Thirty-five Senate seats will be contested in the 2026 midterm elections. The candidates who triumph will help determine the future of American retirement.
Social Security, the cherished social program providing benefits to about 69 million retired and disabled workers, is nearing a critical funding deadline: If Congress doesn’t step in by the end of 2032, the program’s trust funds will face a shortfall, and benefits will have to be cut by roughly 23%.
If current forecasts hold up, then, the senators sworn into their six-year terms next year will eventually be tasked with extending Social Security’s lifespan. They’ll grapple with the program’s future in an environment very different from the last time Congress reformed the program, in 1983. Widening wage inequality and adoption of artificial intelligence are just the start of the issues to deal with.
Several Senate candidates in both parties have set out their approaches to Social Security’s future. In some cases, their stances are ideologically surprising.
“The stakes are definitely higher because you’re voting on who’s going to vote for Social Security,” Kathryn Anne Edwards, an economist and policy consultant who has drafted proposals to better manage Social Security’s future, said in an interview. “To the extent it’s an election issue, it’s really about picking a person you trust to do the right thing.”
Already, several Senate candidates in both parties have set out their approaches to Social Security’s future. In some cases, their stances are ideologically surprising. Earlier this month, embattled Republican Sen. Roger Marshall of Kansas threw his support behind scrapping the payroll tax cap, a measure long a favorite among liberals like Sen. Elizabeth Warren of Massachusetts.
“I would eliminate the cap altogether,” Marshall said at a Kansas Senate debate last week. His Democratic challenger, Adam Hamilton, has said he would lift the cap but not get rid of it entirely. In Maine, incumbent Republican Sen. Susan Collins also supports raising the cap — a rare area of agreement with her Democratic opponent, Troy Jackson.
The current payroll tax cap is $184,500, so earnings above that sum aren’t taxed, and it climbs a little higher every year. Adjusting or removing it makes a lot more income eligible for federal taxation. The Tax Foundation, a right-leaning think tank, estimates that eliminating the payroll tax cap would generate between $1.5 trillion and $3.5 trillion over a decade, depending on the economic effects. Of course, its effectiveness to remedy the financial shortfall hinges on whether it kicks in sooner rather than later and how much income is subjected to the cap.
In 2020, President Joe Biden quietly endorsed raising payroll taxes on individuals earning above $400,000, keeping in line with his broader pledge not to raise taxes on households below that line. He never seriously pursued it, however, and didn’t revive the idea for his aborted re-election campaign.
The idea of raising the retirement age for millennials and Gen Z has polled poorly in the past. Its popularity is unlikely to improve.
Lobbying groups already are planting seeds for the formidable political fights to come. “These are senators who will be there as the Social Security issue comes to the front burner,” Nancy LeaMond, the chief advocacy and engagement officer at AARP, said in an interview. In the past several months, AARP solicited video and written responses from Senate candidates in Texas, Ohio and New Hampshire about how they would tackle Social Security’s future.
“We think this is going to be a very big issue in 2028 — Social Security, and Medicare, for that matter,” LeaMond said.
Congress used to be a lot more nimble dealing with Social Security. Lawmakers expanded coverage in 1939 to include worker deaths, and again to cover permanent disability in 1956. Before 1975, Congress decided cost-of-living adjustments for benefits, until rising inflation made an annual autopilot a necessity.
The most significant changes came in 1983, when (like today) Social Security was in jeopardy of not paying full benefits. A last-minute bipartisan deal paired a gradual increase of the retirement age (from 65 to 67) with tax increases. Falling birth rates and longer life expectancies among Americans crept into the debate at the time, much as they do now.
I once covered a bipartisan Senate group in 2023 that attempted to solve Social Security’s financial shortfall by drafting an early proposal for a deficit-financed $1.5 trillion investment fund that would eventually become another funding source for the program. It didn’t go far, with Democrats and Republicans alike fearful of being cast as out-of-touch misers, since raising the retirement age on younger adults was on the table as well.
Republicans may pull the age lever again. The idea of raising the retirement age for millennials and Gen Z has polled poorly in the past. Its popularity is unlikely to improve, particularly since many younger Americans believe that Social Security will dry up long before it’s their turn to receive benefits.
The next cliff for Social Security is an opportunity to reimagine the future of retiring. The share of older adults in the American workforce has risen since 2000, in part due to financial pressures from a lack of home care or simply being able to pay bills. Now voters get the chance to elect those who will be in the room when their retirement is up for discussion.
The post The future of Social Security is on the line in the midterms appeared first on MS NOW.
Author: Source Author
From MS Now.
Leave a Reply