Proposed Social Security Commission Divides Senate Committee

Senators repeatedly warned Wednesday about potential cuts to Social Security benefits if Congress fails to act, but a Senate Committee on Finance hearing revealed deep disagreement over how Congress should develop a plan and whether bipartisan commissions would assist or harm the process. 

The hearing, “Exploring Process Approaches for Addressing Social Security Solvency,” focused less on the details of a final solvency package than on the process for assembling it.

Committee Chair Mike Crapo, R-Idaho, and several other Republicans argued that a bipartisan working group, commission or advisory body could help lawmakers evaluate tax increases, benefit changes and other proposals before sending legislation through Congress. Democrats, joined by the AARP, which accounted for one of the four witnesses testifying during the hearing, said the committee should handle the issue through regular legislative procedures and in full public view.

The witnesses testifying at the hearing were: Marc Goldwein, a senior policy director at the Committee for a Responsible Federal Budget; Charles Blahous, a senior research strategist at the Mercatus Center at George Mason University; Nancy LeaMond, chief advocacy and engagement officer at the AARP; and Rebecca Vallas, CEO of the National Academy of Social Insurance. 

Various Proposals 

Lawmakers from both parties have introduced bipartisan legislation to address Social Security’s looming insolvency. Some proposals would create a commission to study and recommend solutions, while others would tackle the issue directly through legislation, primarily by increasing revenues. 

For instance, the PROMISE [Protecting Retirement Opportunities and Maintaining Income Security for Everyone] Act, introduced by Senators Richard Durbin, D-Illinois, and Bill Cassidy, R-Louisiana, would task the Social Security Advisory Board with beginning the process of reforming Social Security. Meanwhile, the Bipartisan Social Security Commission Act, introduced by Representatives Tom Cole, R-Oklahoma, and Tom Suozzi, D-New York, would create a 13-member commission of elected officials that would make recommendations and propose legislation.  

On direct policy proposals, the most recent bipartisan legislation came from Senators Elizabeth Warren, D-Massachusetts, and Bernie Moreno, R-Ohio, and would lift the Social Security cap. In 2026, the payroll tax applies to earnings up to $184,500. Income greater than that level is not subject to the Social Security portion of the tax, although benefits are also calculated using only earnings up to the taxable maximum. Having no cap on taxable payroll income would raise significant revenue, but would not, on its own, make Social Security solvent. 

Though several other legislative proposals from Democrats have been introduced to lift the cap, the inclusion of a Republican sponsor indicates the potential popularity of the proposal. Each witness during the hearing indicated they would support raising the cap in some form. 

“Policy-wise, it’s not earth-shattering, because it’s one of the most popular ideas that’s been around for a really long time,” says Kathleen Romig, a senior fellow at the Center on Budget and Policy Priorities, who has served on the Social Security Administration and the Social Security Advisory Board. “But politically, it’s a watershed moment.”

Deadline Looms

Social Security approaches a financing deadline that has moved squarely into the near-term congressional calendar. The program’s Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivor benefits, is projected to exhaust its reserves in the fourth quarter of 2032. Continuing tax revenue would then cover about 78% of scheduled benefits, implying a roughly 22% reduction if lawmakers did not intervene.

“Congress has a responsibility to protect and strengthen Social Security for current beneficiaries and future generations,” Crapo said. “The longer we wait, the more difficult this challenge will become.”

One Battle After Another

Crapo pointed to the bipartisan commission that preceded the 1983 Social Security amendments, the last comprehensive overhaul of the program, as evidence that a structured negotiating forum can help lawmakers reach agreement. He said the hearing was intended to examine multiple process proposals, rather than advance a predetermined plan.

Senator Ron Wyden, D-Oregon, the ranking member of the Finance Committee, rejected the commission approach, calling it an unnecessary transfer of congressional responsibility that could make it easier to advance benefit reductions, including an increase in the retirement age.

Wyden said Democrats had already introduced legislation that would raise additional revenue from wealthy households and higher earners while avoiding reductions for current and future beneficiaries.

“This is the work we were sent to Congress to undertake,” Wyden said. “Handing off that responsibility to somebody else is just buck-passing.”

That argument was echoed by Senators Sheldon Whitehouse, D-Rhode Island; Warren; and Bernie Sanders, I-Vermont. They urged Congress to raise or remove the cap on wages subject to the Social Security payroll tax and, in some cases, apply taxes to additional forms of income received by wealthy households.

But Republicans said the hearing’s focus on process was being mischaracterized as an attempt to engineer benefit cuts.

Ron Johnson, R–Wisconsin, was perhaps the greatest critic of some of the proposals. For instance, he called Social Security a “legal Ponzi scheme,” referencing its inability to manage to pay promised benefits, and at one point indicated that stock investments would be more appropriate for investing Social Security surpluses, which are currently invested in special government securities. Johnson stated he does not support raising taxes to support the fund.

But Cassidy, who has worked with Democrats on previous Social Security proposals, said a bipartisan group could consider plans from both parties and submit one or more options to the Finance Committee, at which point senators could accept, reject or replace them.

“This is not about a solution,” Cassidy said. “This is about a process to arrive at the solution.”

Lessons From Previous Commission

Though the current proposals to establish commissions would essentially empower a set number of individuals to begin the process of reforming Social Security, Andrew Eschtruth, director of the Center for Retirement Research at Boston College, says that one of the strengths of the commission formed in the 1980s was its ability to prompt discussion beyond the commission itself.

“The commission in the early ’80s, it didn’t succeed internally within the commission,” Eschtruth says. “It succeeded because it helped start a process outside the commission, which culminated in an agreement and then got legislation passed.”

Still, as divided as senators were, witnesses were similarly divided on most proposals, even though the solvency issue will most likely require some level of revenue raising, benefit cuts, or a mixture of the two.

Because the depletion of the trust fund remains several years in the future, the proposal that ultimately sticks could still be more than a year away.

“I think all of us would like to something happen sooner rather than later,” Eschtruth says. “We don’t think it’s a good idea to wait ’til the last minute. In terms of what actually moves the political process, sometimes a last-minute deadline looming right in front of you is the thing that does it.”