(Yahoo!Finance) - President Biden released a budget that offered a call for tax increases to shore up Social Security while Donald Trump suggested he would consider entitlement "cutting" if elected this fall.
The back-and-forth between the two candidates Monday showed how Social Security is likely to be a front-burner issue in the coming campaign. It will also be central in the next presidential term no matter who wins this November.
Insolvency — and across-the-board benefit cuts — loom as a possibility for the program in 2034.
The budget proposal released by Biden didn’t offer a detailed plan for Social Security but called for congressional negotiations based on what Shalanda Young, Biden’s budget director, called "the president's ironclad commitment" not to cut benefits at all.
She also made clear that the president’s position on the matter would be focused on an increase to payroll taxes to make up the coming shortfall.
"If you make a million dollars in this country, you are done paying into Social Security sometime in February," Young told reporters. "Is that fair? We don't think so."
The topic also came up briefly during a wide-ranging CNBC interview with Trump. The former president — and Biden's presumptive rival this fall — responded to a question about Social Security, Medicare, Medicaid, and the national debt by suggesting the problem could be solved with efficiencies.
"There is a lot you can do in terms of entitlements, in terms of cutting, and in terms of also the theft and the bad management of entitlements," he told the anchors without offering much in the way of additional details, including whether his proposed cuts would include benefit cuts for the program's participants.
Biden’s plan
Biden’s overall budget proposal for FY2025 comes as the FY2024 budget is still being debated and includes an array of tax increases on corporations and the richest Americans, new spending on social programs, and about $3 trillion in deficit reduction over a decade.
The budget — as with all presidential budgets in recent years — has no chance of passage, Stifel chief Washington policy strategist Brian Gardner said in a note to clients, but it "will still be important for the political message it sends as the 2024 campaign revs up."
But the details on Social Security were again somewhat scarce.
It was one year ago that Biden released a budget that also offered opposition to any cuts to Social Security but gave no details of new investments in the program beyond an increase in the Social Security Administration's operating budget to do things like improve customer service.
It garnered criticism at the time and appears largely similar this time around.
Like last year, Biden’s FY2025 budget is more focused on increasing solvency for Medicare, which is due to reach insolvency sooner.
The budget does propose a $1.3 billion increase in funding at the Social Security Administration itself for staffing, customer service, and other operational issues.
However, the larger issues appear to be on hold for now. Lawmakers debated ideas to increase solvency last year but those abruptly stopped as the election season heated up with a sense that no action is likely until 2025 at the earliest.
"Once the political season is over, I'm hoping that sanity returns," Sen. Bill Cassidy (R-La.) said in a recent Yahoo Finance interview.
The problems are only going to become more unavoidable in the coming years with a recent government trustees report finding that Social Security will be in financial peril within a decade if Congress takes no action.
The program only has the funds to continue paying out 100% of benefits through 2034. After that, benefits could be cut across the board by around 23%.
Trump’s focus on 'tremendous bad management'
Trump floated the idea of cuts in response to a CNBC question about entitlements and debt, focused on what he described as mismanagement at the program.
"Tremendous bad management of entitlements, there is a tremendous number of things you can do," he said, adding a charge that Biden would weaken Social Security "because the country is weak" before quickly moving on to other topics such as his plan to use oil drilling to help pay off the national debt.
The "cutting" comment was one that Biden’s campaign immediately clipped and highlighted with Biden’s account reposting and promising "Not on my watch."
The back-and-forth comes as both the Social Security and Medicare trust funds are at risk. A key Medicare trust fund is likely to run low on funds as early as 2028, according to a recent government trustees report.
Biden's budget offered more details for the healthcare program for seniors, including a plan to implement a "permanent" solvency fix by using a combination of tax increases as well as what the administration hopes will be slowing growth in healthcare costs in the coming decades.
By Ben Werschkul · Washington Correspondent
Ben Werschkul is Washington correspondent for Yahoo Finance.
