Cassidy discusses future of Social Security, need for solutions now
Published 3:20 pm Thursday, September 21, 2023
Social Security will face a shortfall in nine years, leading to a 24 percent benefit cut for millions of Americans, according to U.S. Sen. Bill Cassidy, R-La.
Cassidy discussed possible solutions to secure Social Security for current and future benefit recipients Thursday during an event hosted by AARP.
According to AARP, over 66 million Americans currently receive social security – guaranteed and inflation protected income – at an average of $1,705 a month. A total of 180 million more are eligible once they reach retirement age or are affected by long-term disability.
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Approximately 40 percent of those over 65 rely on Social Security for a least half of their income, and one in seven rely on it for at least 90 percent of their income.
Within 10 years, Social Security could face insolvency. This would lead to a decrease in benefits to meet income, Cassidy said. This will affect people who are currently receiving Social Security benefits.
He has criticized both President Joe Biden and former President Donald Trump on the issue.
“Apparently if you are running for president, you have to deny there is a problem with Social Security. If you are running for president, you can’t tell people there is going to be a 24 percent benefit cut. … Doing nothing is endorsing a 24 percent cut for people currently receiving and for those who will receive in the future. That is the biggest issue.”
This year, Cassidy has worked bipartisanly to create a “big idea” to solve this issue.
Currently, money paid into Social Security is by law kept in cash or into treasuries. He said the interest rates on the treasuries that hold Social Security funds are not keeping up with the steadily rising inflation.
“That is absolutely the worst investment that you could possibly have right now. … We are losing value on the cash and treasuries that are in the social security trust fund. By law, we’re losing that value.”
Cassidy is working with independent Sen. Angus King of Maine, who caucuses with Democrats, on the plan.
Under the bipartisan plan, a separate pool of money called the Save and Secure It Fund ($1.5 trillion) would be gathered – borrowing or selling unused government assets were mentioned as forms of raising money – and then invested.
“As we do that, we invest it in the strength of the American economy. … All we’re doing is what every other 401K, every other national pension fund does, we invest in the strength of the economy, as opposed to the treasuries, which are losing value every day.”
Cassidy said they would borrow to secure scheduled benefits and use the money in the Save and Secure It fund as it grows overtime to offset the borrowing.
This fund will address 70 percent of the shortfall associated with promised Social Security benefits.
In addition to the Save and Secure It fund, he said his efforts would include a poverty alleviation provision and the repeal of the Windfall Elimination Provision (WEP), Government Pension Offset (GPO) and Retirement Earnings Test (RET),” according to a press release published after the discussion.
“We have things in here that make the program stronger as well as address the nation’s indebtedness. Yes, there is short term borrowing, but that short term borrowing is accounted for.”
He said actuaries predict these provisions will make Social Security “evergreen.”
Despite bipartisan efforts at the legislative level, Cassidy stated that it is likely no action will be taken before the presidential election in Nov. 2024. As President Biden “has made it clear that he is not going to act on it,” Cassidy said.
“It takes both parties, both houses and a president who is willing to go there, and right now, our leading candidates are not willing to go there.”
He noted that the White House was briefed on the plan and future insolvency issues four separate times.
“We need a president to come up with the final language … in his State of the Union speech, he did not speak about the bipartisan plan that had seven senators from each party they he had been briefed on. Rather, he spoke about a single senator’s plan that he had retreated from.”
He hopes to follow-through with plans next congress.