US Senators Lead lawmakers In A Proposal To Reform Social Security
The senators, Republican Bill Cassidy of Louisiana and Independent Angus King of Maine, who caucuses with Democrats, are leading a bipartisan group of lawmakers in a proposal to reform Social Security on multiple fronts.
As previously reported by GOBankingRates, one of their proposals is to raise the full retirement age from 67 to 70. They have also proposed establishing a sovereign-wealth fund to assist in the payment of Social Security. The fund could be funded with borrowed funds totaling $1.5 trillion or more.
Another possibility is to change the formula used to calculate monthly Social Security benefits from one based on a worker’s average earnings over 35 years to one based on the number of years worked and paid into Social Security.
Proposals Come Amid Increased talk Of Social Security Reform
These proposals come amid increased talk of Social Security reform before the program’s Old-Age and Survivors Insurance (OASI) Trust Fund runs dry. According to one estimate, this could happen as soon as 2032, leaving the program solely reliant on payroll taxes for funding — which may only cover about 75% of benefits.
Many Social Security advocates strongly oppose raising the full retirement age, citing it as a benefit cut.
In a joint statement issued on March 3, Cassidy and King sought to allay those fears. In response to what they described as “incomplete and somewhat alarmist reports” about the proposal, the senators stated that their goal is to “preserve and protect the retirement security of all Americans now and for the foreseeable future.”
“The Social Security trust fund will be insolvent in less than a decade,” according to the statement. “If Congress does nothing, current law requires painful 24% benefit cuts and a bleak future for keeping our promises.” If we work together now, we can preserve and protect all Americans’ retirement security now and in the future.”
Cassidy and King stated that “conversations are ongoing” about their plan and that they will provide more details once they have a “fully developed plan,” but they did provide a glimpse at a couple of potential elements.
“Dozens of considerations are being weighed to protect Social Security, including early retirement at 62, ironclad protection for lower-wage workers, and exploring avenues to increase benefits immediately,” the joint statement said. “Under what we’re talking about, millions of people would get more money right away, and no one would get less.”
The question is whether their plan will even be put to a vote in Congress. They may have difficulty persuading Democrats and even some Republicans to support a higher full retirement age.
As NBC News pointed out, President Joe Biden and many Democrats prefer to address the funding gap through new revenues, whereas many Republicans prefer to cut spending.