Personal Finance
How Biden, Harris and Trump would change Social Security and Medicare
A voter fills out a ballot at a polling station on Election Day in Falls Church, Virginia, U.S., November 7, 2023.
Kevin Lamarque | Reuters
When it comes to the November election, there is one issue that is at the top of voters’ wish lists: Social Security.
Despite political division, most Americans — 87% — want action to address Social Security’s trust fund shortfall, according to the National Institute on Retirement Security. The group polled 1,208 individuals aged 25 and older.
Meanwhile, 69% of Americans said a candidate’s stance on Social Security will be a major factor in how they vote in the presidential election, according to Nationwide Retirement Institute.
It polled 1,831 adults age 18 and up who “currently receive or expect to receive Social Security.”
While experts mostly agree a fix is needed, they are divided on how that should happen — whether it be through tax increases, benefit cuts or a combination of both.
The deadline to fix the programs will only grow more urgent during the next presidential administration.
“If something is going to happen before the eleventh hour, it is going to require presidential leadership,” said Emerson Sprick, associate director of the Bipartisan Policy Center’s Economic Policy Program. “That’s something we haven’t seen on this issue for a very long time.”
Projected depletion dates are looming
The latest projections from the Social Security trustees estimate the program’s combined funds may run out in 2035. At that time, just 83% of benefits may be payable. The projected depletion date for the trust fund used to pay retirement benefits is even sooner in 2033.
Medicare also faces a looming depletion date for its hospital insurance fund, which is projected to be able to pay 100% of benefits until 2036.
It is up to lawmakers to address the shortfalls before the projected depletion dates, when the programs will face across-the-board benefit cuts.
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The looming depletion dates come as the programs face other pressures.
Retirees are now reaching “peak 65” — with more than 11,200 individuals turning 65 every day.
As more individuals rely on Social Security and Medicare, the gross national debt has now climbed to a record $35 trillion.
“We should fix our dangerously close to insolvent Social Security and Medicare trust funds,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement.
Biden can ‘show leadership’ before presidency ends
U.S. President Joe Biden is flanked by family members as he speaks about the release of Americans detained in Russia during brief remarks at the White House in Washington, U.S., August 1, 2024.
Nathan Howard | Reuters
While the focus is on the presidential campaigns, President Joe Biden still has a window of opportunity to work to address Social Security and Medicare.
“Biden has a really fantastic opportunity, if he wants to get the ball rolling and show some leadership on the issue in the lame duck,” Sprick said.
Some Democrats have proposed raising taxes for the wealthy and increasing benefits.
Meanwhile, a bipartisan group of lawmakers has proposed forming a commission to identify next steps. But those efforts like those have yet to prompt action, which would likely require compromises.
“The folks in Congress need leadership and a little bit of cover from the top of the ticket,” Sprick said.
Biden publicly vowed to protect Social Security and Medicare and “make the wealthy pay their fair share” during his March State of the Union address.
“We could extend the life of Medicare’s Trust Fund permanently — without cutting benefits — if Congressional Republicans would get on board with the President’s historic budget proposal to raise taxes on the wealthy,” said White House spokesperson Robyn Patterson.
“The President’s budget also clearly states his principles for strengthening Social Security,” Patterson said. “He looks forward to working with Congress to responsibly strengthen Social Security by ensuring that high-income individuals pay their fair share, without increasing taxes on anyone making less than $400,000 or cutting benefits.”
Trump wants to eliminate some Social Security taxes
Republican presidential nominee and former U.S. President Donald Trump holds a campaign rally in Harrisburg, Pennsylvania, U.S., July 31, 2024.
Elizabeth Frantz | Reuters
Former President Donald Trump posted on Truth Social on Thursday, in all capital letters, “Seniors should not pay tax on Social Security!”
Experts say the post likely refers to the taxes Social Security beneficiaries may owe on their benefit income. The Trump campaign did not return a request for comment by press time.
Exactly how much Social Security beneficiaries pay in taxes is based on their “combined income,” which includes adjusted gross income, nontaxable interest and half of their Social Security benefits.
For individuals with $25,000 to $34,000 in combined income — or married couples who file jointly with between $32,000 and $44,000 — up to 50% of benefits are taxed.
For individuals with more than $34,000 in combined income — or married couples with more than $44,000 — up to 85% of benefits may be taxable.
Those thresholds are not adjusted for inflation. Consequently, as time passes and benefit income increases, more beneficiaries are liable for taxes on their benefits.
Nixing those levies would allow beneficiaries to keep more of their benefit income. But it would also reduce revenues for both Social Security and Medicare by about $1.6 trillion to $1.8 trillion between fiscal years 2026 and 2035, the Committee for a Responsible Federal Budget estimates.
Like Biden, Trump has mostly promised not to cut Social Security. Yet in a March CNBC interview, Trump said he would consider cutting “entitlements,” which may refer to Social Security, Medicare or Medicaid.
“There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and bad management of entitlements,” Trump told CNBC’s “Squawk Box.”
Harris opposes benefit cuts
Democratic presidential candidate, U.S. Vice President Kamala Harris speaks at a campaign rally at the Georgia State Convocation Center on July 30, 2024 in Atlanta, Georgia.
Megan Varner | Getty Images
Vice President Kamala Harris’ position on Social Security and Medicare is similar to Biden’s, according to the White House.
Together, Biden and Harris have worked to extend Medicare’s solvency and give the program the authority to negotiate drug prices, thereby lowering costs for seniors and individuals with disabilities.
“The president and vice president oppose any proposal to cut benefits and have put forward a plan in the president’s budget to extend Social Security and Medicare solvency by asking the highest-income Americans to pay their fair share,” a White House official said.
As a senator representing California, Harris was a co-sponsor of the Social Security Expansion Act, which calls for raising taxes on the wealthy while making Social Security benefits more generous.
Once Harris was tapped to step in to the 2024 Democratic campaign for president, she readily got the endorsement of retirement advocacy groups.
“Unlike the GOP ticket, Vice President Harris has always been on the side of older Americans as a consistent supporter of Social Security, Medicare and lower drug prices,” Max Richtman, president & CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.
The Federal Reserve held interest rates steady at the conclusion of its policy meeting on Wednesday.
In what could be Jerome Powell’s last as chair before President Donald Trump’s yet-to-be-confirmed nominee Kevin Warsh takes the helm, central bankers maintained the federal funds rate in a target range of 3.5% to 3.75%.
Inflation has surged since the war with Iran began, leaving policymakers with limited room to act, according to Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “We’re in a kind of suspended animation — between Iran and the Fed transition,” Snaith said.
Before the oil shock, inflation was holding above the Fed’s 2% target but not worsening. Now the jump in energy costs could have longer-term inflationary effects, economists say.
For Americans struggling in the face of higher gas prices and overall affordability challenges, the central bank’s decision to keep interest rates unchanged does little to ease budgetary pressures. “The cavalry isn’t coming anytime soon,” Snaith said.
How the Fed decision impacts you
The Fed’s benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many consumer borrowing and savings rates.
Short-term rates are more closely pegged to the prime rate, which is typically 3 percentage points above the federal funds rate. Longer-term rates, such as home loans, are more influenced by inflation and other economic factors.
Credit cards
Most credit cards have a short-term rate, so they track the Fed’s benchmark.
After the Fed cut rates three times in the second half of 2025, the average annual percentage rate has stayed just under 20%, according to Bankrate.
“Without Fed rate cuts, there’s not much reason to expect meaningful declines anytime soon, so carrying a balance will remain very expensive,” said Matt Schulz, chief credit analyst at LendingTree.
Mortgage rates
Fixed mortgage rates, on the other hand, don’t directly track the Fed but typically follow the lead of long-term Treasury rates.
Concerns about how the Iran war will impact the U.S. economy have already pushed the average rate for a 30-year, fixed-rate mortgage up to 6.38% as of Tuesday, from 5.99% at the end of February, according to Mortgage News Daily.
That leaves homeowners with existing low mortgage rates “feeling stuck,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Mortgages, more than any other credit type, work on a churn,” she said, referring to how a dip in rates can boost borrowing activity.
Student loans
Federal student loan rates are also fixed and based in part on the 10-year Treasury note, so most borrowers are somewhat shielded from Fed moves and recent economic uncertainty.
Current interest rates on undergraduate federal student loans made through June 30 are 6.39%, according to the U.S. Department of Education. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year note.
Car loans
Auto loan rates are tied to several factors, including the Fed’s benchmark. Because financing costs remain elevated, new car buyers are taking on longer loans to keep their monthly payments manageable, according to the latest data from Edmunds.
Even so, with the rate on a five-year new car loan near 7%, the average monthly payment on a new car rose to $773 in the first quarter of 2026, an all-time high.
“Car buyers are in a tough spot right now because they’re getting squeezed from both ends: high sticker prices and high interest rates, with neither showing any signs of letting up,” said Joseph Yoon, consumer insights analyst at Edmunds.
“Until the rate picture shifts, buyers will keep stretching loan terms to make payments work, which only adds to the total cost of ownership down the road,” Yoon said.
Savings rates
While the Fed has no direct influence on deposit rates, the yields tend to be correlated with changes in the target federal funds rate. So, although rates on certificates of deposit and high-yield savings accounts have fallen from recent highs, they are holding above the annual rate of inflation.
For now, top-yielding online savings accounts and one-year CD rates pay around 4%, according to Bankrate.
“Yields on high-yield savings accounts and certificates of deposit are down from their peaks of a few years ago, but they’re still strong compared to what we’ve seen for most of the past decade,” Schulz said.
Milan Markovic | E+ | Getty Images
The average tax refund is 11.2% higher this season, compared with about the same period in 2025, according to the latest IRS filing data.
As of April 10, the average refund amount for individual filers was $3,397, up from $3,055 about one year ago, the IRS reported on Friday.
The IRS data reflects about 114 million individual returns received, out of about 164 million expected through Tax Day. Next week’s filing update is expected to include data through the April 15 deadline.
President Donald Trump‘s 2025 legislation, rebranded to the “working families tax cuts,” was a key talking point for Republicans on Tax Day.
With the November midterm elections approaching and Republicans defending slim majorities in Congress, many GOP lawmakers have highlighted Trump’s tax breaks and higher average refunds.
Meanwhile, affordability has been top of mind for many Americans amid rising costs of gas, electricity, food and other living expenses.
For filers who expected a refund this season, nearly one-quarter, or 23%, planned to use the funds to pay down credit card debt, and the same share said they would save the payment, according to the CNBC and SurveyMonkey Quarterly Money Survey, released in April. It polled 3,494 U.S. adults at the end of March.
Who benefited from Trump’s ‘big beautiful bill’
“It’s been a great tax season for the American people,” many of whom have benefited from Trump’s tax breaks, Treasury Secretary Scott Bessent said during a White House press briefing on Wednesday.
More than 53 million filers claimed at least one of Trump’s “signature new tax cuts” — the deductions for tip income, overtime earnings, seniors and auto loan interest — the Department of the Treasury also announced on Wednesday.
Those filers, who claimed the deductions on Schedule 1-A, have seen an average tax cut of over $800, according to the Treasury. Tax cuts can trigger a higher refund or reduce taxes owed, depending on the filer’s situation.
Some filers who itemize tax breaks have also seen benefits from the bigger federal deduction limit for state and local taxes, known as SALT. Trump’s legislation raised that cap to $40,000, up from $10,000, for 2025.
The latest SALT deduction limit change is expected to primarily benefit higher earners, according to a May 2025 analysis of various proposals from the Tax Foundation.
The Treasury has not released data on how many filers have claimed the SALT deduction during the 2026 filing season.
Traders work at the New York Stock Exchange on April 16, 2026.
NYSE
U.S. stocks climbed to record highs on Thursday against a backdrop of war, an oil supply shock and economic forecasts warning of stunted growth amid a protracted conflict.
Many investors may be thinking: Why?
Largely, it’s because the stock market is a barometer of what investors think will happen in the future, rather than an assessment of the present day, according to economists and market analysts.
Investors are essentially shrugging off the Middle East conflict as a blip that will be resolved relatively quickly, they said.
“The stock market isn’t trying to price what’s happening today,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank. “The stock market is always trying to price what the world is going to look like six to 12 months from now.”
Why stocks have been ‘resilient’
The S&P 500, a U.S. stock index, fell about 8% in the initial weeks of the Iran war, from the start of the conflict on Feb. 28 to a recent low on March 30.
But stocks have rebounded since then, erasing all losses since the beginning of the war. The S&P 500 closed at an all-time high on Thursday — about 11% higher than its nadir at the end of March. That followed a record close on Wednesday.
“The market has remained very resilient in the face of the war and has rallied strongly on the prospect that it will be resolved,” said Mark Zandi, chief economist at Moody’s.
A ship waits to pass through the Strait of Hormuz following the two-week temporary ceasefire between the US and Iran, which is conditional on the opening of the strait, in Oman on April 8, 2026.
Shady Alassar | Anadolu | Getty Images
And while investors cheered the possibility of a diplomatic off-ramp to the conflict, the temporary ceasefire has appeared tenuous, with the U.S. and Iran each accusing the other of breaking the agreement.
Nations haven’t been able to reach a peace deal ahead of the ceasefire’s end. Vice President JD Vance said U.S. officials left peace talks in Pakistan over the weekend after the Iranian delegation refused to agree to American demands not to develop a nuclear weapon.
The markets ‘have memory’
Ultimately, the stock market is signaling a collective belief that tensions will ratchet down, the war will end in the near term and oil flows through the Strait of Hormuz will normalize, economists said.
That’s largely because investors have been conditioned to believe that President Donald Trump will back off if the economic pain becomes too intense, economists said — the so-called “TACO” trade, shorthand for “Trump always chickens out.”
“Investors strongly believe — and have been conditioned to believe — he’s going to stand down, find a way to pivot, declare victory and move on,” Zandi said.
Trump has pushed back on the notion of backing down, framing his brinkmanship as a savvy negotiating tactic.
Economists pointed to a recent example of this dynamic: in April 2025 during so-called liberation day, when the Trump administration levied a host of tariffs on U.S. trading partners.
Within days — after the stock market had cratered more than 12% — Trump announced a 90-day pause on those tariffs. Stocks then saw one of their biggest daily rallies in history following Trump’s reversal.
Investors remember that Trump often de-escalates geopolitical shocks — which is why they’ve seized on positive headlines that hint at progress in peace talks, for example, Seydl said.
“The markets have memory,” Seydl said.
AI stocks and the ‘tech boom’
Traders celebrating at the New York Stock Exchange on April 15, 2026, as the S&P 500 closed above the 7,000 level for the first time.
NYSE
There are other factors underpinning market resilience during wartime, economists said.
One is the investors’ enthusiasm for artificial intelligence and technology stocks, which account for almost half of the S&P 500’s market capitalization, Zandi said.
“Those stocks run on their own dynamic independent of anything, including the war in Iran,” Zandi said. “I think we would have been down a lot more and it would have been harder for us to recover had it not been for the very, very optimistic perspectives on AI.”
We’re in the middle of a “tech boom” — and investors are likely to remain optimistic until they think the tech cycle has run its course, Seydl said.
More broadly, stock investors are essentially making a bet on the future earnings growth of a company — and the earnings backdrop has been “pretty solid,” Seydl said.
Consumer spending appears to be stable, for example, economists said. And companies are getting a boost to their after-tax earnings from the GOP’s so-called “big beautiful bill,” which, among other things, made it easier to write off investments upfront and therefore reduce their tax liability, Zandi said.
Going forward
Experts said there will be an economic hit from the Iran war, though.
“Despite the recent news of a temporary ceasefire, some damage is already done, and the downside risks remain elevated,” Pierre-Olivier Gourinchas, director of research at the International Monetary Fund, wrote Tuesday.
A protracted conflict risks deep and global economic pain, he wrote.
Even if the conflict is short-lived — as the broad market expects — stocks are unlikely to march much higher until it’s clear the U.S. is on the other side of the war and its economic fallout, Zandi said.
If investors are incorrect, and President Trump doesn’t back down or quickly extricate the U.S. from the war, the stock market may see a “full-blown correction” or worse, Zandi said. A stock market correction is a decline of at least 10% from recent highs.
“Everyone thinks they know what the script is,” Zandi said. “Now they just need to follow the script. If they don’t, the market will have some real problems.”
The uncertainty provides yet another example of why the average investor with a long time horizon should stick to their investment plan and ignore the noise, experts said.
“Trying to time the market is very difficult if not impossible for the average investor,” Seydl said. “It’s better to take a long-term perspective and ride out bouts of volatility.”
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