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By Hugh Cameron
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With the system at risk of going broke, a former commissioner of the Social Security Administration has backed a proposal he says could save the nation’s largest federal program.
Last week, the Social Security and Medicare Trustees released their annual reports, underscoring the scale of long-running cash shortfalls that could threaten their ability to pay benefits within the next decade. The OASI Trust Fund—the primary source of funding for Social Security retirement and survivor benefits—is now projected to run dry by 2032, a year earlier than previously forecast.
This means that without intervention, an automatic 22-percent cut to benefits is now on the cards, though several solutions have been proposed to rescue the program before it becomes insolvent.
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In an interview with The Hill on NewsNation on Monday, Martin O’Malley argued that higher-income Americans should pay more into the program to keep it afloat, and that Congress should raise the ceiling on earnings subject to Social Security payroll taxes.
O’Malley, who led the Social Security Administration (SSA) between December 2023 and November 2024, said that only 6 percent of Americans “experience any benefit” from the current cap, adding that most “think it is unfair that wealthy people don’t pay the same tax rate as a custodian in a school or a teacher.”
Why Is Social Security in Danger?
The potential depletion of Social Security funds has long been a concern on Capitol Hill. Insolvency would not mean the program stops altogether, though future payments would become entirely reliant on what is collected in payroll taxes each year—likely failing to cover all scheduled benefits.
According to the report released last week, Social Security is set to spend $3.8 trillion more than it takes in over the next decade, and faces an actuarial deficit of 4.42 percent of taxable payroll over the next 75 years, up from 3.82 percent in last year’s report and marking the largest gap since 1977.
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The Committee for a Responsible Federal Budget has attributed the gloomier outlook to lower forecast fertility rates, lower levels of projected immigration, as well as President Donald Trump’s signature tax and spending bill, the One Big Beautiful Bill Act, which it says “reduced revenue from the income taxation of Social Security benefits.”
The Bipartisan Policy Center (BPC) notes that America’s aging population is also "a major contributor to the problem,” given the ratio of workers to beneficiaries has fallen from over five-to-one in 1960 to just 2.9-to-one today.
And given that Social Security is the most popular federal program in the U.S., according to a BPC poll conducted last year, its fast-approaching crisis has reignited calls for congressional action.
“The Social Security Trustees report is a clarion call for Congress to strengthen the program NOW before the looming depletion of the trust fund becomes a full-blown crisis,” Max Richtman, president of the National Committee to Preserve Social Security and Medicare, said in response to the report.
What Solutions Have Been Proposed?
The Trump administration says it has made Social Security a priority and believes many of the current difficulties can be remedied by eliminating “waste, fraud, and abuse.”
“Combined with the administration’s efforts to eliminate waste, fraud, and abuse across federal agencies, and ensure responsible stewardship of taxpayer dollars, we are working to preserve Social Security and Medicare programs and recognize that more work remains to secure benefits for future beneficiaries,” Treasury Secretary Scott Bessent said last week.
But four main solutions have gathered steam on Capitol Hill.
These include adjusting how benefits are calculated and slowing the annual Cost-of-Living Adjustment (COLA), effectively reducing payouts over time.
Raising the full retirement age or means-testing benefits has also, for years, been floated as a possible fix. In a letter to Trump this week, Democratic Senator Elizabeth Warren warned that such a move would be “effectively cutting tens of millions of Americans’ Social Security benefits” and would fall “disproportionately” on lower-income seniors who depend upon these.
And alongside proposals to raise the Social Security payroll tax rate, others have backed adjusting the taxable wage cap, which currently excludes any earnings above $184,500 from Social Security taxes.
O’Malley, who was nominated by former President Joe Biden to lead the SSA, has now voiced support for the latter move. In comments to MarketWatch last week, O’Malley called the looming budget issues “an entirely solvable problem,” one that could be fixed if lawmakers “scrap the cap.”
Former Labor Secretary Robert Reich likewise called the solution “obvious,” and said eliminating the cap on income subject to Social Security taxes was the “only way to reverse” the program’s fiscal trajectory.
And some lawmakers have already backed this approach. The Social Security Expansion Act, introduced by independent Senator Bernie Sanders, seeks to restore the program’s solvency by raising the taxable earnings cap to $250,000, while requiring wealthier households to pay taxes on a portion of their investment income.
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