New Plan Proposed To Save Social Security

Newsweek

09-07-2025

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A bipartisan pair of senators have floated a bold new solution to the insolvency crisis facing Social Security, which they say could save the program within a decade.
In a recent op-ed for The Washington Post, Republican Senator Bill Cassidy and Democratic Senator Tim Kaine announced a proposal to set up an alternative funding model for the safety net program, which would supplement the program's Trust Fund with a new diversified pool of investments.
Why It Matters
The potential depletion of the Social Security Trust Fund has long been an issue of concern on Capitol Hill. A recent report from Social Security Administration warned that the program "continue[s] to face significant financing issues," and estimated that the Old-Age and Survivors Insurance fund would only be able to cover "100 percent of total scheduled benefits until 2033."
Insolvency would not mean that the program stops altogether, though future payments would become entirely reliant on what is collected in payroll taxes each year. This could fail to cover the entirety of scheduled benefits and possibly could result in cuts or increased taxes being needed for the program.
Senator Tim Kaine speaks at a press conference at the U.S. Capitol on April 2, 2025, in Washington, D.C. Senator Bill Cassidy speaks to reporters at the U.S. Capitol on March 11, 2025.
Senator Tim Kaine speaks at a press conference at the U.S. Capitol on April 2, 2025, in Washington, D.C. Senator Bill Cassidy speaks to reporters at the U.S. Capitol on March 11, 2025.
Kevin Dietsch /What To Know
The two senators, who have in the past advocated for various reforms of the embattled Social Security program, unveiled their new plan publicly on Tuesday. The pair said this proposal would preserve full benefits for Americans while aiming to address the program's critical funding shortfall.
Their proposal centers on creating a new, parallel investment fund for Social Security, invested in a blend of "stocks, bonds and other investments that generate a higher rate of return, helping keep the program from running dry." The senators estimate that the fund would require an up-front federal investment of $1.5 trillion, and propose that it be given 75 years to grow.
"The Treasury would temporarily shoulder the burden of providing benefits to Social Security beneficiaries — but when the new fund's 75 years are up, it would pay the Treasury back and supplement payroll taxes to help fill the future gap," they wrote.
The Social Security Trust Fund holds surplus funds collected from payroll taxes, and is currently required to invest these in nonmarketable Treasury bonds. However, as the two senators noted, payroll taxes themselves are insufficient to sustain the program, and these bonds have persistently yielded meager returns when compared to the wider market and the securities that would be incorporated in their additional fund.
Treasury bonds of the type the Social Security Trust Fund currently invests in have grown by a little over 100 percent since 2002, while the S&P 500 has risen some 600 percent over the same period.
As the pair note, a growing number of Americans are concerned about the insolvency of Social Security. According to a May survey by DepositAccounts, 59 percent of nonretired Americans worry that the program won't be available to them by the time they retire.
As a result of these threats, similar alternatives to the traditional funding model have recently been proposed by those in the capital markets sector. In March, BlackRock CEO Larry Fink advocated for allowing Americans to place a portion of their Social Security taxes into private accounts which would allow for higher returns. He likened this to Australia's "superannuation" program, where employers pay a portion of an employee's earnings into a fund which is then invested on their behalf.
In their recent article, the two lawmakers noted that many nations use similar strategies to fund retirement programs, and referenced the National Railroad Retirement Investment Trust (NRRIT), created by Congress in 2001, as evidence that these investment strategies have worked reliably for other federal programs in the U.S. According to its most recent annual report, the NRRIT produced an investment return of 18.9 percent in fiscal 2024, though this was below its benchmark of 21.1 percent.
"The trust has remained firmly in the black, with returns even exceeding expectations at some points and with payments consistently remaining reliable and on schedule," Kaine and Cassidy wrote.
Gopi Shah Goda, senior fellow for economic studies and director of the Retirement Security Project at the Brookings Institution, said that while the plan does address the financial shortfall facing Social Security, it does not take aim at the "structural imbalances" which weigh on its funds.
"The program can be made more progressive by slightly reducing benefit growth rates for higher-income retirees, many of whom live longer and collect more from the program," she told Newsweek. "In addition, increasing the number of working years used to calculate benefits would help reduce the program's shortfall while also improving incentives to work at older ages."
"Borrowing funds in the way the proposal suggests would likely raise interest rates and slow growth," she added, "and avoids the difficult but important work of modernizing the program so that it continues to provide important protection to seniors in a sustainable manner."
Devin Carroll, owner and lead adviser at Carroll Advisory Group and founder of retirement education platform Social Security Intelligence, told Newsweek that the Trust Fund running out would result in "across-the-board benefit cuts."
However, Carroll added that, given the fund is almost depleted, "the main problem now is we don't really have the money to invest."
"We could rebuild it by raising taxes or borrowing, but that's a heavy lift politically," he said. "Honestly, this kind of move would've made more sense a decade or two ago when we had more room to work with."
What People Are Saying
Senators Bill Cassidy and Tim Kaine, in their op-ed for The Washington Post, wrote: "There is a nationwide appetite to implement a bipartisan, commonsense plan like ours."
They added that no one on Social Security would see "any change" to benefits as a result of the plan, and pledged to embed safeguards such as annual audits to prevent misuse of the new fund.
Gopi Shah Goda of the Brookings Institution told Newsweek that while the proposal "While this proposal makes efforts to address the current financial shortfall by infusing the system with an additional investment fund that is invested in stocks, bonds and other investments, it does so in a way that does not tackle the structural imbalances in the program and introduces new risks to the funding structure."
"A sensible package of reforms would change the benefit formula to better target assistance, taking care to protect the most vulnerable beneficiaries," she added.
Devin Carroll, owner and lead adviser at Carroll Advisory Group, told Newsweek: "It's a smart idea on paper. Stocks usually earn more than government bonds, so adding equities to the mix could ease the need for big tax hikes or cutting benefits. But there's a trade-off. More return means more risk, and it raises questions about how involved the government might get in the private markets."
What Happens Next?
Cassidy and Kaine have not yet formally submitted their plan for Congressional consideration. The pair said that waiting until the Social Security Trust Fund nears insolvency could result in "difficult and preventable consequences."