Social Security reform a priority for last days in office: Cassidy

Republican Senator Bill Cassidy Louisiana has one big task she wants to check off her to-do list before her last day in office: Social Security reform.

Cassidy, a two-term senator, failed to win elections in May primary re-election bid He is up against Rep. Julia Letlow and state Treasurer John Fleming. President Donald Trump backed Letlow over Cassidy, one of seven Republican senators who voted to convict the president during his impeachment trial for allegedly inciting the insurrection at the U.S. Capitol on Jan. 6, 2021.

Now, Cassidy, whose term will officially end on January 3, 2027, has vowed to do his best in his final days in office; That includes addressing Social Security, sometimes called the third rail of politics because of the potential consequences for leaders in the office who make changes to the program that more than 71 million Americans use for monthly Social Security retirement and disability benefits.

“The longer you wait, the harder it gets to fix, the more painful it is to fix,” Cassidy told CNBC.com on June 10. An interview outside the Capitol building. “We need to do something now.”

Social Security faces an imminent funding shortfall, according to the latest annual report by the program’s board of trustees: Published June 9. Unless Congress acts, the trust fund known as Old-Age and Survivors Insurance (OASI), which is used to provide benefits to retired workers, their spouses, children and survivors of deceased workers, could run out in the fourth quarter of 2032. reportseveral months earlier than predicted the previous year.

If no changes are made by then, depletion of the OASI trust fund could trigger across-the-board benefit cuts. According to the board of trustees’ latest estimates, only 78% of the aid planned for this fund will be disbursed by that date.

Lawmakers may choose to expand the program’s funding somewhat by combining retirement and disability trust funds. Social Security trustees estimate that this would bring the exhaustion date to the third quarter of 2034, when 83% of planned benefits would be paid out.

The new Social Security trustees report has led House and Senate leaders on both sides of the aisle to agree that something needs to be done.

Four senators – Cassidy; “It is now clear that Congress must delay no further”; Dick Durbin, D-Ill.; Tim Kaine, D-Va.; and Thom Tillis, RN.C. — said joint statement It was released on June 10.

“Many of us are coming together to talk about how we can strengthen Social Security for current and future generations of retirees,” the four senators wrote. “This is what we say to our colleagues: Join us as we do what we were elected to do—legislate on difficult issues and protect this lifeline program for our children and grandchildren.”

While time is of the essence for Social Security, it is also a factor for both Durbin and Cassidy.

Durbin, currently a minority incumbent in the Senate, is retiring at the end of his current term.

“I’m a retired senator, so to speak,” Cassidy said. “I want to get this done before I leave, so there’s momentum to get this done.”

Social Security reform will need to be bipartisan because legislation on the program 60 votes required in the Senate.

Some Democrats have proposed increasing taxes on the wealthy to shore up funding for Social Security and increase benefits. Republicans, meanwhile, largely oppose tax increases, leaving welfare cuts such as raising the retirement age as potential options.

Cassidy came up with what he calls a “big idea” plan that mostly sidesteps the dilemma of raising taxes or cutting benefits. Instead, the proposal calls for investing $1.5 trillion over five years in an investment fund separate from Social Security’s trust funds. Cassidy said that in 65 to 70 years, money invested in the stock market will grow to 60% to 65% of Social Security’s unfunded accrued liability.

According to Cassidy, although $1.5 trillion will be borrowed, this will not increase the country’s debt because it will be held in an escrow account and therefore remain in the hands of the government.

The plan was modeled after changes to the federal Railroad Retirement system under President George W. Bush that allowed retirement funds to be invested in private securities.

Investing on behalf of this program increases solvency and could be a model for Social Security, Cassidy said. Cassidy said the amendment was enacted specifically on a bipartisan basis.

It remains to be seen whether the proposal will gain broader political support from Capitol Hill or the White House. Cassidy told the senator last month.unfaithful disaster“On social media. The White House did not respond to a request for comment.

Of course, the idea could also be a tough sell for some Democrats, who have proposals in both the House and Senate to increase the program’s solvency by raising taxes and increasing benefits.

A. final analysis Cassidy was interviewed by the Boston College Center for Retirement Research with Sen. Tim Kaine, D-Va. A review of his bipartisan proposal, which he said was “unlikely to work” because it would leave the government deeply indebted for the 75th century.^he requires large annual interest payments. But investing in stocks on behalf of the program could work if paired with urgent reforms that would raise taxes or reduce benefits, the researchers said.

The Bipartisan Policy Center, a think tank in Washington, D.C. that promotes bipartisanship. drew attention to concerns A question arose about how the bond market would respond to a “significant increase in borrowing” once the national debt entered an “unsustainable trajectory.”

Also the future stock market Returns are unpredictable and leveraged investment strategies involve “significant risk,” according to the Bipartisan Policy Center.

Cassidy said preparation of the proposal included an analysis of what might have happened during past market downturns and would include an investment premium representing a return higher than the cost of borrowing.

“All risk is covered by the fund; people will receive the promised benefits,” Cassidy said.

Senators who have been working on Social Security proposals for a long time should be given the opportunity to present them. durbin said during a speech in the Senate on June 10.

“But to do that, we have to do something we haven’t done in a long time,” Durbin said. “Get ready. Fasten your seatbelts. I’m talking about passing a law, actually introducing a measure and opening it up for change.”

Cassidy said the next step in his plan is to hold more hearings on the proposal and draft it into legislation.

Cassidy said one question that needs to be answered is how to fill the remaining 35% gap in Social Security funding that is not currently covered by the mutual fund.

“If it doesn’t pass this Congress, I’m talking to my colleagues who will be here in the next Congress and seeing who’s interested in carrying the torch,” Cassidy said.

Leaders elected to the Senate this fall will be in office until late 2032, when the Social Security retirement fund is now projected to be depleted.

But experts say the cost of potential fixes will become more expensive if policymakers wait to act.

“For the good of the country, we must put politics aside, at least for a while,” Cassidy said. “That’s a challenge for members of Congress right now.”