Social Security Trust Fund Now Projected to Run Dry in Late 2032, Senators Warren and Moreno Push Payroll Tax Cap Lift

The Clock Moved Up

The Social Security trustees released their annual report this month, and the news got worse. The Old-Age and Survivors Insurance trust fund — OASI, the account that pays monthly benefits to retired workers, their spouses, children, and survivors — is now projected to hit zero in the fourth quarter of 2032. That's several months sooner than the previous estimate.

When the fund depletes, Social Security doesn't go dark. Per the trustees' own projections, only 78% of scheduled benefits would be payable from ongoing payroll tax revenue. For someone counting on $2,000 a month, that's a $440 cut with zero warning unless Congress acts.

The 1983 reform, the last major overhaul of the program, was designed to provide 75-year solvency, targeting 2058. According to CNBC's reporting on the trustees' analysis, rising income inequality is the primary reason that timeline collapsed decades early.

The Payroll Tax Cap, Explained

Right now, Social Security payroll taxes apply to wages up to $184,500 per year. Above that, the clock stops. High earners effectively finish paying into Social Security early in the calendar year and pay nothing on the rest.

The Center for Economic and Policy Research calculated that individuals earning $1 million in annual wages stopped contributing to Social Security on March 9, 2026. The remaining nine-plus months of their earnings are untaxed for Social Security purposes.

That cap is adjusted annually to track national wage growth. Any bill that sets a new upper threshold, say $250,000 or $400,000, without indexing it the same way would see that gap close over time as baseline wages catch up.

What's Being Proposed

Sen. Bernie Sanders, I-Vt., has put forward the Social Security Expansion Act, co-sponsored by Sen. Elizabeth Warren, D-Mass., and nine other Senate Democrats. It would apply payroll taxes to wages and self-employment earnings above $250,000, increase the net investment income tax, and bring active trade or business income under those levies. The bill also includes benefit increases.

At a Senate Finance subcommittee hearing Wednesday, Sanders called it a matter of making "the wealthiest people in this country, who have never had it so good," pay their fair share. His words were quoted by CNBC.

Rep. John Larson, D-Conn., proposed a separate bill, the Social Security 2100 Act, in 2023. It would tax income above $400,000 and also includes benefit increases. That bill drew 189 Democratic co-sponsors but has NOT been reintroduced in the current congressional session.

The potential bipartisan piece: Warren and Sen. Bernie Moreno, R-Ohio, co-authored an op-ed Tuesday saying they are working together on legislation to lift the payroll tax cap. Rep. Larson described Moreno's involvement as an "enormous breakthrough" for building a cross-party coalition, per his statement cited by CNBC.

The Case Against Lifting the Cap

Opponents of removing or raising the payroll tax cap make a coherent structural argument. Social Security was designed as a contributory insurance system. You pay in, you get benefits proportional to what you paid. Lifting the cap without a corresponding benefit increase for high earners breaks that link and converts the program into a flat wealth transfer. Doing so changes the political and actuarial foundation the program has rested on since 1935.

Critics on the right also note that payroll taxes are already a significant burden on employers and employees alike, and further increases on high-earning self-employed workers or small business owners could affect hiring and investment decisions. There's also a legitimate question about whether lifting the cap actually solves the long-run problem or merely delays it, depending on the benefit formula changes bundled into any final deal.

These concerns explain why Republican co-sponsorship has been rare, and why Moreno's participation, if it produces actual legislation, would mark a genuine shift in the debate.

What's Real, What's Still Open

What is proven: the trust fund depletion date moved earlier. The payroll tax cap sits at $184,500. High earners stop contributing for the year well before December. A bipartisan op-ed exists. Legislation does not, at least not yet publicly filed.

What is unproven: whether Warren and Moreno's collaboration will produce a bill with enough Republican support to pass the Senate, where 60 votes are typically needed to advance major legislation. The Larson bill from 2023 never cleared committee.

No votes are scheduled. No markup has been announced. The concrete next step is whether Warren and Moreno actually introduce a bill and what its thresholds, benefit provisions, and investment income language look like when it lands on paper.