Biden State of the Union: Cut Junk Fees, Not Social Security

President Joe Biden’s State of the Union address on Thursday emphasized numerous topics related to Americans’ financial well-being, including protecting Social Security, lowering prescription drug prices, increasing taxes on the wealthy and reducing junk fees.

“If anyone here wants to cut Social Security or Medicare or increase the retirement age, I will stop you,” Biden said. He added that millionaires should not be paying the same amount into Social Security as middle-class workers, an allusion to the $168,600 cap on earned income that is subject to FICA taxes.

On Medicare, Biden said he wants to empower Medicare to negotiate prices on “500 drugs,” in addition to the costliest drugs for which it currently negotiates, to help control federal spending. He noted that Medicare, under the Inflation Reduction Act, limited insulin costs to $35 per month and capped out-of-pocket costs for prescription drugs at $2,000 starting in 2025. “Americans pay more for prescription drugs than anywhere in the world. It’s wrong, and I’m ending it.”

He proposed extending limits on prescription drug costs beyond Medicare recipients and mentioned several very specific, consumer-finance-related achievements and proposals that address areas often cited as causing Americans financial stress. In addition to drug prices, he mentioned mortgage costs, student loans and college affordability.

Biden promised that income taxes on those earning $400,000 or less would not be increased, though the very wealthy should pay “their fair share.” Specifically, he said he wanted to create a minimum effective income tax rate for billionaires, set at 25%. He added that corporations should only be permitted to deduct the first $1 million of executive pay from their tax bills.

Lastly among concerns about fees, Biden explained that his administration is pushing back against junk fees. He explained that his administration has reduced “credit card late fees from the current average of $32 down to $8” and would be requiring various services such as utilities and online ticket vendors to include the final price, including all fees, upfront, per a rule proposed by the Federal Trade Commission.

The other costs Biden focused on included mortgages and title insurance on mortgages, for which he said he wants to “provide an annual tax credit that will give Americans $400 a month for the next two years, as mortgage rates come down, to put toward their mortgage when they buy a first home or trade up for a little more space.”

He added that his administration is “also eliminating title insurance fees for federally backed mortgages.”