AARP Volunteers Call on Congress to Step Up on Social Security

Cassidy’s ‘big idea’

Cassidy is leading a bipartisan group of senators working on a plan centered on what he calls the “big idea”: a new investment fund, separate from the Social Security trust funds, that could eventually supply the lion’s share of benefit payments. He said such a fund would draw far greater returns than the Treasury securities in which Social Security payroll tax revenue is invested now.

“The interest rate we’re getting on all those Treasury notes could be 1 percent, 2 percent, 4 percent, but inflation is 6 to 7 percent,” he said of the current system. “We are losing value on the cash and treasuries that are in the Social Security trust fund.”

Under Cassidy’s plan, which has yet to be written into a bill, the government would put $1.5 trillion into an investment fund and leave it to grow for 70 years. At that point, he said, assuming returns are in line with historical market performance, the fund would be able to cover 70 percent of Social Security’s long-term financial shortfall — leaving a much smaller gap to be filled by other means.

“All we’re doing is what every other every other 401(k), every other national pension fund does,” Cassidy said, citing Canada and European countries that invest in the market as part of their retirement systems. His plan, he says, could avert any Social Security shortfall in the future.  

“Doing nothing is endorsing a 24 percent cut for people who are currently receiving and those who will receive in the future,” he said.

Larson: Boost benefits, raise taxes

Larson, who has represented a Hartford -area district since 1999, is the ranking Democrat on the House Ways and Means Social Security subcommittee. In July, he introduced the Social Security 2100 Act, which would temporarily increase benefits while permanently raising Social Security payroll taxes for high earners.

“Let’s be brutally honest. There’s only two ways to go with this,” Larson said of filling Social Security’s projected funding gap. “You are either going to cut benefits or increase revenues. You don’t need to study that. There’s some other creative things you might be able to do, but it all boils down to that.” 

Current law caps the amount of wages subject to the 12.4 percent payroll tax that largely funds Social Security (and, for most workers, is split between employee and employer). In 2023, the cap is $160,200. Under Larson's bill, earnings above $400,000 would also be taxed at that rate, as would net investment income for taxpayers earning more than $400,000.

Among other provisions, Larson’s legislation would also tweak Social Security’s benefit formula to raise monthly payments by 2 percent across the board; further boost benefits for lifelong low-wage workers, surviving spouses of two-income households and the oldest retirees; and alter the cost-of-living adjustment (COLA) calculation in a way that could produce bigger annual benefit increases for inflation. 

These changes to enhance benefits or expand eligibility would be in effect from 2025 to 2034. If adopted in full, Social Security 2100 would delay depletion of the trust funds for 32 years, to 2066, according to an analysis by Social Security’s chief actuary.

Larson said 5 million Social Security recipients “who get below-poverty-level checks” would see that change under a minimum-benefit plank in his bill. The tax increases would affect “six-tenths of 1 percent of Americans,” he said. “Six-tenths of 1 percent — that’s what we’re asking to pay for this.”

Volunteers’ views

Larson, who has seen previous iterations of his bill stall in committee, called on his colleagues to treat the threat to benefits with what the Rev. Martin Luther King Jr. called the "fierce urgency of now.” The problem, he said, “is Congress, and Congress not voting.” 

Larson echoed comments by three AARP volunteer leaders who attended the event in person. They talked about the role Social Security plays in their lives and urged Congress to fix the trust fund shortfall before it threatens retirees’ livelihoods.

“Retirement is a plan. You have to plan for it,” said Tony Vola, a member of the AARP Iowa Executive Council. “If you’re fortunate — I’m retired military, I have a pension and Social Security. The cut in Social Security is a disruptor in my part. 

“However, during my life, I’ve also run an in-home care company where 70 percent of the individuals were on Medicaid, where Social Security was their only income. You cut that 20 percent, that’s not a disruptor to them, that’s a crisis,” he said. “We’re talking the basics of life. So, I look at it this way: We’ve done our part. Time for Congress to do their part.”