Social Security doesn’t have enough money to pay everything that has been promised, and Sen. Elizabeth Warren (D–Mass.) has a plan to fix that: Making workers pay more in taxes without asking older Americans to give up any of their benefits.
Warren has been pushing this idea for a few months now, under the guise of defending Social Security against the Trump administration, which she claims is “threatening the benefits that millions of Americans have paid into their entire working lives.” In reality, the threat to Social Security is the program’s own math. When it reaches insolvency in 2032, the Social Security trustees project that all benefits will be cut by about 23 percent—that’s the trajectory that will become reality if nothing is done.
In an op-ed published this week in The New York Times, Warren and Sen. Bernie Moreno (R–Ohio) lay out what they want to do: Eliminate the cap on the payroll tax. That sounds like a wonky idea, but it’s pretty straightforward. Social Security is funded with a 12.4 percent tax on all earnings up to $184,500. Earnings that exceed the cap are not taxed—so, a single worker cannot pay more than $22,878 into Social Security annually.
Raising the cap or removing it, as Warren wants to do, would provide more revenue for Social Security to redistribute to retirees. But Warren’s plan has mathematical, political, and moral problems.
Let’s tackle the math first. As the Committee for a Responsible Federal Budget points out, eliminating the payroll tax cap would extend Social Security’s solvency by just 21 years. According to Social Security’s own estimates, eliminating the payroll tax would keep the program out of the red for just four years. It would not fix any of Social Security’s flaws—like the too-generous benefits that are driving the program into insolvency in the first place—and would accomplish little more than postponing the eventual reckoning that Social Security faces.
In short, it would be a very expensive way to kick the can down the road.
That’s where you hit the political problem. As Moreno and Warren explain in their Times op-ed, this proposed tax increase would fall entirely on wealthier Americans. They see that as a perk, rather than a problem.
It is certainly no secret that Democrats (and now at least one Republican) want to soak the rich with higher taxes. But let’s spin this idea forward a bit. Let’s assume Warren and her buddies can pass a bill that eliminates the payroll tax cap. Now, they’ve got a huge pot of new tax revenue, all of it extracted from the wealthiest Americans. Mission accomplished, right?
Well, what’s the best way to spend that money? Warren’s plan is to hand all of it to retirees in the form of Social Security benefits.
That means every other Democratic spending priority gets nothing out of what would be one of the biggest tax increases in American history. Nothing for healthcare programs, nothing for schools, nothing for welfare. The senior citizens get it all. Is that really a proposal that Democrats will support?
That runs straight into the moral problem. In the Times, Moreno and Warren write that “instead of cutting benefits for the retirees who count on Social Security, we need to take bipartisan action to protect those benefits, reward work and restore fairness.”
But what is fair about a proposal that says Social Security beneficiaries shouldn’t have to absorb any benefit cuts? Some households get more than $5,000 per month in Social Security benefits, and older Americans are the wealthiest cohort of people in the country.
If Moreno and Warren believe that wealthier Americans ought to shoulder the burden of fixing Social Security, they should be looking to cut Social Security benefits, either by means testing or by reconfiguring how benefits are structured. In 2022, for example, the Congressional Budget Office calculated that Social Security’s insolvency could be fixed by giving all seniors a flat monthly payment equal to 150 percent of the federal poverty line—about $1,700 per month. That would certainly be better than asking workers to pick up the full tab.
The real kicker is that Moreno and Warren have the gall to describe their proposal as being about “fairness.” In reality, they are prioritizing older Americans’ economic well-being over every other political constituency in the country. They want higher taxes on workers, and they want all of that new tax revenue to flow exclusively to senior citizens, all while refusing to ask retirees to be part of the solution.
That’s not good policy, it doesn’t seem like smart politics, and it certainly isn’t fair to anyone who has to foot the bill.
