Senate group wades into tough talks on Social Security

A bipartisan group of senators is treading carefully into the politically difficult discussion of making changes to Social Security to extend its solvency.  

Senators from both parties who have been involved in the talks are tight-lipped when it comes to revealing details, though reports have begun to surface of discussions of potential changes to the age threshold for retirement and raising the taxable wage cap. 

“All of the ideas on the table are the ones you would expect, but the thing that I like about these discussions is that there’s ideas on the table that nobody has talked about until now, but that have a track record of working, and that’s what I think is interesting,” Sen. Tim Kaine (D-Va.) said. 

It’s unclear exactly how many senators are involved in the talks, though Sen. John Cornyn (R-Texas) said about five to six senators have been attending briefings “routinely,” including Sens. Angus King (I-Maine), Bill Cassidy (R-La.) and Mitt Romney (R-Utah).

The talks are taking place against the backdrop of efforts to raise the debt ceiling this summer. House Republicans have demanded steep spending cuts in return for raising the ceiling.  

The Biden administration has argued that the lifting of the debt ceiling should be handled separately, while accusing Republicans of seeking to make cuts to Social Security and Medicare.

Republicans in the Senate and House have chafed at the White House attacks, and Speaker Kevin McCarthy (R-Calif.) has insisted that Social Security and Medicare will not be touched as part of a debt limit deal.  

But there are voices in both parties who think changes do need to be made to Social Security to extend its life separately from the debt limit fight.  

A report released by the Congressional Budget Office earlier this month warned that the Social Security trust fund could run out of money by 2032 — a year earlier than previously expected — without changes to existing policies.   

The development puts the exhaustion date within a 10-year window, the first time experts say that’s happened in decades, prompting fresh uneasiness among lawmakers.  

But changes to the program are a tough lift, especially in a Congress where one party leads each chamber.  

“The only way that any reforms to Social Security are going to work out is if they’re 100 percent bipartisan,” said Sen. Cynthia Lummis (R-Wyo.), who expressed interest in some of the ideas that have been a part of the informal Senate talks. “If there’s even one person out of balance, it won’t work.”  

One idea that has piqued interest on both sides of the aisle is to create a new sovereign wealth fund to help finance Social Security.   

While senators say the overall plan is yet to be finalized, sources familiar with the proposal told Semafor that the fund could involve more than $1 trillion in seed money to help finance investments.  

The idea has prompted questions from some experts over how much the fund could help shore up the program, which is expected to pay out more than a $1 trillion in benefits this year alone.

But the proposal has gotten some support from senators involved in the bipartisan effort being led by Cassidy and King.   

Romney said the proposal would allow the country “to be able to borrow at low interest rates and invest in the growth of our economy, and perhaps economies of other nations as well.”   

“That’s what other retirement funds do around the world, in corporations and in the railway world, and it creates a substantial source of revenue,” he said, adding that if the investments “didn’t do terribly well, we would kick in through other sources and make sure that we don’t threaten in any way the benefits of recipients.”  

According to Semafor, among the ideas being discussed as a potential backup plan if the fund falls short of at least 8 percent in return include upping the maximum taxable income and payroll tax rate. But both are proposals that could see a tough time garnering necessary support for passage in a divided Congress.   

The senators involved in the bipartisan group say they are trying to keep the talks from becoming politicized. That’s a difficult task given the high stakes in the debt ceiling fight.   

President Biden in his State of the Union address sought to get Republicans to agree to not make any cuts to Social Security and Medicare. Former President Trump, who is running for another term in office, has also criticized the idea of cutting Social Security or Medicare.

In remarks on Tuesday, Sen. Mike Rounds (R-S.D.), who has been a part of the talks, said one of the biggest hurdles to the effort is keeping “presidential politics out of it.”  

“It’s a really easy third rail to use on both sides of the aisle, if you want to go after an opponent,” Rounds told The Hill.

“Sometimes, it’s easier just to spin it because this is an area that people care about, but they’re always concerned because they’re worried about somebody taking away benefits and they don’t trust government the way it is,” he added.   

Some Democrats aren’t crazy about the talks, however.   

Sen. Sherrod Brown (Ohio), one of six vulnerable Democrats targeted in a recent GOP campaign effort charging the party with “threatening Social Security and Medicare,” called the proposed sovereign wealth fund a distraction by Republicans to detract attention from proposals to cut existing benefits.

The Biden administration has also been hesitant to lean into the discussions.  

As for when lawmakers plan to put ink to the plan, senators involved in the effort say the public could see text in a matter of months.

“I think it will likely be introduced this year,” Romney said. “I’m not sure it’ll pass this year, but obviously, it’s a huge topic with enormous interest, and the fact that we have both Medicare and Social Security that are slated to become insolvent within a decade suggests that we need to make sure to save them.”