What do Trump, Musk, and Louisiana's delegation think about fixing Social Security?
WASHINGTON – However happy people might be that Louisiana’s 94,000 retired police, firefighters, schoolteachers and other public servants are starting to receive enhanced Social Security this month, the state’s nearly 1 million seniors and disabled beneficiaries should take pause.
Social Security’s Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivor benefits, is running out of money. Repealing the two provisions that penalized Social Security benefits for public servants whose municipal, parish and state employers hadn’t paid into the system will cost so much that the fund will go insolvent in eight years, rather than nine.
That doesn’t mean bankruptcy. It means Social Security will then pay only 79% of the benefits owed.
A lot of ideas are being floated on how best to shore up Social Security’s finances in time.
The Social Security Administration employs about 60,000 full-time workers, about 7,000 fewer than 10 years ago. Administrative costs are 1% of the $1.6 trillion distributed every year to about 69 million Americans.
Musk making budget cuts
President Donald Trump has repeatedly promised on the campaign trail and from the Oval Office that Social Security “won’t be touched.” But Elon Musk, who heads Trump’s Department of Government Efficiency, or DOGE, said in February that Social Security is “the biggest Ponzi scheme of all time.”
Both claim without evidence that “shocking levels of incompetence and probable fraud” wasted up to $700 billion.
For instance, Musk says obviously dead people who are listed as 150-years-old and older are still receiving benefits. Trump included the claim during his March 4 speech to the nation.
A July 2023 inspector general’s report found more than 18 million people born before 1920 didn’t have death information and remained on the aging computer system because of a software glitch. None of those listed were receiving benefits.
A July 2023 inspector general’s report found more than 18 million people born before 1920 didn’t have death information and remained on the ag…
As they are doing with the rest of federal government, Trump and Musk want to trim the Social Security Administration by 12% across the board.
Leases already are being terminated for 10 field offices – the closest to Louisiana is in Nacogdoches, Texas.
Earlier this week, the Social Security Administration planned to end phone service, requiring the elderly and disabled to go online or visit offices in person to handle retirement and disability claims. After The Washington Post reported the move, the administration pulled that plan late Wednesday.
“He’s out to privatize Social Security,” U.S. Rep. John Larson, D-Connecticut, said Wednesday of Musk.
Higher incomes, higher payments?
In the Congress that ended in December, Larson pushed a Social Security financial fix that would have required people making more than $400,000 a year to pay more Social Security taxes.
Sen. Bernie Sanders, I-Vermont, and Sen. Elizabeth Warren, D-Massachusetts, have a similar idea, only theirs would apply Social Security payroll taxes on incomes over $250,000.
Under current rules, the Social Security tax rate is 12.4% of earnings – half paid by the employer and half paid by the employee. That’s the money going into the trust fund to pay retirement benefits.
But only earnings up to $168,600 are taxed. Whatever a person makes above that amount isn’t taxed.
Rep. Troy Carter, D-New Orleans, is a co-sponsor on the House version of the Sanders-Warren legislation.
“This bill reflects the urgency of this moment: Social Security is not a handout; it is an earned benefit. It has lifted millions of seniors and people with disabilities out of poverty, and it continues to be the most successful anti-poverty program in U.S. history. At a time when Republicans are threatening to cut benefits and privatize the system, we must fight to protect and expand Social Security for future generations,” he said Thursday.
Turning to investment markets
Sen. Bill Cassidy, R-Baton Rouge, and Sen. Angus King, No Party-Maine, went after the problem in a different way.
The primary funding mechanism in the Cassidy-King idea, which hasn’t been filed as a bill, would be a $1.5 trillion loan into an affiliated fund that would be invested in the financial markets, like 401(k) retirement plans. Interest and dividends would go to pay down the loan and shore up the Old-Age and Survivors Insurance Trust Fund.
“For years, I have been pushing my ‘Big Idea’ to create a fund separate from Social Security and invest it into the U.S. economy,” Cassidy said Thursday. “We don’t raise retirement age, we increase work incentives, and pay for the overwhelming majority of shortfall.”