Just a few weeks into the 116th Congress, Democrats’ takeover of the House of Representatives has already exposed the huge gulf between what American voters want and what the previous House leadership and the Trump administration have thrust upon them in recent years. Congressional Democrats’ bold agenda—such as higher taxes on the rich, universal health care, and expanding Social Security—has strong support not just among progressives but also across party lines. This popularity is a direct rebuke to Trump’s and his congressional colleagues’ massive 2017 tax giveaway to the wealthy and corporations; Trump’s ongoing efforts to sabotage the Affordable Care Act (ACA) and Medicaid; and Trump’s and congressional Republicans’ continued efforts to cut Social Security.
Perhaps nowhere is the gulf between voters’ wishes and the policies Trump and his colleagues in Congress are pursuing greater than when it comes to Social Security—a program that voters overwhelmingly want to see expanded rather than cut. A 2017 Pew Research Center poll found that 95 percent of Democrats and 86 percent of Republicans preferred to maintain or expand Social Security. Yet, despite promising not to cut Social Security on the campaign trail, President Donald Trump’s fiscal year 2019 budget would have slashed $72 billion from the program—cruelly targeting people with disabilities—over the coming decade. And Senate Majority Leader Mitch McConnell (R-KY) and then-House Speaker Paul Ryan (R-WI) didn’t even wait until the ink was dry on their $2 trillion tax giveaway to begin insisting that everyday Americans face cuts to Social Security to pay for their deficit-busting tax bill.
Fortunately, American voters finally have champions in the growing chorus of Democratic lawmakers calling for expanding Social Security. Their approach fits seamlessly into the growing calls for higher taxes on the wealthy from congressional leaders and 2020 presidential contenders: It pairs benefit increases with commonsense revenue raisers such as lifting the payroll tax cap so that higher earners pay into Social Security all year, just like other workers do. This is a move that more than two-thirds of Americans support and reflects the common desire of both voters and progressive policymakers to tackle the nation’s sky-high inequality by putting everyday workers and families—not the uber-rich—first.
Rising inequality has not only threatened working families’ economic security—making Social Security’s modest benefits all the more critical—it has also actively damaged Social Security’s financial outlook. This analysis updates earlier CAP analyses to illustrate how much rising inequality has harmed Social Security’s finances since 1983—the last time major changes were made to the program. (see earlier versions for methodology) We first show how policymakers’ failure to address rising inequality benefits rich Americans, including millionaire and billionaire earners as well as President Trump. Second, we show how Social Security’s combined retirement and disability trust funds would have contained $1.4 trillion more by the end of 2017 if policymakers had kept the payroll tax fixed at 90 percent of earnings rather than letting an increasing share of rich Americans’ income go untaxed every year. Finally, we show that the trust funds’ assets would have been $570 billion greater by the end of 2017 if the average worker’s pay had grown in step with their productivity since 1983 instead of the paltry pay gains they actually experienced.