Democrats’ midterm victory could put some of the party’s most ambitious Social Security proposals back on the congressional agenda. For Americans, that could translate to higher benefits, changes to cost-of-living adjustments or potentially making wealthy Americans pay Social Security taxes on more of their earnings. Democrats won control of both chambers of Congress in Tuesday’s midterm elections, which means the party could have the power to advance Social Security legislation once the new Congress takes office in January.
However, President Donald Trump will still have the power to veto legislation, and Democrats are not expected to necessarily have enough votes to override him. Despite that, recent proposals to tax more of high earners’ wages have attracted support from several Republicans, and Democrats and Trump have overlapping interests in reducing taxes paid by retirees. Social Security is facing a looming financial deadline regardless of which party controls Washington.
The latest trustees' projections indicate that Social Security's Old-Age and Survivors Insurance trust fund could exhaust its reserves in the fourth quarter of 2032. If Congress allowed that to happen without changing the law, the continuing revenue would only be sufficient to cover about 78 percent of scheduled retirement and survivor benefits. Impending Social Security cuts may push Democrats to put Social Security legislation on the floor with their new congressional majority, even if some bills could face a presidential veto.
Newsweek compiled a list of the biggest ideas Democrats could pursue. Many Democrats have gotten behind the idea of requiring high earners to pay Social Security payroll taxes on more, or all, of their wages. Workers and employers currently each pay a 6.2 percent Social Security payroll tax on earnings up to $184,500 in 2026.
Any earnings above that taxable maximum aren't subject to the tax. So, someone earning $200,000/year pays Social Security tax on about 92 percent of their income, while someone earning $1 million pays it only on 18/5 percent of their income. According to the Alliance for Retired Americans, eight Democratic Senate candidates seeking Republican-held seats supported eliminating or raising the cap.
That included Josh Turek in Iowa, Sherrod Brown in Ohio, Abdul El-Sayed in Michigan, Troy Jackson in Maine, Annie Andrews in South Carolina, Adam Hamilton in Kansas, Angie Nixon in Florida and James Talarico in Texas. This proposal is unique because it has attracted at least some Republican interest. Elizabeth Warren, the Democratic senator from Massachusetts, and Bernie Moreno, the Republican senator from Ohio, called lifting the payroll tax cap a "common-sense solution" earlier this year.
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