Debt Ceiling Crisis: Senator Manchin Proposes Solution to Avoid Financial Catastrophe and Preserve Social Security

The United States’ debt ceiling was officially reached on January 19^th, resulting in all $31.4 trillion allocated for expenditures being spent. This has sparked intense debates on how to avoid a complete spending freeze and financial catastrophe. According to a report by CBPP on January 27, 2023, if Congress does not act before the June deadline, there could be severe consequences, including the potential loss of 6 million jobs and a hike in the unemployment rate to 7%, leading the country into a full-blown recession.

The situation remains at a stalemate as Democrats advocate for a higher debt ceiling limit while Republicans call for spending cuts. However, Democratic Senator Joe Manchin has proposed a partial solution by changing the way Social Security is funded. He believes that raising the cap on payroll taxes for high-earners will ensure that beneficiaries continue to receive payments and relieve government overspending.

Currently, American workers pay 6.2% of their pay towards Social Security, with a cap of $160,200 in 2023. Self-employed workers pay a higher rate of 12.4%. Millionaires hit the cap in February each year. FICA, which includes Social Security and Medicare, requires regular employees to pay 7.65% and self-employed individuals to pay 15.3%, as reported by Go Banking Rates on January 31, 2023.

Manchin’s proposal aligns with President Biden’s goal of preserving Social Security for the long term. Biden’s plan calls for high-wage earners to pay the same taxes as middle-class families. Republicans have proposed different measures, such as increasing the retirement age and adjusting benefits, but these are unlikely to be supported by Biden. The Social Security program is facing exhaustion by 2035 if it is not funded.