Social security and Medicare: Where Republicans and Democrats stand.
Both Social Security and Medicare have financial problems. Any changes enacted by Congress will affect current retirees, people closing in on retirement -- and younger workers.
Lower birthrates mean fewer workers are paying into the system today than the growing number of people retiring and collecting benefits. Another cause of the shortfall is rising income inequality. Social Security collects FICA contributions only up to a certain wage , leaving a growing share of wages outside the taxable base.
Workers have responded, to some extent, by delaying their benefit claim. In 2021, 31% of retired worker claims were made by people age 62, down from 60% in 1998, according to an analysis of Social Security Administration data by Johnson. But 84% of workers had claimed benefits by age 66. Last week, Sens. Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts introduced the latest version of their own Social Security proposal. It would extend solvency by 75 years, give nearly all beneficiaries an increase of $200 per month through a revision in the benefit formula and adopt a more generous annual cost-of-living increase. It would be funded by applying current FICA tax rates to incomes above $250,000, and with two new taxes on investment income.
Johnson worries that focusing Social Security on low-income workers would threaten the program’s future. Social Security is “a social insurance program — not a poverty reduction program,” he said. “If we reduce benefits for higher-income people, that fundamentally changes the nature of the program — and it raises the risk that Social Security could wither like other poverty reduction programs, and lose some of its popular support if everyone doesn’t have a stake in it.”Sens.
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