Summary: We estimate the effects on Social Security's finances and the economy of Former Vice President Joe Biden's Social Security plan. Detailed summaries of the proposals in the plan can be found in our analysis of the estimate.

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Analysis of Estimate

Table 1: Reforms to Taxes and Benefits in Biden's Proposal

Provision	Current Law	Proposed Law
Benefit Provisions
Survivor Spouse Benefits	Dual-Earner, Single-Earner Gap Exists	Dual-Earner, Single-Earner Gap Closed
Special Minimum Benefit	Indexed to CPI-W, full Special Minimum Benefit is $886.40 in 2019 (currently outdated, since wage growth exceeds price growth)	Set Special Minimum Benefit at 125% of Federal Poverty Line ($1301 in 2019), Grown by the National Averate Wage Index (AWI)
Increase Benefits for Long-lived beneficiaries	Benefits grow only based on COLA	Provide a 5 percent uniform PIA increase 20 years after benefit eligibility. Phase in the PIA increase at 1 percent per year from the 16th through 20th years after eligibility. The full PIA increase is equal to 5 percent of the PIA of a worker assumed to have career-average earnings equal to the SSA average wage index. Auxiliary beneficiaries receive benefit enhancement based on the PIA of the governing worker.
Cost of Living Adjustment (COLA)	CPI- Urban Wage Earners and Clerical Workers (CPI-W)	CPI-Elderly (CPI-E)
Tax Provisions
Payroll Taxes on Wage Earnings Above $400,000 (Donut Hole)	0%. Earnings above taxable-maximum ($132,900 in 2019) are not subject to payroll tax	12.40%

Table 2: Estimated OASDI Financial Effects of the Biden Plan Relative to Current Law

Percentage Points

	Long Range OASDI Actuarial Present Value Balance Ratio	Short Range OASDI Actuarial Present Value Balance Ratio
	Conventional (Static) Estimates (2020-2094)	Dynamic Estimates (2020-2050)
Current Law	-3.55	-2.25
Effect of proposed changes	1.54	0.80
Proposed Law	-2.01	-1.45

Note: The OASDI actuarial present value balance ratio is the actuarial balance as a percent of current law taxable payroll. See here for a discussion of current law and current policy. Consistent with our previous dynamic analysis and the empirical evidence, the dynamic projections above assume that the U.S. economy is 40 percent open and 60 percent closed. Specifically, 40 percent of new government debt is purchased by foreigners.

Figure 1: Social Security’s Annual Non-Interest Income Balance as a Share of Taxable Payroll, Short Range (2019-2049) Dynamic Estimates

Note: Consistent with our previous dynamic analysis and the empirical evidence, the dynamic projections above assume that the U.S. economy is 40 percent open and 60 percent closed. Specifically, 40 percent of new government debt is purchased by foreigners.

Table 3: Effects on Key Macroeconomic Variables Relative to Current Law in Year Shown

Percent Change from Baseline

Year	GDP	Labor Income	Hours Worked	Capital Service
2021	-0.3	-0.3	-0.1	0.1
2030	-0.6	-0.6	-0.1	-0.9
2040	-0.7	-0.7	0.0	-1.3
2050	-0.8	-0.8	-0.1	-1.5

  Year,Current Law,Proposed Law
  2021,-1.294196969,-0.4336945746
  2022,-1.544411177,-0.7002263416
  2023,-1.673054242,-0.8088383271
  2024,-1.882540321,-1.113490482
  2025,-2.124698453,-1.31403612
  2026,-2.132953882,-1.349723437
  2027,-2.499346953,-1.651444724
  2028,-2.612796091,-1.756401337
  2029,-2.795752269,-1.776473934
  2030,-2.866915762,-1.960037505
  2031,-3.037168236,-2.049191129
  2032,-3.03062932,-2.157345389
  2033,-3.248526468,-2.40916978
  2034,-3.392774435,-2.450559225
  2035,-3.419334095,-2.550868716
  2036,-3.51385229,-2.604910243
  2037,-3.578331558,-2.644724785
  2038,-3.704810628,-2.657502951
  2039,-3.565156918,-2.609234572
  2040,-3.579082915,-2.658454737
  2041,-3.728866154,-2.666502197
  2042,-3.639613553,-2.619588629
  2043,-3.595952581,-2.445025816
  2044,-3.640836048,-2.472557177
  2045,-3.690707395,-2.441534874
  2046,-3.64704974,-2.374764046
  2047,-3.499096273,-2.261587367
  2048,-3.404046365,-2.133059157
  2049,-3.336354293,-1.981939697
  2050,-3.008112826,-1.691819536

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