Social Security is in worse shape than it looks

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The rot runs deeper than we thought. 

In May, the public received another update from the Social Security trustees confirming that the Social Security Trust Fund will be insolvent in nine years. But 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. We cannot afford to wait and see how much higher that number will go.

That $615 trillion accounts for the cost of paying benefits and interest on the debt the United States would accrue if we allow Social Security to go insolvent and deficit-spend to keep it afloat over the next 75 years. This underscores both the severity of the problem and the need to stop burying our heads in the sand.

When the Social Security Trust Fund is depleted in nine years, current law dictates an automatic 21% benefit cut for all current and future retirees. Congress can avoid this cut by deficit spending, but it should pursue a strategy to make the program sustainable and fairer. We need a comprehensive plan that avoids massive benefit cuts or tax hikes and avoids putting us on the road toward $615 trillion in additional debt. 

A Senate working group I’m leading has a proposal that accomplishes both. Our “Big Idea” creates a new fund separate and independent of the Social Security Trust Fund. This new fund would invest $1.5 trillion in financial markets, just like a normal pension fund, and hold it and all dividends in escrow for nearly 75 years. 

Assuming historically average market return, our “Big Idea” covers about two-thirds of Social Security’s shortfall, including the borrowing costs. The remainder can be addressed without raising taxes on seniors or decreasing their benefits. 

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In addition to this, our proposal would repeal the Windfall Elimination Provision and Government Pension Offset, create work incentives, and even evergreen the Social Security Trust Fund. 

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. This isn’t hyperbole —we’re seeing the effect in real time. 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. 

Bill Cassidy is a U.S. senator for Louisiana and serves on the Health, Education, Labor, and Pensions Committee.