Social Security Is Breaking and Congress Doesn’t Have a Plan

Host Luke Vargas opens by noting that the midterm campaigns are full of messages about affordability, health care, and political control, but neither party is saying much about Social Security’s looming financing problem. He introduces WSJ tax policy reporter Richard Rubin and asks what happens if Congress does nothing. Rubin explains that Social Security accumulated a surplus while baby boomers were working and paying payroll taxes. The program has since been paying out more in benefits than it collects, using that surplus to cover the difference. The surplus is projected to run out in 2032. At that point, the law would require an automatic across-the-board benefit reduction of about 22% for the millions of retirees, survivors, and other beneficiaries who rely on the program. Rubin says virtually everyone assumes Congress will prevent such a cut because it would be politically untenable for people not to receive benefits they have been counting on. The deadline matters immediately because senators elected in November will serve six-year terms lasting through 2032, and the next president will also serve a term that runs through that year. The politicians elected now may therefore be the ones forced to make the deal.

Luke plays a report from national political reporter Ken Thomas, who says Social Security has been a “sleeper issue” in a campaign otherwise focused on affordability, health care, and the war on Iran. Thomas says the issue is especially visible in states with older populations. He points to a recent Senate debate in Maine, where Republican Senator Susan Collins is seeking reelection against Democrat Troy Jackson. Thomas also names Senate candidates James Talarico in Texas, Josh Tuerk in Iowa, and Abdul El-Sayed in Michigan as candidates who have discussed lifting the payroll-tax cap on higher earners. That approach could raise enough money to prevent the future automatic 22% reduction. He adds that control of Congress could affect how seriously the issue is taken: a Democratic House might prompt the Ways and Means Committee to work on it, while the Senate may be less likely to move quickly. Luke asks whether Democrats and Republicans are entrenched or whether a middle ground exists. Rubin replies that Democrats have largely focused on raising or eliminating the payroll-tax cap, while Republicans historically considered reducing future benefits but have moved away from that position under President Trump.

Rubin explains that employees and employers each pay a 6.2% Social Security payroll tax. In 2026, that tax applies only up to $184,500 in wages, with the cap rising over time. Earnings above the cap are not taxed for Social Security, and workers do not receive additional benefits for income above it. Many Democrats consider that structure unfair because high earners are exempt from paying the tax on more of their salaries. They have proposed raising the cap or eliminating it altogether. Rubin says taxing more high-income earnings could keep Social Security solvent for a couple of decades. If those additional contributions did not generate proportionally higher benefits, the program could roughly run in balance. The tradeoff would be significantly higher marginal tax rates for high-income workers, many of whom live in Democratic-leaning states and already pay high state income taxes. Rubin therefore questions how universal Democratic support would be once the consequences become clearer. Republicans once regularly considered reducing promised benefits through measures such as caps on benefits for high-income retirees, higher retirement ages, or changes to annual cost-of-living adjustments. Rubin says much of that has receded over the past decade because Trump repeatedly campaigned on leaving Social Security benefits alone—in his initial campaign, reelection campaign, and 2024 campaign. Future Republican presidential candidates will have to decide whether to revive benefit changes, adopt tax increases, or borrow to continue paying benefits.

Luke asks whether Trump’s promise of $5,000 checks for Americans, assuming Republicans retain control of Congress, could require borrowing and affect the funds that pay Social Security benefits. He also asks about the effects of Trump’s tax law. Rubin says the connection is real, though not necessarily direct: borrowing is one possible way to finance new spending, while tax changes can reduce the revenue available to support Social Security. Rubin focuses on a new deduction for seniors created by last year’s tax law. Trump calls the policy “no tax on Social Security,” although Rubin says that description is not technically precise. For many seniors, however, the deduction has roughly the effect of eliminating income taxes on their Social Security benefits. Those taxes are one source of revenue for the program, so reducing them accelerates the projected insolvency date somewhat. Rubin presents this as evidence of a broader Republican shift. Rather than reducing promised benefits, raising taxes on seniors, or otherwise restraining the program, Trump and Republicans have increasingly moved toward providing more money to seniors—a particularly reliable voting group. That political incentive makes it harder to adopt policies that would improve Social Security’s finances by asking current beneficiaries or near-retirees to give something up.

Asked about the likely outcome, Rubin says Congress can borrow to pay Social Security benefits, but he rejects the idea that a one-party budget maneuver can easily resolve the problem. Budget reconciliation rules allow many fiscal bills to pass with a simple majority, but Social Security is specifically exempt from that process. Any major change therefore has to be bipartisan. Rubin sees two broad areas of agreement: lawmakers do not want to be blamed for automatic benefit cuts, and changes to benefits should generally be phased in slowly. He points to the last major Social Security agreement, reached in 1983 when the program was also approaching a solvency deadline. That deal followed years of discussion and a commission, and it was completed only months before the money was projected to run out. Rubin expects a similar process this time, with many unpopular policy levers debated and Congress working until the deadline. Luke compares the situation with France’s protests over raising the pension age from 62 to 64 and asks whether Social Security could become a similarly explosive issue. Rubin says it is difficult to get people highly agitated about a problem six years away while more immediate issues dominate politics. He does not expect voters to accept a 22% cut passively, but he thinks it will take time for the issue to become politically urgent.