WSJ What’s News - Social Security Is Breaking and Congress Doesn’t Have a Plan

Episode Date: October 25, 2026

Democrats and Republicans are pulling out all the stops as they vie to control the next Congress, but neither party is saying much about their plans to address the looming 2032 depletion of the fund that pays out retirement benefits to nearly 75 million Americans. Budget observers find that particularly concerning, given the Senators elected this November will serve until early 2033. In this episode, WSJ tax policy reporter Richard Rubin looks at the range of options that exist to address Social Security's crunch. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Hey, what's news listeners. It's Sunday, October 25th. I'm Luke Vargas for the Wall Street Journal, and this is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news. And this week, Democrats and Republicans are pulling out all the stops as they vie to control the next Congress. We are going to build a movement to take our government back. We are going up against our own goliads, those billionaire mega donors, those corporate packs. If we lose Texas, we lose the common sense revolution. There is no other option but victory, faith, family, freedom. And things are getting heated.

That is absolutely outrageous, and you owe me an apology. That is absolutely outrageous. But neither party is say much about their plans to address the looming depletion of the fund pays out social security benefits to nearly 70 million Americans, something that budget observers find particularly concerning, given that most of the senators elected this November will be in office when that deadline hits. So what's likely to happen to social security? And could the budget promises we've been hearing about in the midterm campaign make its budget shortfalls even worse? Let's get right to it. Well, talking about social security and entitlement reform requires both an expert in the room and

and a master communicator. And thankfully, we've got both today wrapped into one guest. He's tax policy reporter Richard Rubin. Richard, thank you for joining us. Are you up for the challenge making Social Security a Sunday morning talk show topic? Yeah, I don't get a vote in Congress to solve the challenge, but absolutely I'm here for it. I'm grateful for you for that. All right, let's start with this looming Social Security shortfall, which this summer was estimated to occur in 2032. Tell us what's going to happen then if Congress does nothing and why it matters so much for these senators will be choosing in just a few days? So what's been happening is that Social Security built up a surplus during the years when the baby boomers were working and paying lots of payroll taxes

into the system. And so even though the program has been running annual deficits every year, paying out more in benefits than it's collecting in payroll taxes now, it's been relying on spending down that surplus over time. But by 2032, that runs out. And And so what that's likely to mean is 22% across the board benefit cuts for the millions and millions of people who rely on Social Security. Everyone basically assumes that Congress will not let that happen. The idea that you would have retirees and survivors not getting money that they've been counting on is just untenable politically. So the race is on to try and figure out what happens. And of course, senators get elected for six-year terms.

So senators who are elected in November of this year serve a term through 2032, and the presidential candidates who will start hearing from very soon after the midterms will be elected for a four-year term running through 2032. So Social Security is on the clock, you might say, and now is the time when you might think people will start coming up with solutions to prevent those kinds of steep automatic benefit cuts. Well, you've teamed me up nicely because I actually asked our national political reporter Ken Thomas to send an update from the campaign trail. He's been keeping an ear out for whether this topic is coming up and what candidates are saying or not saying about it. Let's hear what he had to say. The midterms have been heavily focused on affordability, health care, the war in Iran. But I do think the future of Social Security is a sleeper issue in this race, especially in states with older populations. It came up in a recent Senate debate in Maine where Republican Senator Susan Collins is running for re-election in a tough race against Democrat Troy Jackson.

We are also seeing this come up in several Senate races. James Tala Rico in Texas, Josh Turrick in Iowa. Abdul El-Sayed in Michigan have all talked about lifting the payroll tax on higher income. And that would be a way to avoid this automatic 22% benefit cut that is looming in the future. Rich Ken also went on to say, you know, depending on who wins control of the House in particular, if it's Democrats, maybe the House Ways and Means Committee starts really taking on this issue. The Senate may be a little bit less likely, but just big picture. Are the two sides sort of digging in here or is there a middle ground? So on the Democratic side, you've seen, as Ken talked about, a lot of focus on raising the cap on payroll taxes. So right now, the payroll tax, which is 6.2% from employees, 6.2% from employers, ends once you reach $184,500 of wages in 2026.

That cap goes up every year. And then about that, people don't pay into the system. That means they don't qualify for additional benefits as a result of those higher contributions that they're putting into the system. That cap, many Democrats feel is unfair. It exempts higher workers from paying the tax on more of their salary or all of their salary. And so they want to raise that or eliminate that cap entirely. And that would, in fact, stave off insolvency for a couple of decades. It would make the program run roughly even if you don't give additional benefits to those people as they make more contributions into the system.

It would also mean pretty significantly higher marginal tax rates on high income workers. many of whom live in Democratic states and vote for Democrats and have high state income taxes on top of that. So we'll see how much universal support there is for that among Democrats. On the Republican side, for a long time, Republicans were looking at ideas to, in the long run, to reduce promise benefits, whether that's caps on high income retirees benefits or higher retirement ages or changes to the annual cost of living adjustments. a lot of that has gone by the wayside in the past decade or so because President Trump ran for office and ran for reelection and ran again in 2024, all on the promise of not touching Social Security benefits. So he's really shifted where the party is. And I think that was part of his appeal to a lot of the voters he's been able to sway in his direction in those three elections, two of which he won, was the idea that he was different from other Republicans and was going to be. protect Social Security. So I think this is something that we'll be watching really closely when we see

Republican presidential candidates emerge. Unlike President Trump, they will be around in 2032 in office, potentially, and would have to come up with some sort of plan for how to deal with this. And will they go back to the older Republican model of looking at benefit changes? Will they shift to this tax idea? Will they just say borrow to pay the benefits? It's not at all clear. And it's going to be a really interesting debate to watch on the Republican side. All right, Rich, put a pin in that one because we've got to take a very short break. But when we come back, we'll be looking at the broad menu of fixes out there for Social Security. Stick around.

Rich, before the break, you were talking about some of the ways that President Trump has campaigned on Social Security. And one of the campaign messages he's got this year, I'm curious if it indirectly touches it. This is this promise of $5,000 checks that would be sent to people if Republicans retain control of Congress. I imagine borrowing might be needed to pay for that. Would that affect the funds that pay out Social Security? And then there was, of course, Trump's tax law last year. What effect are all of these moves having on Social Security's finances? Are they connected?

Somewhat. So the tax law last year created a new deduction for seniors. Trump labels it as no tax on Social Security. It's not exactly that. But for many senior citizens who receive Social Security, it roughly is equivalent to not having to pay income taxes on benefits. Income taxes on benefits are part of what funds Social Security. So that change has accelerated that insolvency date somewhat.

So it's an example, again, of how Trump and Republicans have shifted to this mindset of providing more to seniors as opposed to looking for ways to lower promise benefits or remove promise benefits or raise taxes on seniors. They have certainly moved all in the direction of trying to provide more money to this group that is in many ways the most reliable group of voters. Rich, what do you see as the most likely outcome to all of this? And sort of part and parcel of that, is there any kind of trillion-dollar coin idea Congress might embrace here to kind of, quote-unquote, solve some of the difficult math

here around budgeting for Social Security? What's the outlook as far as you see it? You can always borrow. That's certainly something Congress can do. One thing to remember is that the budget reconciliation rules that let Congress pass many fiscal pieces of legislation with a one-party majority don't actually work for Social Security. It has to be bipartisan. There's a specific exemption for that. So this is going to have to be something where both sides find a way to hold hands and jump. And I think there's a pretty clear

consensus that no one wants to be responsible for automatic benefit cuts. And I think there's a pretty clear consensus that, for the most part, changes on the benefit side should be phased in relatively slowly. It's been more than 40 years since Congress has really taken a a big change to Social Security. The last one happened in 1983 when there was a bipartisan deal when we were nearing a solvency deadline. And it took years of discussion, a commission, and was resolved months before the solvency was about to run out. That would expect something similar to happen this time, that there's going to be a lot of discussion, a lot of ideas get thrown out there. There are a lot of levers you can poll, none of which are super popular

necessarily, and Congress will work right up to the end. Do you foresee a scenario in which this becomes kind of an A1 issue that's really motivating people? I think back a few years ago to France, right, where they were trying to raise the pension age two years from 62 to 64, and it sparked a series of nationwide protests, really heated ones. Is this going to motivate people in a way in the future that it maybe hasn't thus far? Oh, I think it will. I think it's just a little hard to get very agitated and politically motivated by something

that might happen six years from now when there's all sorts of pressing issues happening right now. So I don't think by any stretch that people are going to be complacent about her would accept the kinds of automatic benefit cuts that would happen if Congress doesn't do anything. It's just going to take some time for this to unspool. All right. We'll be keeping an eye on it very closely. I've been speaking to our tax policy reporter Richard Rubin. Richard, thank you so much for breaking this down for us. Sure. Thanks for having me.

And that's it for what's news Sunday for October 24th. 5th. Today's show was produced by Hattie Moyer, with supervising producer Sandra Kilhoff and Melanie Roy, along with Deputy Editor Chris Zinsley. I'm Luke Vargas, and we will be back tomorrow morning with a brand new show. Until then, thanks for listening.