Guest Column: A Plan to Save Social Security

May 01, 2024

By U.S. Sen. Bill Cassidy

The Social Security Trust Fund is going broke in nine years. When it does, there will be a 23% cut in benefits for every current and future retiree.

About 10,000 Baby Boomers become eligible for benefits every day. When Social Security began, the average lifespan was 62; now it is nearly 80.

Families are having fewer children, meaning that fewer people pay into Social Security for each recipient compared to when the program started. And the money in the Trust Fund is only invested in Treasury notes, which have a poor return on investment.

Social Security is a pay-as-you-go system. As workers pay payroll taxes, monthly checks are sent to beneficiaries.

Any extra tax receipts are put in the Social Security Trust Fund and invested in Treasury notes. If there is not enough money coming in through payroll taxes to pay current obligations, then the money in the Trust Fund supplements tax receipts.

Unfortunately, the Trust Fund has been supplementing payroll tax income for so long that it will be insolvent in nine years. When this happens, by law, benefits will be cut by about 23% to match income, which will double the poverty rate among the elderly.

If current law is ignored and the federal government just borrows to pay benefits, the accumulated debt to the taxpayer will be approximately $560 trillion over 75 years. We need to find a comprehensive solution to save Social Security, but finding this solution means daring to touch the third rail of politics.

I am working on a solution with other senators called the “Big Idea,” which invests $1.5 trillion over five years into an investment fund separate from the Social Security Trust Fund. The fund would be invested into the U.S. economy, and any dividends would be reinvested and kept in escrow for 75 years.

The U.S. Federal Railroad Retirement System also was going insolvent in the 2000s, so Congress changed it to an investment fund like I am proposing. Now the fund is in the black.

Our “Big Idea” would repeal the automatic benefits cut, while the investment fund would also offset any borrowing required to pay benefits in the meantime. Combined with some relatively minor tweaks to the program, at the end of 75 years, all the accumulated debt would be paid off, and the Social Security program would be able to cover its obligations in perpetuity.

This also gives us a chance to address the Windfall Elimination Provision and Government Pension Offset, which penalize state and local government workers who also worked in the private sector. We would also repeal the “Retirement Earnings Test,” which mandates that if someone continues to work after beginning to draw Social Security, their monthly benefit check is reduced one dollar for every two dollars earned.

One of the most appealing aspects of the separate fund is that individual beneficiaries don’t have any risk and their benefits are paid no matter what. History shows we can expect a more than 8% rate of return on our investment, compared to Treasuries that only yield between 1-5%.

There would also be safeguards preventing future Congresses from meddling in the investment strategy. In short, the “Big Idea” is a much better investment for the American people.

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