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Mar 31, 2023
Hopes for Bipartisan Social Security Fix Dimmed by Biden-GOP Tensions
(Bloomberg) -- A bipartisan Senate effort to shore up Social Security is hitting a political roadblock even as new projections show that trust fund reserves will run out sooner than previously forecast.
Some members of the ad hoc group of lawmakers who’ve been trying to fashion a deal say the prospects have been diminished by President Joe Biden’s accusations that Republicans want to cut benefits, and former President Donald Trump’s campaign promise to leave entitlement programs alone.
“If the folks who are running for president are going to take the attitude that this is a ‘third rail’ issue and they’re trying to use it for political purposes, then we can’t fix Social Security at this time,” said Mike Rounds, a South Dakota Republican who is part of the group. “It’s going to take an adult running for the White House to get this done.”
The breakdown comes despite signs that Americans’ Social Security benefits are at real risk if current policies aren’t changed. The trustees for the program said Friday that the program’s retiree fund will exhaust its reserves by 2033, a year earlier than they projected last year. Upon insolvency, beneficiaries would face a 20% across-the-board benefit cut.
Related story: Social Security Finance Projections Dip While Medicare Improves
The Senate group, led by Republican Bill Cassidy of Louisiana and Angus King, an independent who caucuses with Democrats, asked in January for a meeting with Biden. They want to discuss ways to strengthen the program, which is projected to reach insolvency in about a decade.
Cassidy has complained publicly in recent weeks that the White House won’t commit. At a March 26 Senate Finance Committee hearing, he swiftly cut off Treasury Secretary Janet Yellen at hearing and said, “That’s a lie,” when she said Biden is prepared to work with Congress to reform Social Security.
The group wants the president’s support for changes under consideration that include creating an additional Social Security trust fund that the government would invest in stocks, raising the retirement age from 65 and boosting the payroll taxes that finance the program, Cassidy and other participants say. While the two leaders of the group said earlier this year that a preliminary proposal was being crafted, Cassidy said this week that one can’t be completed without Biden’s engagement.
“All it would do is create pot-shots, when really all we’re trying to do is open up a negotiating position,” Cassidy said in a hallway interview. “So why open up a negotiating position with someone who doesn’t want to negotiate?”
A White House official said aides there have engaged in good faith talks to understand the proposals from the senators. The president is open to suggestions on how to extend Social Security’s solvency without cutting benefits and without hiking taxes on those earning less than $400,000 annually, the official, who asked not to be identified, said.
A person familiar with the talks, who asked not to be identified, said White House staffers have held a half-dozen meetings with Cassidy and King and their aides.
King declined to comment about the talks or their prospects. Another participant in the group, Democratic Senator Tim Kaine of Virginia, said he expects senators will continue talks after a two-week Easter recess but that any agreement is unlikely without Biden’s support.
“This is something where the Congress and the president are going to have to be together,” Kaine said.
Biden has thrashed Republicans on Social Security and Medicare including during his February State of the Union address, and GOP lawmakers have called on him to stop telling Americans they seek to slash entitlement benefits. House Speaker Kevin McCarthy has said entitlement cuts aren’t being considered in talks this year to raise the debt ceiling and avoid a payments default, and he hasn’t pushed for Social Security reforms outside of that.
As Trump ramps up his bid for a second term, he’s has been promising to leave entitlements alone. He’s lashed out at Florida Governor Ron DeSantis, an expected 2024 Republican presidential primary opponent, for past positions supportive of changes to the programs, and at GOP presidential contender Nikki Haley for proposing to raise Social Security’s retirement age for people currently in their 20s.
Government forecasters are warning that the program faces dire challenges if current policies stay in place.
In December, the nonpartisan Congressional Budget Office said if Social Security’s two trust funds were combined, their reserves would be exhausted in 2033, which would spark an across-the-board benefit cut of more than 20% for beneficiaries. In February, the CBO in a broad economic outlook report updated that, saying that the larger of the two funds would reach insolvency one year than it earlier projected, in 2032.
--With assistance from Alex Tanzi.
(Updates with new insolvency projection in 4th paragraph)
©2023 Bloomberg L.P.
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