1 Social Security Quote From Joe Biden That Retirees Must See

Social Security is an important source of income for millions of Americans, but the program has a serious financial problem. The cost of paying benefits exceeded income last year, and the deficit is expected to persist through 2097, creating a long-term funding shortfall of $22.4 trillion.

The Social Security Board of Trustees believes the trust fund will be depleted by 2034, and it estimates that payroll taxes will cover just 80% of scheduled benefits at that point.

Recipients will see their benefits cut by 20% unless lawmakers find a solution.

Here's what retired workers should know.

President Biden says he won't cut a single benefit

President Joe Biden recently said he would not cut a single Social Security benefit. He said the following during his State of the Union Address in February:

Social Security and Medicare are a lifeline for millions of seniors. American have been paying into them with every single paycheck since they started working. So tonight, let's all agree to stand up for seniors. Stand up and show them we will not cut Social Security. We will not cut Medicare. Those benefits belong to the American people. They earned them. If anyone tries to cut Social Security, I will stop them.

Readers should take that promise with a grain of salt. History says benefit cuts could be unavoidable.

Biden has voted in favor of Social Security cuts in the past

Years ago, President Biden actually supported Social Security benefit cuts. He was one of 58 senators who voted “yea” for the 1983 Social Security Amendments, which gradually raised the full retirement age and empowered the federal government to tax Social Security income.

Biden was also one of 50 senators who voted for the Omnibus Budget Reconciliation Act of 1993, a bill that extended the federal government's ability to tax Social Security income.

For context, the 1983 Social Security Amendments brought about sweeping changes that pulled the trust fund back from the brink of insolvency, and some of those changes involved benefit cuts. Lawmakers voted in favor of raising the full retirement age from 65 to 67 over a period of several decades, and they approved the federal taxation of benefits for high earners.

As a caveat, the term “high earners” now appears misleading, because the income thresholds specified by Congress in 1983 have never been adjusted for inflation. Specifically, the 1983 Social Security Amendments allowed up to 50% of benefits to be taxed for single individuals with income exceeding $25,000 or married couples with income exceeding $32,000.

The Omnibus Budget Reconciliation Act of 1993 added a second income threshold, extending federal taxation of Social Security income. Specifically, it made up to 85% of benefits taxable for single individuals with income exceeding $34,000 or married couples with income exceeding $44,000.

Social Security benefit cuts are probably unavoidable

Politics is fraught with complex issues that lack clear-cut answers, and Social Security reform is a perfect example. It's fair to assume that Republicans and Democrats both want what's best for the American people, but politicians often find themselves between a rock and a hard place. On one hand, they must toe the party line so as not to alienate voters, but on the other hand, they must be willing to compromise to effect real change.

I have no doubt that Biden would like to avoid Social Security cuts. But resolving the $22.4 trillion funding shortfall without reducing benefits in some way seems unrealistic, especially when past reforms have included benefit reductions. Social Security outlays consumed 4.8% of U.S. gross domestic product (GDP) in 2022, up from the 50-year average of 4.4%, and that figure is expected to reach 6% of GDP by 2033. That trend is simply unsustainable.

For that reason, lawmakers will likely need to reduce benefits to keep the trust fund solvent beyond 2034, just as Congress cut benefits in 1983 and 1993. But retired workers shouldn't fret just yet. Those benefit cuts could take many forms, meaning different cohorts could be disproportionately affected.

For instance, most Americans support raising the full retirement age again, and they also support reducing benefits for high earners. Those measures would leave Social Security benefits unchanged for most current recipients.

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