The Dwindling Pot Of Money That Could Plunge Seniors Into Poverty
ARLO: Hi. This is Arlo (ph) from Portland, Ore. I turn 50 years old tomorrow.
DOMENICO MONTANARO, BYLINE: Is he on a horse?
ARLO: And I decided to spend today hiking 50 kilometers.
TAMARA KEITH, HOST:
Wow.
MONTANARO: Whoa.
SUSAN DAVIS, BYLINE: Whoa.
ARLO: I'm too old to hike my age in miles. This show was recorded at...
KEITH: 1:37 p.m. on Thursday, the 11 of May.
ARLO: Things may have changed by the time you hear this, but I'll probably still be treating some blisters. OK, here's the show.
(SOUNDBITE OF THE BIGTOP ORCHESTRA'S "TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)")
KEITH: Well, happy birthday.
DAVIS: Happy birthday.
MONTANARO: Are we sure he's not on a horse? I mean, that was some galloping moving, man.
(LAUGHTER)
MONTANARO: Like, I have never hiked that fast. That's awesome.
KEITH: I prefer to drink my age in ounces.
(LAUGHTER)
MONTANARO: I think we're going to have to...
DAVIS: The alcohol content's going to have to go down as the years go up.
KEITH: Of water. Of water.
(LAUGHTER)
MONTANARO: I think that's pretty good. I think we just need to put a cork on some of it, you know, because we have a long way to go through 2024.
KEITH: Hey there. It's the NPR POLITICS PODCAST. I'm Tamara Keith. I cover the White House.
DAVIS: I'm Susan Davis. I cover politics.
MONTANARO: And I'm Domenico Montanaro, senior political editor and correspondent.
KEITH: If Washington does nothing, Social Security will start to run out of money in about a decade. If that were to happen, it would be disastrous. Without this safety net, poverty among the elderly would skyrocket. We often hear about Social Security when politicians accuse one another of trying to cut it. It's something of a third rail in politics. But the challenges are real. And that's what we're talking about today on the pod. So, Sue, let's start with the basics. Why is this program running out of money? I mean, aren't there a lot of people paying into the system, you know, every month on our paychecks?
DAVIS: Yeah. Social Security is funded by workers' payroll taxes, and that money goes into a trust fund. You know, you pay into it; you get it when you retire. But, you know, at a certain point, it's going to have a solvency issue. It's not taking in as much money as it needs in order to pay out the benefits that it's owed. And Social Security, by law, is not allowed to borrow money for itself. So Congress has to do something about it to address the solvency issue. The latest forecast - which can shift. But the latest forecast for the program is that right around 2034 is when you're going to start to hit that time where it's taking in less money than it needs to go out. And if nothing else happens, Social Security has no other recourse except to automatically cut benefits. And the estimates are that that could be to the tune of about 24% across-the-board cut to beneficiaries.
MONTANARO: Whoa.
KEITH: So this is a real challenge, and yet it is not something that has found a real solution. Why has that been so hard for Congress?
DAVIS: I mean, think about how Congress tends to solve problems, even in today, like the debt limit fight. They always come right up to the cliff or the deadline, or there has to be consequences or stakes. And when you talk about Social Security having a 10-year-out problem, I feel like that sounds like a lifetime in Washington. So I think...
KEITH: That's somebody else's problem.
DAVIS: Exactly. And that is the way that Washington policymaking tends to happen. You know, there's reasons to do it sooner. The longer you wait, actually the more expensive it's going to be to fix. But I think that there has been a lack of a sense of urgency around it and also, you know, the politics around it. I think that the Republican Party, for a long time, has been seen as the party that wants to change or alter Social Security. The last time, you know, Republicans really engaged on the topic was back in 2004, when former President George W. Bush, after he won reelection, made a big political push to try to create private investment accounts around Social Security. That was a political disaster for Republicans. And no one's really stepped into the breach since then. And Democrats, you know, election after election, like to still hold that over the head of the Republican Party.
MONTANARO: You know, Social Security and Medicare are the biggest drivers of the national debt, the more than $30 trillion in national debt. But neither party really wants to touch either one. I have to say, with Social Security, we've, you know, been through some of these negotiations and fights before. And the Social Security fixes are far easier than the Medicare ones.
KEITH: Right. And part of the just structural issue here is there were a lot more people born a long...
MONTANARO: Yeah.
KEITH: ...Time ago who are now senior citizens than there are people now who are paying into it, or...
MONTANARO: And having fewer children.
KEITH: And every year, there are more people who are of retirement age.
DAVIS: Yeah. And a lot of the solvency issue is being fueled by the baby boomer retirements. I mean, we're about to have this huge spike in older people retiring that need to get these benefits and just not enough money to pay for them. So it's a big demographic problem. Yeah.
KEITH: All right. So, Sue, you interviewed a man who really does want to tackle this and has a plan to fix it. Tell us about him and what he's trying to do.
DAVIS: So I got interested in this because, as I said, you know, the Republican Party last tried to do something on Social Security two decades ago, and it failed. And the parties kind of walked away from the issue since. No one's really been trying to, like, get in the Social Security fight. And then there's this guy, Bill Cassidy. He's a Republican senator from Louisiana. He's been serving in the Senate for quite some time. But about a couple years ago, he started quietly working on a Social Security fix. And he's been putting together the - a framework of a plan, along with independent Senator Angus King. He's an independent, but he caucuses with Democrats. And they have come up with what they call a, quote, "big idea" for how to get at this solvency issue.
And part of the reason why I'm so interested in it is because it's so politically dangerous to try to touch Social Security, and he's, like, enthusiastically running into this fight and trying to build support and generate interest around an idea that is also, you know - not a lot of Republicans have even put up ideas about how to address Social Security. So I wanted to talk to him about it.
BILL CASSIDY: If I sound aggravated as heck, we've got a program that's going insolvent in eight to nine years, at which point, by the way, poverty among the elderly doubles. And we have the leading presidential candidates acting like there's not a problem.
DAVIS: And that's important, too. You know, Cassidy has been sort of an equal opportunity critic of both Joe Biden and Donald Trump, who's currently the front-runner for the nomination, saying, like, look; both of these guys are out there campaigning that they're going to save Social Security, but they haven't actually put out any plans on how they plan to do it.
KEITH: OK. So how does Bill Cassidy plan to do it?
DAVIS: So the Cassidy-King idea is that you create, essentially, an independent investment fund separate from Social Security. So the fund would bear all the risk, not the taxpayer. And yes, Congress would have to initially seed the fund. He proposes $1.5 trillion, not an insignificant amount of money, over five years, and you let it be managed by people independent from Congress so it would be sort of protected from political influence. And it exists to be invested in the market and grow over the course of literally 70 years, and the idea being that the fund would basically be able to cover up to 75% of the insolvency issues.
It doesn't solve the whole thing. That other 25%, the hard stuff, still comes down to that question of, do you need to raise the retirement age? Do you need to raise payroll taxes for what people can pay into the system? But he says that part would actually have to be figured out by a president and Congress. We solve most of the problem; now we just need the political buy-in to figure out the rest.
KEITH: OK. But that takes 75 years.
DAVIS: It does. And he makes the point, though, that, yes, like, Congress would still have to borrow money to cover the insolvency in the short term, but you would be borrowing against the fund. So in some ways, it wouldn't actually have a huge impact on the debt or the deficit 'cause you're borrowing against a fund that will be making money off of itself. It doesn't put the government deeply into the red over the long term. If anything, it could arguably pay for itself over the long term.
MONTANARO: Well, while we talk about political buy-in, there isn't political buy-in because this has really become a third-rail issue that has been a third rail in politics for quite some time. I mean, we're even seeing, with the populist rise on the Republican right, with Trumpism having been the dominant factor in Republican politics over the last several years, that we're seeing now Trump take on his potential rivals based on Social Security. Just take a listen to this Trump ad that he's running against Ron DeSantis, the Florida governor who may very well run.
(SOUNDBITE OF POLITICAL AD)
UNIDENTIFIED PERSON: Did you know Ron DeSantis backed deep cuts to Social Security and Medicare?
UNIDENTIFIED ACTOR: (As character) Ron DeSantis?
UNIDENTIFIED PERSON: Yeah, he voted to cut Social Security or Medicare, not once, not twice, but three times. DeSantis even tried to raise the retirement age to 70.
UNIDENTIFIED ACTOR: (As character) I thought DeSantis was one of the good ones, but he's just another career politician.
MONTANARO: And you see there in the ad, he tosses a DeSantis hat into a trash can. This is the kind of ad that 20 years ago would have been run by a Democrat against a Republican.
KEITH: Well, and it's an ad that this year could still be run by a Democrat against a Republican.
MONTANARO: It probably will. You're right.
(LAUGHTER)
DAVIS: And that's one of Cassidy's points, where he knows, like, now's not the time. I mean, he pointed to President Biden in the State of the Union address, where he devoted a lot of that speech to trying to bash Republicans for their plans for Medicare and Social Security. I mean, not only is it Trump's playbook against DeSantis, but it's going to be part of Biden's playbook against whoever the Republican nominee is as well.
MONTANARO: Including Trump.
KEITH: All right. We are going to take a quick break. And when we get back, more on the politics of this in a second.
And we're back. And to say that the politics about making changes to Social Security are challenging would be an understatement. The last really serious attempt to get something done was in 2005, after George W. Bush was reelected, and he rapidly discovered that he didn't have enough political capital to take it on. So how is this proposal different from past ideas? And does it have any better chance?
DAVIS: Well, I think what's fundamentally different here is what Bush had proposed was that individuals could take their payroll taxes and privately invest them in the market on their own. And Democrats overwhelmingly rejected this idea because the risk would then go to the person, right? Like, think about your 401(k) and how it can be - market volatility can affect what's in your retirement, where Social Security is sort of this ironclad guarantee is what you always hear. They don't want to structurally change the system.
And I asked Cassidy about that because his system puts all the risk on the fund. Like, the way that the taxpayer and the benefits system is structured now would not change under his plan. And I said, you know, does that mean to you that this era, the George W. Bush era, the Republican era of advocating for private investment accounts, is over? He did make the point that Mike Pence, who might also run for president, is still a Republican out there who supports the idea. But he was like, look...
CASSIDY: I'm a pragmatic guy. Ronald Reagan said, give me 80% of what I want; I'll give you 20%. Democrats don't want private investment accounts. We've learned that. OK. We've learned that.
DAVIS: And I thought, one, it's always interesting when politicians say the pragmatic thing. But he's right, right? Like, Democrats are never going to agree to any Social Security overhaul, certainly not in any foreseeable future, that prioritizes any part of Social Security. So I think he's trying to actually put together something that Democrats could get on board for. You know, I mentioned Angus King. This is one of those informal gangs, Tam. Like, this isn't coming out of committee. There aren't co-sponsors. There isn't technically legislative text. But the Democrats that have been reported to be engaged in these talks, you know, it's Democrats like Tim Kaine of Virginia, Kyrsten Sinema, who's also now an independent from Arizona - like, the clutch of senators who are known for trying to be those bipartisan dealmakers.
KEITH: So does Cassidy have a plan to get this done or move this beyond the group of senators having coffee or jello or whatever, talking-about-ideas phase and get it to the making-something-happen phase?
DAVIS: That's a great question. And I think that, like, realistically - and even he will say it doesn't seem likely this is going to happen before the 2024 election. But the time is finite here. Like, sometime after the next presidential and sometime roughly before 2034, Washington is going to have to address the Social Security solvency issue. And I think what he's doing with this group of senators is being like, we're ready and in the waiting and have spent literally years now working on this...
KEITH: Yeah.
DAVIS: ...Idea. So if it - when the time ripens, we'll be ready. Another small but important thing here that I think Cassidy and his allies have been doing - they've been going to all the stakeholders in Washington and presenting this plan and trying to make it bulletproof. Why does it suck? How do we make it better? Would it work? Would it not work? Places like the AARP, you know, the lobbying group for retired people in this country - hugely influential in Washington. They haven't endorsed the plan, but they're being brought in, right? Like, he's working, talking to, like, the ideological think tanks, like Heritage Foundation, to the good government, the good budget groups. He said he even talked - they talked to bond traders about future financial forecasts. How would a fund work?
Like, they're trying to answer all these questions and be ready so if the time is ripe, they are there with a solution. Will he be there when that time is ripe? You know, will this be the idea that Washington gets behind? I don't know. But there are very, very few policymakers in positions of power even trying to be part of this conversation.
MONTANARO: Hey, Sue, I want to whisper one thing - what about raising taxes?
DAVIS: And that is the other part. Like, this is the hard part of that 25%, that he's saying, like, my idea fixes most of the problem, but not all the problem. And yeah, like, Republicans at some point might have to confront the idea that you have to raise payroll taxes to fund it, and Democrats might have to accept that you have to alter change benefits or the retirement age. This has happened before. It's not, you know - former President Reagan and former Speaker Tip O'Neill famously cut a deal over Social Security in the early '80s. That's the dream and the goal to do it again. Who are the leaders in the White House in Washington? Who were the Reagan and Tip O'Neill of the next era? I don't think I can answer that question. But it's going to have to get fixed, right? Like, it's just a problem that has to be fixed. It's not an avoidable one.
KEITH: I want to ask you a question about Cassidy as the messenger here because he's not maybe a traditional Republican anymore. He certainly isn't where the center of his party is. Former President Trump is clearly his party's front-runner in the presidential race. Cassidy voted to convict Trump in his second impeachment.
DAVIS: Yeah. He's an interesting person in the Senate, especially - Domenico, like, we talk about all the time, about polarization, right? And, like, people vote with their party and party lines. And he's part of a small group in the Senate who is willing to buck his own party and work with the other party and be more of, like, a policymaker. You know, he voted to convict Trump. He says he won't vote for him in 2024. He said he'll vote Republican, but it won't be for Trump, even if he's the nominee. Very few Republicans are willing to say that, certainly ones that are still in elected office. He was one of a small group of Republicans who voted for Joe Biden's infrastructure bill.
If you can remember, back when Republicans, under Trump, tried to repeal and replace Obamacare, he was one of the Republicans who was actually trying to come up with an alternative health care plan, not just the repeal it and figure it out. That obviously fell apart, but he was, like, trying to come up with solutions on the health care front. Even before he got to Congress, he spent a lot of his life - he was formerly a gastroenterologist, and he worked a lot with poor people and with the uninsured. So he - you know, he's someone who's given a lot of thought to, I think, like, how poor people live, what they need, their resources. And he's someone who, if, like, there's going to be a Social Security bipartisan deal in Washington, it's hard to see it passing without the support of someone like Bill Cassidy.
MONTANARO: You know, so you said that this is a not-avoidable problem, something that's going to have to be dealt with. And that's because of the politics here. You know, I keep hearing all the time, especially from younger people, that they don't expect Social Security to be there when they retire.
DAVIS: Yeah.
MONTANARO: And I always say to them, why? You know, you have to have a political will to get rid of it. And it's actually just the opposite. Very few in either party want that. No one wants to see it gotten rid of, or very few do anyway. So there is going to be a political will at some point as the deadline nears to do something.
DAVIS: It's also, like - the one thing Americans can probably still agree on is Social Security. They probably even can fight more about Medicare and whether it's good or bad or not. But Social Security is probably the most overwhelmingly popular program in American history. And in researching this, it even surprised me that according to the Social Security Administration, nearly 9 out of 10 Americans over the age of 65 benefit from Social Security in some way. I mean, it is universally used and popular. So of course, Washington has to fix it because how are you not going to fix a program that the country can, like, universally say is necessary to American life?
KEITH: Well, on that positive note, let's end it there for today. I'm Tamara Keith. I cover the White House.
DAVIS: I'm Susan Davis. I cover politics.
MONTANARO: And I'm Domenico Montanaro, senior political editor and correspondent.
KEITH: And thank you for listening to the NPR POLITICS PODCAST.
(SOUNDBITE OF THE BIGTOP ORCHESTRA'S "TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)")
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