Social Security Update: Expert Issues Warning on ‘Risky’ Plan

A retirement policy expert is warning a proposed bipartisan plan to shore up Social Security by investing borrowed federal funds in the stock market would add significant risk while doing virtually nothing to fix the program’s long-term finances.

In a piece published by the Center for Retirement Research (CRR) at Boston College on Thursday, senior advisor Alicia H. Munnell argues the proposal from Senators Bill Cassidy, a Louisiana Republican, and Tim Kaine, a Virginia Democrat, relies on aggressive borrowing and risky investment assumptions without addressing Social Security’s underlying funding imbalance. 

“The higher expected returns on equities merely compensate for the risk that will be borne by the taxpayers–a huge and risky financial maneuver with very little payoff,” Munnell wrote.

Why It Matters

Social Security is projected to face long-term funding shortfalls as early as 2032, and how lawmakers choose to address them could have major consequences for retirees, workers, and taxpayers. More than 70 million people depend on Social Security benefits.

While many ideas have been proposed to fix the gap, experts at the CRR warn the Cassidy-Kaine plan risks adding financial instability without meaningfully improving the program’s outlook.

What To Know

Under the plan, the federal government would borrow approximately $1.5 trillion over the next decade to create a new trust fund for Social Security. Those borrowed funds would be invested in equities and other “risky assets” and allowed to grow for 75 years, untouched. During that period, the Treasury would continue to borrow additional funds to cover Social Security’s ongoing benefit shortfalls. 

At the end of the 75-year period, the trust fund would repay the Treasury the original borrowed amount plus interest. Any remaining gains based on the difference between Treasury interest rates and stock market returns would be used to offset a portion of the government’s borrowing costs for Social Security benefits. 

However, Munnell warned projected stock market gains are not a free solution and would come with heightened financial exposure for taxpayers.

“How can anyone argue for more borrowing when we already have $32 trillion in debt, scheduled to rise to $56 trillion by 2036?” Munnell wrote. 

“As a share of our economy, the debt is projected to rise from 101 percent of GDP to 120 percent in 2036, levels we have never seen before. The best thing we could do for our fiscal situation is to restore balance to Social Security by putting together a package of modest revenue increases and benefit cuts.”

Munnell added despite its size, the proposal generates no new revenue for Social Security beyond borrowed money. Any possible benefit depends entirely on market performance exceeding borrowing costs, which is a result that is uncertain and could ultimately leave taxpayers responsible for losses if returns fall short.

However, those in favor of the proposal have referenced the success of the Railroad Retirement Investment Trust, as well as large public pension systems in Canada, as proof equity investment can strengthen retirement programs. However, Munnell said those systems are funded through tax revenues or worker contributions, not large-scale federal borrowing.

“Social Security is currently funded through payroll taxes, which are not keeping pace with the amount needed to sustain the program,” Cassidy and Kaine wrote in a Washington Post op-ed in July 2025. “For now, the Social Security Trust Fund—which is invested exclusively in U.S. government bonds yielding low returns—is helping to fill the gap, but it can’t for long. The most recent Social Security Trustees Report showed that payroll tax revenue will fall more than $25 trillion short of owed benefits over the next 75 years, in today’s dollars, if the trust fund becomes insolvent. We propose creating an additional investment fund—in parallel to the trust fund, not replacing it—that would be invested in stocks, bonds and other investments that generate a higher rate of return, helping keep the program from running dry.”

They added: “Our proposal is also consistent with virtually every other pension plan—state and private—currently operating in our country, and it matches the strategy most nations use to fund their retirement programs.”

What People Are Saying

Senator Bill Cassidy, a Louisiana Republican, wrote on X last July: “If Congress doesn’t act, millions will see their Social Security benefits cut when the program goes insolvent. Doing nothing is not an option. We are putting a real, workable plan on the table to fix this crisis now.”

Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: “Compare this idea to your household budget. You already owe more on your credit cards than your yearly salary. So, you go to the bank to borrow even more money in order to make ends meet? No. You spend less, you work more, and you pay down the debt. The issue with Social Security is that it does not collect enough revenue to pay for the promised benefits. What fixes this is some combination of more tax revenue and less benefits, not a loan.”

Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: “Part of me understands the logic. We borrow money for everything else, so why not. But the more reasonable side of me sees a real issue. Borrowing money just to invest it in the stock market sets a dangerous precedent. It starts to look like a federal backstop of asset prices. At the end of the day, we are using taxpayer dollars and funneling them into companies.”

What Happens Next

The Cassidy-Kaine proposal has gained attention in recent months, including an endorsement from Larry Fink of BlackRock, but it has not yet been enacted into law. 

“On the surface, beneficiaries would welcome anything that helps shore up Social Security. But what this really creates is more inflation,” Thompson said. “Asset prices would likely rise as new money flows into the market, which creates a wealth effect and more spending. The real question is whether that increase in asset values would actually outpace the inflation it helps create.”