According to an article published in The Wall Street Journal by Brian Riedl, a high-ranking fellow at the Manhattan Institute, President Joe Biden has pledged to thwart any efforts to reduce the benefits of Social Security or Medicare.
However, this will almost certainly increase taxes levied against the middle class.
Tax Increases
During his recent State of the Union address, President Biden made a commitment to prevent cuts to Medicare and Social Security.
He also promised not to raise taxes on families with annual incomes of less than $400,000 during this time.
According to what Riedl wrote, it will be practically impossible to prevent significant tax increases without also slashing benefits. The two systems are projected to have shortfalls of $48 trillion and $21 trillion, respectively, over the next 30 years.
My new op-ed in the @nytimes.
President Biden has pledged that Social Security and Medicare pay full benefits with no reforms, and that taxes not be raised on 98% of taxpayers. Together, these promises are almost certainly economically impossible. (1/)https://t.co/VHaRBWheNk— Brian Riedl 🧀 🇺🇦 (@Brian_Riedl) February 21, 2023
In his article, he argued the president’s statement, which implied that full benefits could be paid, sans raising taxes for 98 percent of households, had no basis in the mathematical realities of the situation.
According to Riedl, even if Congress were to impose state and wage bill tax rates approaching 100% for wealthy tax-paying citizens through upper tax bracket rate increases, high-worth asset taxes, and a raised rate on corporations, the new tax revenue would not be enough to cover costs of Social Security and Medicare over the next three decades.
Not only is it insufficient, but progressives should be careful hiking marginal tax rates on the rich to revenue-max rates of 60-65% (Fed+State+FICA) for boomer benefits.
That means middle-class taxes have to finance the bigger Medicare hole & the entire progressive wishlist.
— Brian Riedl 🧀 🇺🇦 (@Brian_Riedl) February 21, 2023
Instead, he argued that attempting these programs in their current form will result in much higher tax rates for the middle class.
These tax increases could take the form of a nine-point increase in the payroll tax and a twenty percent increase in the value-added tax; this level of tax increase has not been seen since the end of the Second World War.
Benefits For Retirees
According to Riedl’s analysis, however, Congress may largely circumvent these tax increases by elevating the qualifying age. Congress can also take steps to slow the rise of benefits for retirees who are not considered to be financially disadvantaged.
Riedl stated that Medicare and Social Security are programs that symbolize a commitment between different generations and are of critical importance.
Since the debates over the deficit in 2011, neither White House has given any serious consideration to the issue of how to resolve their unsustainable expenditures.
In the past, when he was the vice president, Joe Biden had the intestinal fortitude to lay out every possible tax and expenditure option in the pursuit of a comprehensive deficit reduction agreement.
He concluded this bravery is required again, given the impending bankruptcy of the trust funds that underpin Social Security and Medicare within the next 11 years.
The White House did not provide a remark in response to the request. It seems the present government is hell-bent on making life unbearable for the average American.
