WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA) penned an op-ed in the Washington Post outlining his “Big Idea” to save Social Security by creating a sovereign wealth fund—separate from the Social Security Trust Fund—dedicated to protecting the program for all current and future Social Security beneficiaries. Cassidy was joined by U.S. Senator Tim Kaine (D-VA) in penning the op-ed.
“There is a nationwide appetite to implement a bipartisan, commonsense plan like ours. Waiting until the Social Security Trust Fund is on the eve of crisis would have difficult and preventable consequences. Congress should seize the moment,” wrote the senators.
Read the full op-ed here or below.
Our Bipartisan Plan Could Rescue Social Security
If Congress doesn’t act, the Social Security Trust Fund will be insolvent as soon as 2033, and millions of Americans who have been paying into the program will see a significant portion of their promised benefits cut. That’s why we’re working on a bipartisan proposal for a new investment fund that would infuse much-needed money into Social Security, while ensuring no one on Social Security or nearing retirement sees any change to the benefits whatsoever.
Social Security is currently funded through payroll taxes, which are not keeping pace with the amount needed to sustain the program. For now, the Social Security Trust Fund — which is invested exclusively in U.S. government bonds yielding low returns — is helping to fill the gap, but it can’t for long. The most recent Social Security Trustees Reportshowed that payroll tax revenue will fall more than $25 trillion short of owed benefits over the next 75 years, in today’s dollars, if the trust fund becomes insolvent. We propose creating an additional investment fund — in parallel to the trust fund, not replacing it — that would be invested in stocks, bonds and other investments that generate a higher rate of return, helping keep the program from running dry.
We estimate that it would take a $1.5 trillion up-front investment into the fund to get it going, and we propose giving the fund 75 years to grow. The Treasury would temporarily shoulder the burden of providing benefits to Social Security beneficiaries — but when the new fund’s 75 years are up, it would pay the Treasury back and supplement payroll taxes to help fill the future gap.
The result? The consistent delivery of Social Security benefits for generations of Americans, and a reduction to the United States’ long-term indebtedness by up to 20 percent.
A substantial majority of Americans are concerned about the challenges facing Social Security. We understand if they also question whether politicians could use the proceeds of the new fund we propose for other objectives.
That risk can be effectively managed by putting in place guardrails modeled after those used by the Thrift Savings Plan, including a fiduciary duty to seek a maximal return on investments and deterrence measures to address concerns that a future Congress might want to raid the fund. As for transparency, the new fund should be subject to annual audits published online.
We know a program like this could work because it already has. In 2001, Congress created the National Railroad Retirement Investment Trust — a diversified investment fund designed to ensure retirement benefit payouts for railroad workers. The trust has remained firmly in the black, with returns even exceeding expectations at some points and with payments consistently remaining reliable and on schedule. Our proposal is also consistent with virtually every other pension plan — state and private — currently operating in our country, and it matches the strategy most nations use to fund their retirement programs.
There is a nationwide appetite to implement a bipartisan, commonsense plan like ours. Waiting until the Social Security Trust Fund is on the eve of crisis would have difficult and preventable consequences. Congress should seize the moment.
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