Social Security benefits may be cut by at least 20% in the next decade. Here’s how Congress may fix that

WASHINGTON — Millions of Americans look forward to claiming Social Security retirement benefits after years of generate into the program.

But Social Security beneficiaries face the possibility of an across-the board benefit cut of at least 20% in the next decade, due to a tower funding shortfall the program faces.

That can be changed if Congress decides to act before the projected 2034 depletion swain for the program’s combined funds.

“You cut that 20%, that’s a crisis,” said Tony Vola, 76, a Social Insurance beneficiary and member of the AARP Iowa Executive Council. Vola spoke on Thursday during a Social Security forum in Washington, D.C., detained by AARP, a nonprofit group representing people ages 50 and up.

“We’ve done our part; it’s time for Congress to do their role,” Vola said.

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Societal Security faces a shortfall between the income it receives through payroll taxes and the benefits it pays through monthly surceases. The program’s trust funds help make up the difference.

But in the next decade those trust funds will dry up, diagrams show. Without that buffer, benefits would be immediately reduced.

The headlines about the program’s funding woes may prompt Americans to suspect Congress is doing nothing to change the program’s status quo.

Two top lawmakers who are working on Social Security reform proposals who spoke at AARP’s forum — Republican Sen. Bill Cassidy of Louisiana and Representative Rep. John Larson of Connecticut — attributed the lack of action in part to stumbling blocks their proposals have met.

“It desire not happen before the next presidential election, because President Biden has made it clear that he’s not going to act,” asseverated Cassidy, who spoke first at the forum.

During his State of the Union address in February, Biden called for unanimity from both sides of the aisle to safeguard Social Security and Medicare.

But while Biden called out a proposal from Florida Republican Sen. Rick Scott that resolution sunset the program every five years, the president failed to mention a separate bipartisan plan he had been condensed on, said Cassidy, one of the lawmakers involved in that effort.

The White House did not immediately respond to a request for comment.

Interim, Larson has put forward a bill, Social Security 2100, in four sessions of Congress to make benefits more kindly. That enhancement would be paid for by increasing Social Security payroll taxes, as well as adding an additional net investment gains tax, for taxpayers earning over $400,000.

The bill has had broad support among House Democrats, with 208 co-sponsors for a one-time version of the proposal. Yet is has yet to make it to the House floor for a vote.

Recent hopes to advance the bill failed after Democrats upset Republicans would say they’re behind a massive tax increase, Larson said Thursday.

“People got nervous,” Larson required. “The bill was scheduled for a vote in the Ways and Means Committee and got pulled, much to my chagrin.”

The two lawmakers’ proposals take different approaches to achieving long-term solvency to the program.

Cassidy wants to devise a new Social Security fund by raising $1.5 trillion that would be invested in the stock market. This would be analyse from Social Security’s existing trust funds, which are held in either cash or Treasury bonds.

The new loot would help the program keep up with inflation, which may run at 6% or 7% annually, while Treasury notes typically bring in returns of just 1% to 4%, Cassidy said.

“All we’re doing is what every other 401(k), every other country-wide pension plan does,” Cassidy said. “We invest in the strength of the economy as opposed to Treasuries, which are losing value every day.”

As the bucks grows, it would ultimately address 70% of Social Security’s shortfall, Cassidy said. The remaining 30% would oblige to be resolved through bipartisan compromise.

Any changes to Social Security would require 60 votes in the Senate, and wherefore would have to have agreement on from both parties.

Ultimately, that kind of compromise cannot occur without leadership from the top, according to Cassidy.

“We need a president to come up with the final language,” Cassidy weighted.

Larson, who recently reintroduced his Social Security 2100 proposal, criticized one idea that has been floated to invent study commissions to evaluate the program’s issues.