a subset of the Consumer Price Index, which measures changes in the prices consumers pay over time. Beneficiaries saw a record 5.9% increase in 2022, and are poised to see an even bigger boost to benefits in 2023. Yet many argue the measure used, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, is not the best gauge of the costs retirees pay. Democratic proposals all call for replacing that measure with the Consumer Price Index for the Elderly, or CPI-E. That change would increase the shortfall by 12%.

7. Increasing benefits for beneficiaries over age 80

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[1] Url: https://www.cnbc.com/2022/08/03/changes-americans-are-willing-to-make-to-fix-social-security.html

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