U.S. Congress faces Social Security funding deadline, lawmakers propose tax and benefit reforms

New projections indicate the Social Security Trust Fund could run out as early as 2032, leaving benefits vulnerable to a 22% cut unless reforms are enacted. With only six years before the insolvency cliff, lawmakers are advancing a range of options.

Senators Bernie Moreno (R‑OH) and Elizabeth Warren (D‑MA) propose eliminating the payroll‑tax wage cap of $184,500, a change they estimate could raise about $3 trillion over ten years. A separate proposal from Senator Sheldon Whitehouse (D‑RI) and Representative Brendan Boyle (D‑PA) would raise the cap to $400,000 and subject investment income to the payroll tax.

Republican Senator Bill Cassidy (R‑LA) and Democrat Tim Kaine (D‑VA) suggest preserving current benefits by creating a $1.5 trillion government‑backed investment fund in stocks and other risk assets, financed with additional borrowing of roughly $25 trillion over 75 years. Critics note the volatility of equity returns.

A more politically sensitive path would be to cap benefits for high‑earning couples, a plan put forward by the Committee for a Responsible Federal Budget. All proposals will be debated by the newly elected Senate amid the 2024 midterm elections.