Senators Dick Durbin and Bill Cassidy are leading an effort to extend the solvency of Social Security, aiming to prevent a projected 22% cut in benefits for tens of millions of recipients that could occur in six years. The proposal, championed by the outgoing senators, establishes a process for Congress to act rather than dictating a specific solution.
The plan would task the bipartisan Social Security Advisory Board with gathering public input and submitting draft legislation to Congress. This legislation would then be introduced by the majority leaders of the Senate and House. If they do not act, any member could sponsor the bill, which would then be sent to the Senate Finance Committee and the House Ways and Means Committee for debate and potential amendments. Ultimately, the bill would be placed on the Senate and House calendars for consideration, with a final vote after up to 100 hours of debate. Passage would require a three-fifths vote in the Senate and a simple majority in the House.
Despite the structured approach, the initiative faces resistance. Senator Cassidy expressed frustration, noting that some lawmakers prefer to avoid difficult votes, even on establishing a process. AARP has also voiced opposition, arguing that the bill fast-tracks changes and limits amendment options.
Cassidy has also co-sponsored a separate proposal with Senator Tim Kaine that involves creating a $1.5 trillion fund. This fund would be invested in stocks and other assets over 75 years, with the goal of using its returns to cover a significant portion of the projected $26.6 trillion needed to maintain Social Security payments. The seed money for this fund would come from Treasury borrowing. While Cassidy projects this could cover about two-thirds of the shortfall, other actions like tax increases or benefit cuts would still be necessary to fully close the gap.
Concerns about the debt-funded nature of this investment fund have been raised by watchdogs, with the Committee for a Responsible Federal Budget calling it a "dangerous, debt-funded gamble."
Another approach gaining attention involves modifying the Social Security payroll tax. Senators Elizabeth Warren and Bernie Moreno have joined forces to advocate for lifting the cap on income subject to the Social Security payroll tax. Currently, this tax applies only to earnings up to $184,500, meaning higher earners pay a smaller percentage of their total income into the program.
According to the Peter G. Peterson Foundation, eliminating the cap entirely could generate over $3.2 trillion for the trust fund in a decade. However, some conservative groups argue that such a tax increase could lead to lower wages and reduced employment.
Variations on this proposal exist. A bill from Senator Sheldon Whitehouse and Representative Brendan Boyle would apply the payroll tax to income exceeding $400,000, while also increasing contributions for Medicare. Meanwhile, progressives led by Senator Bernie Sanders and Representative Val Hoyle are backing a bill to lift the payroll tax cap to cover all earnings above $250,000, including capital gains and dividends. This latter proposal also includes provisions to increase Social Security benefits by approximately $2,400 annually and enhance cost-of-living adjustments. Sanders argues this approach would extend the program's solvency for generations and help the Democratic Party regain public trust.