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House Democrats are considering pushing a massive tax Opens a New Window. hike on American workers, regardless of their income level, as part of a bill to expand Social Security. There’s no question that Social Security Opens a New Window. faces significant funding issues, but there are better ways to reform the program than increasing payroll taxes Opens a New Window. on every employer and worker.
According to the Social Security and Medicare Trustees, Social Security is facing a $13.2 trillion cash shortfall between 2034 and 2092. Medicare is in even worse financial shape facing a $37.7 trillion funding shortfall over the next 75 years, but the issues with Medicare are a topic for another time. The Social Security Disability Insurance (DI) Trust Fund will be depleted in 2032, at which point the trust fund will be able to pay 96 percent of scheduled benefits. The Old Age and Survivors Insurance (OASI) Trust Fund will be depleted in 2034. The trust fund will be able to pay only 77 percent of OASI benefits.
Clearly, the severe financial issues that Social Security faces must be addressed sooner, rather than later. However, the way House Democrats are approaching the issue is wildly misguided.