Janet Yellen appeared in front of a Senate Finance Committee in March where explosive testimony erupted when a senator from Louisiana asked a line of questions regarding the impending insolvency of Social Security.
The Social Security Trust Fund is due to go broke in nine years, at which point recipients will receive 24% fewer benefits when that happens.
Of the $4.5 trillion in taxes proposed by President Joe Biden, none of those tax increases are earmarked for shoring up Social Security.
A bipartisan group of senators has made repeated requests to meet with the president regarding the plan for Social Security, all of which have been ignored.
President Biden has proposed increasing the taxes on individuals making over $400,000 to address these issues. The challenge with that is, in order to put the nation on a sustainable path, tax rates would have to rise to absurdly impractical levels.
Doubling the debt-to-GDP ratio would be devastating for the economy, which is essentially the situation if the president doesn’t take action.
The scenarios are: we do nothing and all Social Security recipients receive a 24% cut in benefits, keep borrowing money and double the debt in the short-term, or try to put a sustainable plan into place. The third option has mostly been ignored up until this point.
There are honest politicians on both sides of the aisle. Unfortunately, many are not willing to make tough decisions for fear of alienating a portion of the electorate.
This exchange indicates that President Biden is opting for a delay strategy, which is bad news for Americans with the majority of their money in tax-deferred accounts.
Mentioned in this episode:
David’s books: Power of Zero, Look Before Your LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David’s Tax-free Tool Kit at taxfreetoolkit.com