(The Center Square) – With the Social Security Trust Fund insolvency date looming, a congressional committee discussed creating a basic procedural framework to address the thorny issue at a Wednesday hearing.
Social Security’s insolvency will automatically trigger an estimated 22% to 28% benefit cut in 2032 — the equivalent of deducting $500, on average, from every monthly check.
Rather than agree on a basic plan to proceed, however, Democrats and Republicans on the Senate Finance Committee instead sparred over specific policy ideas, including whether to establish an advisory commission to help Congress tackle insolvency.
Committee ranking member Ron Wyden, D-Ore., claimed that Republicans’ commission idea is “designed to smuggle in benefit cut plans with minimal public scrutiny or debate.”
“I want to work on a bipartisan basis to fix this problem … We can do that by updating Social Security to reflect the economy of America today and ask billionaires to pay their fair share through the payroll and income tax,” Wyden said.
Under current law, the Social Security payroll tax applies to earnings only up to about $185,000. Additionally, many high-income business owners will reclassify their labor income as business income to effectively avoid the payroll tax.
Sen. Bill Cassidy, R-La., who helped introduce earlier this year the bipartisan PROMISE Act to reform Social Security, objected to Wyden’s characterization.
“You know what's really going to cut seniors? If we don't fix it, there's going to be, by law, a 22 to 28% cut in benefits for every senior currently receiving Social Security,” Cassidy said. “Or we'll increase taxes by 40% — boy, won't that gut the ability to save money for retirement for the American people. Or, we'll just borrow lots of money and destroy our country's credit rating. And every year we wait, it gets worse.”
Sen. Ron Johnson, R-Wis., posited that simply boosting Social Security revenues would “harm economic growth” and fundamentally restructure the program into a “welfare system.”
“Massive tax increases, taking off the [income] cap, first of all, violates the premise of Social Security, because now all of a sudden for [every] $1 those individuals pay into the Social Security system they're not going to get even a penny,” Johnson said.
“Another thing we ought to grapple with is, Social Security is a legal Ponzi scheme. I get criticized for saying it, but that's exactly what it is,” he added. “We extracted money from taxpayers, we spent the money, it's gone. It got paid out to earlier investors, because it wasn't set up as an investment fund. You'll not solve this problem if you're not willing to recognize how grossly mismanaged Social Security was for decades.”
Federal spending on programs for seniors made up between $350 billion and $520 billion of the federal deficit in 2025, depending on the methodology used to calculate interest payments, according to the Joint Economic Committee.
Policy experts called to testify at the hearing, including representatives from the Committee for a Responsible Federal Budget and AARP, generally supported both establishing a commission to support the committee’s work and pursuing policies boosting trust fund revenue.
Charles Blahous, senior research strategist at the Mercatus Center, told lawmakers during the hearing that while boosting revenues might address insolvency, Congress needs to moderate cost growth as well.
Simply raising taxes would shift the burden of financing the program from incoming beneficiaries onto younger workers, he said.
“[T]he current benefit formula automatically increases benefits from one retiree cohort to the next in proportion to the national Average Wage Index (AWI), but cannot be financed under current eligibility rules without tax burdens rising faster than AWI,” Blahous wrote in his testimony. “[T]his causes the growth of worker standards of living to lag relative to those of beneficiaries.”
He also noted that “if no further contribution to solvency is made by Baby Boomers and Gen Xers, then those who enter the workforce from this point forward will be made poorer by Social Security, net, by an amount equal to 4.4% of lifetime earnings.”
If federal spending remains at current levels, more than half of the federal budget will go toward benefits for Americans 65 years and older by 2036, congressional research predicts.
