The Urban Institute recently published a report that analyzes Democratic presidential nominee Joe Biden’s Social Security reform plans.
The brief estimates the plans’ potential impact on beneficiaries, program revenues, and program costs. The study also explores how Biden’s Supplemental Security Income (SSI) proposals might reduce poverty for older adults and people with disabilities.
By way of background, Biden has proposed increasing Social Security revenue, enhancing Social Security benefits, and expanding Supplemental Security Income, a program that provides cash benefits to low-income older adults and people with disabilities.
The Urban Institute's projections show that his proposals would lift more than 1 million people out of poverty in 2021 and cut the poverty rate for adult Social Security beneficiaries over the coming decades by more than half. Biden’s plan would boost median benefits 27 percent for beneficiaries in the bottom fifth of the lifetime earnings distribution compared with only 14 percent for beneficiaries in the top three-fifths of the lifetime earnings distribution.
The Urban Institute also projects that by extending the Social Security payroll tax to earnings above $400,000, his plan would close about a quarter of the program’s long-term funding deficit and extend the life of the trust funds by about five years. The projections show that Social Security would collect 12 percent more revenue under Biden’s plan than the current law would in 2040 and 16 percent more in 2065.
Biden’s plan would increase total projected federal and state income and payroll tax collections 2.4 percent in 2065; total income and payroll taxes collected from taxpayers with incomes between $500,000 and $1 million (in 2018 inflation-adjusted dollars) would increase 4.1 percent.
In a video interview with Retirement Daily, Richard Johnson, a senior fellow at the Urban Institute, discussed those and other key findings from the report.