After a flurry of activity this spring, bipartisan talks on Capitol Hill to stave off a looming insolvency for Social Security are officially on ice — likely until after the 2024 election.
In an interview this week before Congress left for summer recess, Sen. Bill Cassidy (R-La.) didn’t mince words. “I have no optimism whatsoever,” he said of the chances of action this year.
Cassidy has been a leader on the Republican side of those talks and, before they stalled, Cassidy and Sen. Angus King (I-Maine) had enlisted a group of 14 senators from both sides of the aisle to explore solutions like adjusting the retirement age. The talks stalled and never produced a detailed plan.
But even as the push to stave off insolvency moves to the back burner, there is some optimism that Congress might move on two smaller Social Security efforts — one around education for retirees and another around public sector workers — in the months ahead.
“There are a couple interesting Social Security things going on right now,” said Shai Akabas, director of Economic Policy at the Bipartisan Policy Center, who has been involved in the talks. “If we can get some bipartisan agreement on some of these low-hanging fruit issues, it might help us build up the muscle memory to tackle the bigger problems.”
Of course those bigger problems are only going to become more unavoidable in the coming years with a recent government trustees report finding that Social Security will be in financial peril within a decade if Congress takes no action. The program only has the funds to continue paying out 100% of benefits through 2034. After that, benefits could be cut across the board by around 23%.
The ideas for Social Security changes
One smaller effort that has gained momentum is centered around how the Social Security Administration communicates with Americans to help them make better decisions about when to claim their Social Security benefits.
The Social Security program gives retirees an option of when to start getting their checks. They can begin as early as age 62, but with a tradeoff: Those monthly benefits are locked in at a lower rate for the rest of their lives. The monthly benefit amount gets bigger the longer you wait to claim, topping out with maximum benefits for Americans who wait until age 70.
“For most people, it's wiser to wait until age 70,” said Cassidy, who is also a co-sponsor of that effort alongside Sens. Chris Coons (D-Del.), Susan Collins (R-Maine), and Tim Kaine (D-Va.). Their bill would push the agency to change the language it uses to describe how their benefits change with age. It would also require the agency to send paper statements to more Americans informing them how when they claim affects their benefit amount.
A second effort from Reps. Abigail Spanberger (D-Va.) and Garrett Graves (R-La.) is focused on changing the rules around the Windfall Elimination Provision and the Government Pension Offset. The current setup can reduce the Social Security benefits for workers who receive a pension from a job not covered by Social Security.
It is in effect, the lawmakers say, a penalty on public sector workers.
“Our teachers, police officers, firefighters, emergency responders, and other local and state public servants – and their spouses or survivors – have been wrongly penalized,” Graves said.
That bill currently has 288 co-sponsors in the House from both sides of the aisle.
The chances of action
The path ahead for both bills is unclear with Congress set to navigate an array of thorny issues in the months ahead including a possible government shutdown this fall.
The education bill is seen as an easier lift because it requires little additional funding. Meanwhile, eliminating the Windfall Elimination Provision could be tougher because it's estimated to cost $182 billion over the coming decade.
Akabas said there’s a good chance the House of Representative will take up the Windfall Elimination Provision bill this fall, but support for action in the Senate is much more uncertain.
Alex Lawson, executive director of a group called Social Security Works, suggests the price tag could be the challenge to address the windfall issue outside of a larger Social Security package.
He called the provision “a cruel policy that we should absolutely get rid of,” but said that “you're only going to get one bite of the apple when it comes to Social Security” structural reforms.
The education bill, on the other hand, “you could definitely see that happening.“
As for the larger reforms to address Social Security's looming funding shortfall, Cassidy says anxious retirees will have to wait for action from Washington. Meanwhile, he is continuing to push ideas to shore up the solvency now as well as his "big idea" to create a $1.5 trillion investment fund to supplement future Social Security benefits down the road.
Cassidy has been critical of both President Joe Biden and former President Donald Trump — also the current GOP frontrunner — for offering few details on Social Security, but said “once the political season is over, I'm hoping that sanity returns.”
He added that the prospect of these across-the-board cuts to benefits could mobilize voters in the coming years and increase the political focus on the issue.
The question will be whether lawmakers can resolve deep differences with liberal lawmakers like Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) on one side proposing a bill that would increase benefits by taxing wealthier Americans. Meanwhile, Republicans including Cassidy are not in favor of tax increases in order to increase the revenue side of the program, looking instead for solutions like raising the retirement age as a means to close the shortfall.
Either way, “the legwork that Sen. Cassidy and others have been doing over the past couple years will be really important when the time for that conversation comes," Akabas said. “It will be instrumental in trying to move the needle when the stars align.”
Ben Werschkul is a Washington correspondent for Yahoo Finance.
Click here for politics news related to business and money
Read the latest financial and business news from Yahoo Finance