Biden says wealthy should pay ‘fair share’ to Social Security

President Joe Biden urged lawmakers to “stand up for seniors” in his annual State of the Union address on Thursday, while pledging to protect Social Security and Medicare.

“If anyone here tries to cut Social Security or Medicare or raise the retirement age, I will stop them,” Biden said.

The president’s vow comes as he will likely face off with former president Donald Trump at the polls in November. While Trump has said he doesn’t plan to touch Social Security, former Republican candidate Nikki Haley suggested raising the retirement age on the campaign trail.

Social Security and Medicare face crucial inflection points. The trust funds Social Security relies on are due to run out within 10 years, or by 2034, at which point 80% of benefits will be payable, the program’s trustees have projected. Medicare’s hospital insurance fund, which is dedicated to Medicare Part A, may be depleted in 2031.

To fix Social Security’s funding, Biden on Thursday suggested lifting the annual payroll tax cap — currently limited to $168,600 in wages — to “make the wealthy pay their fair share.”

Workers with $1 million in gross annual wage income stopped paying into Social Security on March 2 after reaching the taxable maximum for the year, a recent analysis from the Center for Economic and Policy Research found. Most workers have Social Security payroll taxes deducted from their paychecks throughout the year.

“Working people who built this country pay more into Social Security than millionaires and billionaires do,” Biden said. “It’s not fair.”

Democrats have bills that call for applying the Social Security payroll tax to earnings over $250,000 or over $400,000 in separate proposals, while also raising taxes on investment income.

“It’s time to act, it’s time to vote, not only to protect Social Security, but to expand benefits that haven’t been expanded in more than 50 years,” Rep. John Larson, D-Conn., said in a post-State of the Union speech.

Larson’s bill, the Social Security 2100 Act, currently has 183 Democratic co-sponsors in the House.

More from Personal Finance:
Millionaires may have hit their 2024 Social Security payroll tax limit
78% of near-retirees failed or barely passed a basic Social Security quiz
Many Americans believe pensions are key to achieving the American Dream

Biden has not proposed a specific plan to address Social Security’s solvency as president. However, his campaign platform called for applying the payroll tax to wages over $400,000 while making benefits more generous, particularly for those with lower incomes.

The White House has proposed increasing the Medicare tax rate for incomes over $400,000, while also closing loopholes that allow certain high-income individuals and business owners to avoid paying those taxes.

During the State of the Union, Biden also took a swipe at Republicans’ alleged intentions for the programs.

“Republicans will cut Social Security and give more tax cuts to the wealthy,” Biden said.

Ahead of the State of the Union, House Republicans advanced a 2025 budget that calls for the creation of a bipartisan fiscal commission to evaluate Social Security and Medicare solvency issues.

The Committee for a Responsible Federal Budget praised the move to create a commission to “address the unsustainable growth of the national debt.”

Yet advocates for Social Security and Medicare worry that the process may lead to benefit cuts.

“The commission is designed to slash vital earned benefits through a fast-track, closed-door process, intended to allow Republicans to avoid political accountability,” Nancy Altman, president of advocacy group Social Security Works, said in a statement.

Biden also took the opportunity on Thursday to tout other initiatives to help seniors, including efforts to increase the number of medications subject to Medicare negotiations from a current target of 20 per year to 50 per year and to establish minimum staffing levels for nursing homes.

“In tonight’s State of the Union address, President Biden put himself unequivocally on the side of American seniors and the programs they rely on,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.