Saturday, July 13, 2024

Senator Bill Cassidy Warns Social Security is in Worse Shape Than Previously Thought

by BIZ Magazine

WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA) has raised alarms in a recent op-ed published in The Washington Examiner, highlighting a new report indicating that Social Security’s financial situation is far graver than previously understood. The Social Security Trustees’ latest update estimates that it would take approximately $615 trillion to cover benefits and interest on the debt over time if Social Security becomes insolvent.

“Buried in the data was the alarming statistic that the total cost of Social Security insolvency has ballooned to $615 trillion in nominal dollars — yes, trillion. That’s a nearly $100 trillion increase in debt from three years ago,” wrote Dr. Cassidy. “We cannot afford to wait and see how much higher that number will go.”

Dr. Cassidy emphasized the urgency of addressing the issue, stating, “Fixing Social Security is a math problem that will take political will to tackle. We know the longer we wait, the less favorable the math becomes and the more painful it will be to fix.”

The Financial Crisis Looming Over Social Security

In his op-ed, Senator Cassidy pointed out that the Social Security Trust Fund is projected to be insolvent within nine years. This insolvency would trigger an automatic 21% cut in benefits for all current and future retirees under current law. Cassidy warned that continuing to ignore this issue would lead to massive deficit spending, pushing the debt to an unprecedented $615 trillion over the next 75 years.

Proposed Solutions

Senator Cassidy is leading a Senate working group that has put forward a proposal known as the “Big Idea.” This plan involves creating a new fund separate from the Social Security Trust Fund. This new fund would invest $1.5 trillion in financial markets, similar to a traditional pension fund, and hold all dividends in escrow for nearly 75 years. Assuming historically average market returns, this approach aims to cover about two-thirds of Social Security’s shortfall, including borrowing costs, without raising taxes or decreasing benefits for seniors.

Key Components of the Proposal

  • Investment Fund: Establish a $1.5 trillion investment fund to bridge the gap in Social Security’s finances.
  • Repeal Provisions: Remove the Windfall Elimination Provision and Government Pension Offset.
  • Incentives: Create work incentives to encourage continued workforce participation.
  • Sustainability: Implement measures to evergreen the Social Security Trust Fund, ensuring its longevity.

Call to Action

Cassidy underscores that addressing Social Security’s challenges is not just a policy necessity but a fiscal imperative. “Investing now may save our country, and taxpayers, $615 trillion in debt down the line. That seems like a worthwhile investment for almost any reasonable American,” he concluded.

Background

Senator Cassidy has been proactive in seeking solutions for Social Security’s looming crisis. He has led a bipartisan working group dedicated to preserving and protecting Social Security and has engaged with various stakeholders, including the AARP and the Bipartisan Policy Committee. Cassidy has also been vocal in his criticism of the current administration’s lack of a comprehensive plan to address Social Security’s solvency, as highlighted in his exchange with U.S. Treasury Secretary Janet Yellen.

For more details on Senator Cassidy’s “Big Idea” and ongoing efforts to secure America’s retirement system, the full op-ed can be read in The Washington Examiner.

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