Critical talks are underway in Congress after legislation was introduced in the House and Senate to create a bipartisan “Fiscal Commission” tasked with creating a plan to address the looming insolvency of federal government trust funds. This would include Social Security and Medicare, which are the largest such trust funds and are facing looming shortfalls within the next decade.
Called the Fiscal Stability Act in the Senate, the bill would:
- Establish a 16-member commission made up of 12 Members of Congress and four outside experts.
- Require the commission to produce a report by May 1, 2025, that proposes new legislation with the goal of cutting the deficit and improving the solvency of Social Security and Medicare Part A Trust Funds over a 75-year period.
- If the commission’s work is approved, the proposed legislation would receive expedited consideration in the House and the Senate.
The legislation was introduced in the Senate by Senators Mitt Romney (UT) and Joe Manchin (WV), and a similar bill was introduced in the House by Representatives Bill Huizinga (MI-4) and Scott Peters (CA-50).
Contrary to what some lawmakers in Congress say, benefit cuts are not the only option to reduce Social Security’s deficits. There are two major ways to bring the trust funds into balance — through raising revenues and spending cuts.
The one key fix that has the most support from older adults would be to raise the amount of wages subject to the Social Security payroll tax. Currently, Social Security payroll tax is applied to wages up to $168,600. A CEO making $2,000,000 will satisfy that tax liability and stop paying Social Security taxes by February. According to Social Security Administration actuaries, that fix alone could resolve up to two-thirds of Social Security’s deficit over 75 years.
TSCL believes that Medicare costs borne by beneficiaries are already too high and that adults 65 and up cannot afford to pay any more than they already do. Last year, TSCL’s Senior Survey conducted from mid-January through June of 2023 found that 66% of respondents spent up to 29% of their entire household budget on healthcare costs, including premiums, deductibles, and co-pays. Take TSCL’s 2024 Senior Survey _ https://seniorsleague.org/2024-senior-survey/
Sources: Provisions Affecting Payroll Taxes, Office of the Chief Actuary, Social Security Administration, accessed on November 21, 2023. https://www.ssa.gov/oact/solvency/provisions/payrolltax.html