WASHINGTON D.C. (BRPROUD) – Social Security is on track to go insolvent in the next decade, according to economists, if no action is taken by Congress. This means younger generations will lose out on retirement benefits and those already on the program will see major cuts to their monthly checks.
Members of Congress on both sides of the aisle have differing ideas on how they think the program should be saved from insolvency.
“I think the key date is 2034, and that’s where the system is projected to actually run out of funds and go negative,” said LSU Economics professor Dek Terrell.
U.S. Sen. Bill Cassidy has a few ideas of what he wants to see done. Firstly, he wants to do away with the Windfall Elimination Provision and Government Pension Offset. He said those calculations for benefits are unfair to government servants and could dissuade people from taking government jobs.
Social Security has been struggling for a long time. With the growing trend of fewer workers paying into the program and more retirees using the benefits, the bank account is running low. Cassidy believes the best way to make up the funds is to diversify the investment portfolio. Right now the investments are through treasuries, he wants to open things up in a way similar to how other countries run their programs.
“Our current Social Security investment strategy by law is about the worst investment strategy we could have,” Cassidy said. “What we propose is to do what Canada does… what Louisiana does to an extent, is create a fund separate from Social Security and put it in other investment vehicles.”
He likens this plan to how the railroad retirement fund under the Bush administration was set to go insolvent and the bond investments were diversified. Cassidy said that program is now successful. Terrell said that idea could be a solution but would add a lot more risk to the country’s investments.
“As you move to a higher yield, you’re going to get lower quality bonds. So there’s more risk associated with it,” Terrell said. “You might be buying bonds from a company that’s not going to be able to pay off that obligation in the future.”
Across the aisle, Congressman Troy Carter said he is exploring the different options to prevent insolvency. He’s been in talks with Sen. Cassidy on potential bipartisan legislation proposed for this issue. He said he does not want to kick the issue down the road until the deadline.
“I know that there’s multiple options that we can explore,” Carter said. “That does not include changing the rules three-quarters of the way into the game. That’s not fair. That’s not the American way.”
Some Democrats want to lift the cap on incomes that contribute to social security or to increase the amount taken out of the paychecks of the country’s highest earners.
“Raising that threshold wouldn’t be unheard of. I think the argument in favor of having that threshold is the amount of Social Security benefits that you get is also capped. So you’re not going to get Social Security benefits that are much, much larger because your income was much higher,” Terrell said.
What has been done in the past is cut benefits or raise the retirement age to offset some of the costs. That idea is widely unpopular and has not been proposed publicly at this time. The issue is still being heavily debated as the nation’s debts and spending are tied up on Capitol Hill.