The Social Security Fund will run out of money in just six years, a shorter time frame than previously thought, according to a report released earlier this month by the program trustees.
News of the funding crunch prompted a pair of lawmakers to cross the aisle and propose a rescue plan in an op-ed published last week in the New York Times.
Sen. Bernie Moreno, R-Ohio, and Sen. Elizabeth Warren, D-Mass., have called for lifting the cap on the amount of annual income subject to the payroll tax that funds Social Security. The current limit is $184,500.
In other words, the plan would require individuals earning more than $184,500 a year to pay taxes on their entire income, potentially generating trillions in additional funds for the program over the next 10 years.
In theory, the proposal could help administrators avoid painful decisions for recipients, such as cutting Social Security benefits.
Legislation reflecting this proposal has not been enacted. In the New York Times, Moreno and Warren said they were “working on legislation.” Representatives for Moreno and Warren declined to comment on the status of the measure.
Here’s what you need to know about the new bipartisan proposal to protect Social Security:
Is Social Security in financial trouble?
Yes, the program will face an ever-tightening budget constraint over the next few years, according to a report released this month by the Social Security Trustees.
The Social Security trust fund will run out in 2032 unless Congress combines old-age and disability funds, in which case insolvency would occur in 2034, the report said. Last year, program trustees predicted that Social Security would become insolvent in 2033 or 2034.
The program generates revenue from payroll taxes paid by workers and employers, allocating that revenue from the general federal budget. However, since the early 2010s, Social Security has been paying out more in benefits than it receives in taxes, reducing the program’s available funds, according to a study released by the Urban Institute earlier this year.
The budget deficit is exacerbated by declining birth rates and reduced immigration, leaving fewer taxpayers at a time when many baby boomers have started to receive benefits. The One Big Beautiful bill also eliminated the tax on Social Security benefits, draining another source of revenue for the program.
What is Warren and Moreno’s welfare reform proposal?
The bipartisan reform proposal would change the payroll tax that funds Social Security.
The program is funded by a 12.4% payroll tax, split equally between employers and employees. However, the tax only applies to annual income of $184,500 or less, meaning any income above that amount remains tax-free.
The proposal put forward by Warren and Moreno would remove the cap on taxable income, allowing the tax to apply to a person’s entire income, even if they earn more than $184,500 a year.
Senator Bernie Moreno in Miami, March 7, 2026, and Senator Elizabeth Warren in Washington, March 21, 2026.
AP Photo
“Because the vast majority of Americans earn less than this amount, most people pay Social Security taxes on 100 percent of their earnings, while the highest earners pay only a portion of their income,” Warren and Moreno said in an article co-authored by the New York Times.
Eliminating the cap on taxable income would generate about $3.4 trillion in additional revenue over the next decade, according to an analysis from the nonpartisan Peterson Institute. The policy change would close more than half of the program’s funding gap, the group said.
“As rising prices and artificial intelligence cause economic uncertainty in the future, Social Security must remain a stable foundation to help retirees afford basic life needs,” Warren and Moreno said.
The proposal has drawn opposition from at least one conservative lawmaker. Sen. Jon Husted, R-Ohio, criticized the plan for what he called a “giant tax increase.”
“We need to provide Social Security, we need to protect it, we need to make it stronger,” Husted said on the Guy Benson Show last week. “But I don’t agree with the approach they’ve laid out.”
What are some alternative reforms to finance Social Security?
As the program’s budget problems have worsened in recent years, elected officials and researchers have proposed a number of solutions. As with any financial shortfall, corrections either increase revenue or reduce expenses.
An alternative way to increase tax revenue under the program would increase the payroll tax by one percentage point from 12.4% to 13.4%, the Peterson Institute said. The move would generate $601 billion in additional revenue over 10 years, closing about a quarter of the program’s funding gap, the group added.
If Congress fails to address the projected budget deficit, the automatic cuts would reduce Social Security benefits by about 25% in 2032, Social Security Trustees said earlier this month.
Earlier this month, a bipartisan bill introduced in the House of Representatives proposed creating an independent commission consisting of 13 members appointed by congressional leaders and the president. The Commission will seek ways to address the long-term sustainability of the program. The bill, which has three co-sponsors, has been assigned to two House committees.
Over time, the task of reforming the social security system has become more and more difficult, the Urban Institute said.
“Waiting only makes change bigger and more difficult,” the group added.