Tax-the-rich social security plan was focus of Biden and Sanders meeting: report

President Joe Biden met with Sen. Bernie Sanders (I-VT) over a possible plan to raise the Social Security payroll tax cap as a way to make the program sustainable, reportedThe Washington Post on Thursday — but no definitive action has been agreed to, and there are obstacles to the proposal.

"This previously unreported discussion between Biden and his onetime presidential primary rival reflects a broader behind-the-scenes effort inside the White House to decide how, or if, the party’s message on entitlements should go beyond criticizing the GOP," reported Jeff Stein.

"Biden aides have in recent weeks discussed proposing raising payroll taxes on the rich to fund Social Security, but it is unclear if the president will ultimately endorse that measure when he releases his budget in March, according to three people familiar with international deliberations, who spoke on the condition of anonymity to describe private talks. One of those people cautioned the talks were preliminary and it is still likely the White House opts not to advance the plan."

Sanders' proposal would, according to him, expand the life of the Social Security trust fund for seven decades. Lifting or eliminating the cap on taxable earned income, which currently means nothing over $160,200 is taxed, is broadly popular in the Democratic Party, with even conservative Sen. Joe Manchin (D-WV) backing the idea, and polling has shown most voters support it too.

However, there are political challenges for Biden on the issue — one being that he promised never to raise taxes on anyone making under $400,000.

"His campaign plan would only increase payroll taxes on those earning above that threshold. Such a proposal would create a 'doughnut hole' — so-called because of the gap in taxation in the middle of the income distribution. Such a move is largely frowned upon by tax experts, because it disproportionately taxes lower-income Americans," said the report. "'You’re saying to someone making $150,000: You have to pay payroll tax on all your wages, but telling someone making $350,000: You have to pay payroll taxes on only the first $150,000 and the rest is exempt,' said Howard Gleckman, a policy expert at the Tax Policy Center, a nonpartisan think tank. 'It does not make any policy sense.'"

Policy experts broadly agree that some type of reform is necessary within the next decade, or the Social Security trust fund could run out, triggering automatic benefit cuts for millions of people. Starting in 2032, the report says, "If lawmakers fail to act, the government will reduce the benefit for a traditional retiring couple by between $12,000 and $17,000, according to projections by the Committee for a Responsible Federal Budget, a nonpartisan think tank." Medicare, also funded by payroll taxes, is facing similar shortfalls, but the Biden administration has already passed some Medicare reforms and is promising an upcoming budget that would add 20 years to the solvency of Medicare's trust fund.

Faced with massive backlash from previous GOP proposals like Florida Sen. Rick Scott's "Rescue America" plan that could have affected Social Security benefits, Republican leaders have vowed not to cut Social Security benefits as part of their upcoming threats to ransom the debt ceiling for spending cuts. However, this means they are instead making enormous cuts to anti-poverty programs like Medicaid, food stamps, and student aid, some of which could devastate these programs.