President Joe Biden made a big show of protecting Social Security and Medicare in recent months. He also accused Republicans of trying to slash these programs during his State of the Union.
The GOP quickly struck back, saying they never had any intention of cutting into either program. And in fact, they claim Biden’s long-term plans will ultimately cause widespread financial suffering.
One expert just said it’s basically inevitable — and one group of taxpayers will get hit the hardest.
Biden notably promised not to raise taxes on families earning less than $400,000 per year, which would be most families in the country. Democrats have touted this as a big win for the middle class.
The only problem is, it’s “not rooted in mathematical reality.”
That’s what Manhattan Institute senior fellow Brian Riedl wrote in the Wall Street Journal (via The Daily Caller):
President Joe Biden promised to block any attempts to reduce Social Security or Medicare benefits, but this will almost certainly lead to a tax hike on the middle class.
‘The president’s implication that full benefits can be paid without raising taxes for 98 percent of families has no basis in mathematical reality,’ he wrote.
Currently, Medicare and Social Security are set to come up short by $48 trillion and $21 trillion respectively in the next 30 years.
So, Riedl argues that it’ll be almost impossible to avoid significant tax hikes if they’re not willing to cut benefits. And the Biden administration has made it clear that they’re not going to do that.
The middle class are once again slated to get hammered, because “tax the rich” won’t work out in this scenario.
According to Riedl, even if Congress imposed state and payroll taxes of almost 100% for the wealthy, and also jacked the corporate tax rate, it still wouldn’t cover the expenses of Social Security and Medicare.
The problem is clear: if we intend to keep these programs as they are, the middle class will invariably pay much higher taxes.
This could come via 20% value-added tax or a nine-point payroll tax hike, a jump that hasn’t happened since World War II. However, Riedl says there are a few ways to avoid this disaster.
For example, we could raise the age when people are eligible for these benefits, and we could reduce the benefit growth for retirees who are not poor.
Both of these seem like perfectly reasonable solutions, as most Americans would agree that it’s ridiculous for wealthy senior citizens to receive such massive benefits, especially as people are living longer now.
But no matter what, something is going to have to change — and if it doesn’t, it’s the middle class who will pay through the nose.
- A financial expert says if Social Security and Medicare continue on the current path, the middle class will have to see huge tax increases.
- The scale of increase would be something America hasn’t seen since WWII, because both programs will cost trillions.
- Solutions include raising the eligibility age and reducing benefits for well-off retirees.
Source: The Daily Caller