Social Security Update: Republican Senator Outlines Proposed Changes
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Senator Bill Cassidy on Friday proposed significant changes to Social Security to prevent the agency's impending insolvency.
In an interview on CNBC's Squawk Box, he said the Social Security fund is currently invested in Treasury bonds, which are low yielding in nature. His new proposal would change that and establish a new fund to ensure that the Social Security Administration doesn't reach its insolvency date.
"We are losing money on those treasuries right now," said Cassidy, a Louisiana Republican. "What we propose is a separate fund from the Social Security trust fund, in which we would put $1.5 trillion into it over 10 years, invest it in the U.S. economy, hold it in escrow for 65 to 75 years and then use that return to offset any unfunded accrued liability in the Social Security trust fund."
Senator Bill Cassidy during a Senate Finance Committee hearing in the Dirksen Senate Office Building on March 14, 2025, in Washington.
Senator Bill Cassidy during a Senate Finance Committee hearing in the Dirksen Senate Office Building on March 14, 2025, in Washington.Why It Matters
Currently, the Social Security trust fund, which pays out the retirement benefits owed to Americans for the years they worked in the workforce, funding the agency, is facing a funding crisis.
Treasury estimates that by 2034, the fund will no longer be able to make full payments to beneficiaries, leading to a 23 percent cut in benefits.
Since many retirees depend on Social Security payments for the bulk of their everyday necessities, this could have dire consequences for seniors, pushing many to delay retirement or not be able to retire.
What To Know
During his interview Friday on CNBC, Cassidy stressed the importance of ensuring that the Social Security fund still has enough money for full benefits and said his solution would work no matter the state of the larger economy.
"We modeled this through the Great Financial Crisis, and the Great Financial Crisis, of course it dips down, but within a year, it's back up to where it was," Cassidy said. "The power of our economy is so great....Even if it only offsets 60 percent of our unfunded accrued liability, that's a lot better than we're doing now."
The comments came as Cassidy and Democratic Senator Tim Kaine of Virginia introduced bipartisan proposal aiming to address the looming insolvency of Social Security this week. Their plan, announced in a recent op-ed for The Washington Post, would establish a new fund parallel to the existing Social Security Trust Fund, investing in a diversified portfolio including stocks and bonds to achieve higher returns and supplement traditional funding methods.
The proposal would require an initial federal investment of $1.5 trillion and allow the fund a 75-year period to mature before it begins to directly support Social Security payouts. Its goal is to prevent benefit cuts or tax increases for future retirees by creating an additional stream of income to shore up the program's finances.
The urgency behind such reforms has grown in light of recent trustee reports showing the Social Security Old-Age and Survivors Insurance (OASI) Trust Fund could be depleted by 2034. If no legislative changes are made, beneficiaries could see payments reduced to roughly 77 percent to 81 percent of current rates starting in 2033 or 2034.
The fund has been drying out primarily because of demographic shifts such as lower fertility rates, slower wage growth and increased benefits following policy changes in recent years. Disability Insurance (DI) Trust Funds are projected to remain solvent until at least 2099, but retirees are at risk of having their promised Social Security payments diminished.
Cassidy and Kaine's new investment approach is intended to mirror successful strategies in existing state and private pension funds, as well as in countries overseas.
Current law restricts the Social Security Trust Fund to investing in low-yield Treasury bonds, limiting growth potential. By comparison, major equity indexes such as the S&P 500 have generated substantially higher returns over comparable timeframes.
Newsweek reached out to Cassidy and Kaine for comment via email.
What People Are Saying
Senators Bill Cassidy and Tim Kaine, in their op-ed for The Washington Post: "There is a nationwide appetite to implement a bipartisan, commonsense plan like ours."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "Senator Cassidy's proposal is not the first of its kind, but it is thinking that Congress desperately needs to head off the coming shortfall in Social Security expected to hit over the next decade. The concept is pretty simple: taking the fund used for Social Security and investing it in a diversified portfolio of stocks, bonds, and other investments, similar to a 401k. Over time, the fund would grow and be able to provide for recipients without extensive tax increases."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "In theory, it makes sense. But theory needs to be backed by modeling—especially worst-case scenarios. We should compare the potential downside of investing in equities with the worst-case outcome under the current system, where the trust fund is invested in Treasuries.
"Right now, Treasuries are yielding more than they have in years, meaning the risk-free rate of return has increased. So, any shift to riskier assets like equities would need to deliver even higher returns to justify the added risk."
What Happens Next
While Cassidy and Kaine's proposal has not been officially submitted for congressional approval, they said waiting to act could lead to "difficult and preventable consequences."
Beene said past proposals of this nature have faced criticism over the concern that investments don't always necessarily go up.
"You're playing with the primary source of retirement income for millions of Americans," Beene said. "It's hard to envision this perfectly working or passing unless a case is made that investments would be secure and steady enough to not trigger significant losses to the fund."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Los Angeles Times
18 minutes ago
- Los Angeles Times
Trump plays golf in Scotland while protesters take to the streets and decry his visit
EDINBURGH, Scotland — President Trump played golf Saturday at his course on Scotland's coast while protesters around the country took to the streets to decry his visit and accuse United Kingdom leaders of pandering to the unpopular American president. Trump and his son Eric played with the U.S. ambassador to Britain, Warren Stephens, near Turnberry, a historic course that the Trump family's company took over in 2014. Security was tight, and protesters kept at a distance were unseen by the group during Trump's round. He was dressed in black with a white 'USA' cap and was spotted driving a golf cart. The president appeared to play an opening nine holes, stop for lunch, then head out for nine more. By the middle of the afternoon, plainclothes security officials began leaving, suggesting Trump was done for the day. Hundreds of demonstrators gathered on the cobblestone and tree-lined street in front of the U.S. Consulate about 100 miles away in Edinburgh, Scotland's capital. Speakers told the crowd that Trump was not welcome and criticized British Prime Minister Keir Starmer for striking a recent trade deal to avoid stiff U.S. tariffs on goods imported from the U.K. Protests were planned in other cities as environmental activists, opponents of Israel's war with Hamas in Gaza and pro-Ukraine groups loosely formed a 'Stop Trump Coalition.' Anita Bhadani, an organizer, said the protests were 'kind of like a carnival of resistance.' June Osbourne, 52, a photographer and photo historian from Edinburgh, wore a red cloak and white hood, recalling 'The Handmaid's Tale.' Osbourne held up a picture of Trump with 'Resist' stamped over his face. 'I think there are far too many countries that are feeling the pressure of Trump and that they feel that they have to accept him, and we should not accept him here,' Osbourne said. The dual U.S.-British citizen said the Republican president was 'the worst thing that has happened to the world, the U.S., in decades.' Trump's late mother, Mary Anne MacLeod, was born on the Isle of Lewis in Scotland, and the president has suggested he feels at home in the country. But the protesters did their best to change that. 'I don't think I could just stand by and not do anything,' said Amy White, 15, of Edinburgh, who attended with her parents. She held a cardboard sign that said, 'We don't negotiate with fascists.' 'So many people here loathe him,' she said. 'We're not divided. We're not divided by religion, or race or political allegiance, we're just here together because we hate him.' Other demonstrators held signs of pictures with Trump and Jeffrey Epstein, as the fervor over files in the late child abuser's case has created a political crisis for the president. In the view of Mark Gorman, 63, of Edinburgh, 'The vast majority of Scots have this sort of feeling about Trump that, even though he has Scottish roots, he's a disgrace.' Gorman, who works in advertising, said he came out 'because I have deep disdain for Donald Trump and everything that he stands for.' A Scottish newspaper, the National, greeted Trump's arrival with a banner headline in its Friday edition that read, 'Convicted U.S. felon to arrive in Scotland.' Saturday's protests were not nearly as large as the throngs that demonstrated across Scotland when Trump played at Turnberry during his first term in 2018. But, as bagpipes played, people chanted, 'Trump out!' and raised dozens of homemade signs with such messages as 'No red carpet for dictators,' 'We don't want you here' and 'Stop Trump. Migrants welcome.' One dog had a sign attached that said 'No treats for tyrants.' Some on the far right took to social media to call for gatherings supporting Trump in places such as Glasgow. Trump also plans to talk trade with Starmer and Ursula von der Leyen, the European Commission president. But golf is a major focus. The family will also visit another Trump course near Aberdeen in northeastern Scotland, before returning to Washington on Tuesday. The Trumps will cut the ribbon and play a new, second course in that area, which officially opens to the public next month. Scottish First Minister John Swinney, who is also set to meet with Trump during the visit, announced that public money will go to staging the 2025 Nexo Championship, previously known previously as the Scottish Championship, at Trump's first course near Aberdeen next month. 'The Scottish government recognizes the importance and benefits of golf and golf events, including boosting tourism and our economy,' Swinney said. At a protest Saturday in Aberdeen, Scottish Parliament member Maggie Chapman told the crowd of hundreds: 'We stand in solidarity, not only against Trump but against everything he and his politics stand for.' The president has long lobbied for Turnberry to host the British Open, which it has not done since he took over ownership. In a social media post Saturday, Trump quoted the retired golfer Gary Player as saying Turnberry was among the 'Top Five Greatest Golf Courses' he had played in as a professional. The president, in the post, misspelled the city where his golf course is. Weissert writes for the Associated Press.
Chicago Tribune
18 minutes ago
- Chicago Tribune
The House is looking into the Epstein investigation. Here's what could happen next
WASHINGTON — A key House committee is looking into the investigation of the late Jeffrey Epstein for sex trafficking crimes, working to subpoena President Donald Trump's Department of Justice for files in the case as well as hold a deposition of Epstein's former girlfriend, Ghislaine Maxwell. The Republican-led House Oversight and Government Reform Committee acted just before House Speaker Mike Johnson, R-La., sent lawmakers home early for a monthlong break from Washington. The committee's moves are evidence of the mounting pressure for disclosure in a case that Trump has unsuccessfully urged his supporters to move past. But they were also just the start of what can be a drawn out process. Here's what could happen next in the House inquiry as lawmakers seek answers in a case that has sparked rampant speculation since Epstein's death in 2019 and more recently caused many in the Trump administration to renege on promises for a complete accounting. Democrats, joined by three Republicans, were able to successfully initiate the subpoena from a subcommittee just as the House was leaving Washington for its August recess. But it was just the start of negotiations over the subpoena. The subcommittee agreed to redact the names and personal information of any victims, but besides that, their demand for information is quite broad, encompassing 'un-redacted Epstein files.' As the parameters of the subpoena are drafted, Democrats are demanding that it be fulfilled within 30 days from when it is served to Attorney General Pam Bondi. They have also proposed a list of document demands, including the prosecutorial decisions surrounding Epstein, documents related to his death, and communication from any president or executive official regarding the matter. Ultimately, Republicans who control the committee will have more power over the scope of the subpoena, but the fact that it was approved with a strong bipartisan vote gives it some heft. The committee chairman, Rep. James Comer, R-Ky., said he told the speaker that 'Republicans on the Oversight Committee were going to move to be more aggressive in trying to get transparency with the Epstein files. So, we did that, and I think that's what the American people want.' Comer has said that he is hoping that staff from the committee can interview Maxwell under oath on Aug. 11 at or near the federal prison in Florida where she is serving a lengthy sentence for child sex trafficking. In a congressional deposition, the subject typically has an attorney present to help them answer — or not answer — questions while maintaining their civil rights. Subjects also have the ability to decline to answer questions if it could be used against them in a criminal case, though in this instance that might not matter because Maxwell has already been convicted of many of the things she will likely be asked about. Maxwell has the ability to negotiate some of the terms of the deposition, and she already conducted 1 1/2 days of interviews with Justice Department officials this past week. Democrats, however, warn that Maxwell is not to be trusted. 'We should understand that this is a very complex witness and someone that has caused great harm and not a good person to a lot of people,' Rep. Robert Garcia, the top Democrat on the oversight committee, told reporters this week. Committee Republicans also initiated a motion to subpoena a host of other people, including former President Bill Clinton, former Sen. Hillary Clinton as well as the former attorneys general dating back to Alberto Gonzales, who served under George W. Bush. It's not clear how this sweeping list of proposed subpoenas will actually play out, but Comer has said, 'We're going to move quickly on that.' Trump is no stranger to fighting against congressional investigations and subpoenas. And as with most subpoenas, the Justice Department can negotiate the terms of how it fulfills the subpoena. It can also make legal arguments against handing over certain information. Joshua A. Levy, who teaches on congressional investigations at Georgetown Law School and is a partner at Levy Firestone Muse, said that the results of the subpoena 'depend on whether the administration wants to work through the traditional accommodation process with the House and reach a resolution or if one or both sides becomes entrenched in its position.' If Congress is not satisfied with Bondi's response — or if she were to refuse to hand over any information — there are several ways lawmakers can try to enforce the subpoena. However, that would require a vote to hold Bondi in contempt of Congress. It's practically unheard of for one political party to vote to hold one of its own members in contempt of Congress, but the Epstein saga has also cut across political lines and driven a wedge in the GOP. Ultimately, the bipartisan vote to subpoena the files showed how political pressure is mounting on the Trump administration to disclose the files. Politics, policy and the law are all bound up together in this case, and many in Congress want to see a full accounting of the sex trafficking investigation. 'We can't allow individuals, especially those at the highest level of our government, to protect child sex traffickers,' said Rep. Summer Lee, D-Pa., a committee member. The Trump administration is already facing the potential for even more political tension. When Congress comes back to Washington in September, a bipartisan group of House lawmakers is working to advance to a full House vote a bill that aims to force the public release of the Epstein files.
Chicago Tribune
18 minutes ago
- Chicago Tribune
President Donald Trump says Japan will invest $550 billion in US at his direction. It may not be a sure thing.
WASHINGTON — President Donald Trump is bragging that Japan has given him, as part of a new trade framework, $550 billion to invest in the United States. It's an astonishing figure, but still subject to negotiation and perhaps not the sure thing he's portraying. 'Japan is putting up $550 billion in order to lower their tariffs a little bit,' Trump said Thursday. 'They put up, as you could call it, seed money. Let's call it seed money.' He said 90% of any profits from the money invested would go to the U.S. even if Japan had put up the funds. 'It's not a loan or anything, it's a signing bonus,' the Republican president said, on the trade framework that lowered his threatened tariff from 25% to 15%, including on autos. A White House official said the terms are being negotiated and nothing has been formalized in writing. The official, who insisted on anonymity to detail the terms of the talks, suggested the goal was for the $550 billion fund to make investments at Trump's direction. The sum is significant: It would represent more than 10% of Japan's entire gross domestic product. The Japan External Trade Organization estimates that direct investment into the U.S. economy topped $780 billion in 2023. It is unclear the degree to which the $550 billion could represent new investment or flow into existing investment plans. What the trade framework announced Tuesday has achieved is a major talking point for the Trump administration. The president has claimed to have brought trillions of dollars in new investment into the U.S., though the impact of those commitments have yet to appear in the economic data for jobs, construction spending or manufacturing output. The framework also enabled Trump to say other countries are agreeing to have their goods taxed, even if some of the cost of those taxes are ultimately passed along to U.S. consumers. On the $550 billion, Japan's Cabinet Office said it involves the credit facility of state-affiliated financial institutions, such as Japan Bank for International Cooperation. Further details would be decided based on the progress of the investment deals. Japanese trade negotiator Ryosei Akazawa, upon returning to Japan, did not discuss the terms of the $550 billion investment. Akazawa said he believes a written joint statement is necessary, at least on working levels, to avoid differences. He is not thinking about a legally binding trade pact. The U.S. apparently released its version of the deal while Japanese officials were on their return flight home. 'If we find differences of understanding, we may have to point them out and say 'that's not what we discussed,'' Akazawa said. The U.S. administration said the fund would be invested in critical minerals, pharmaceuticals, computer chips and shipbuilding, among other industries. It has said Japan will also buy 100 airplanes from Boeing and rice from U.S. farmers as part of the framework, which Treasury Secretary Scott Bessent said would be evaluated every three months. 'And if the president is unhappy, then they will boomerang back to the 25% tariff rates, both on cars and the rest of their products. And I can tell you that I think at 25, especially in cars, the Japanese economy doesn't work,' Bessent told Fox News' 'The Ingraham Angle.' Akazawa denied that Bessent's quarterly review was part of the negotiations. 'In my past eight trips to the United States during which I held talks with the president and the ministers,' Akazawa said. 'I have no recollection of discussing how we ensure the implementation of the latest agreement between Japan and the United States.' He said it would cause major disruptions to the economy and administrative processes if the rates first rise to 25% as scheduled on Aug. 1 and then drop to 15%. 'We definitely want to avoid that and I believe that is the understanding shared by the U.S. side,' he said. On buying U.S. rice, Japanese officials have said they have no plans to raise the current 770,000-ton 'minimum access' cap to import more from America. Agricultural Minister Shinjiro Koizumi said Japan will decide whether to increase U.S. rice imports and that Japan is not committed to a fixed quota. Trump's commerce secretary, Howard Lutnick, has suggested that the Japanese agreement is putting pressure on other countries such as South Korea to strike deals with the U.S. Trump, who is traveling in Scotland, plans to meet on Sundayv with European Commission President Ursula von der Leyen to discuss trade. 'Whatever Donald Trump wants to build, the Japanese will finance it for him,' Lutnick said Thursday on CNBC. 'Pretty amazing.'
