© Reuters. FILE PHOTO: US Treasury Secretary Janet Yellen takes questions on the Biden administration’s plans following the collapse of three US lenders including Silicon Valley Bank and Signature Bank, as she testifies before a Senate Finance Committee hearing
By Richard Cowan
WASHINGTON (Reuters) – A Republican US senator’s accusation on Thursday that Treasury Secretary Janet Yellen had lied during a tussle over the future of the Social Security program obscured behind-the-scenes talks between the White House and lawmakers that have been underway for months, according to sources.
The war of words came in a Senate Finance Committee hearing when Republican Senator Bill Cassidy asked Yellen if Democratic President Joe Biden was aware that Social Security funds would run out within the next decade unless Congress shores up the popular retirement program with 66 million beneficiaries.
When Yellen responded that Biden “stands ready to work” with lawmakers, Cassidy shot back, “That’s a lie because when a bipartisan group of senators has repeatedly requested to meet with him about Social (Security) … we have not heard anything on our requests.”
For several months now, Cassidy and independent Senator Angus King, who caucuses with Democrats, have tried to address Social Security underfunding as approximately 10,000 baby boomers retire every day.
Within a decade, tax revenues and a backup dedicated trust fund will be insufficient to meet the payouts for what is often regarded as the most successful program the federal government has administered since Social Security’s inception in 1935.
Central to the Cassidy-King bipartisan effort is the possible creation of a second trust fund that for the first time would allow money to be invested in the stock market, instead of traditional Treasury securities that would achieve lower returns.
It would be modeled after a railroad pension fund that invests in stocks.
The last week of bank failures and worries of a wider-ranging crisis, however, could give lawmakers second thoughts about investing Social Security funds in stocks.
Cassidy and King are leading a group of workhorse senators that includes Republican Mike Rounds, Democrat Tim Kaine and independent Kyrsten Sinema.
While no meetings between the senators and Biden have been scheduled, a source familiar with the discussions said that White House aides are engaged in talks with the Senate. But a formalized plan has not yet been crafted to present to Biden, the source added.
White House officials did not respond to a request for comment.
“It’s going to be tough. I don’t think we should sugarcoat it. But there are serious conversations in the Senate … on a package that would improve Social Security’s finances,” said Shai Akabas, economic policy director at the Bipartisan Policy Center, a centrist think tank in Washington.
The senators’ effort is not the only Social Security rescue plan being devised.
Democrats in Congress might rally around a bill that Representative John Larson will unveil by early April, which would increase benefits across-the-board along with other changes, with an emphasis on helping those receiving the least.
“There are close to 5 million Americans who get below-poverty level checks from Social Security,” Larson said. His bill would create a new floor for benefits at 125% of the poverty level, “making sure no one can ever retire into poverty.”
To succeed, any proposal would need the support of Democrats, who control the Senate, and Republicans, who have the majority in the House of Representatives.
Several House Republicans have been pushing for an outside commission to recommend reforms under a fast-track approval process, much like one that was part of a successful effort in 1983.
“If someone’s got a better idea that they can pass, that’s great. I tend to be conservative and say this worked once, let’s try that again,” Republican Representative Tom Cole told Reuters.
“That’s really just a way to have (benefit) cuts without leaving your fingerprints on it,” said Nancy Altman, president of Social Security Works and head of a coalition of labor unions and other liberal-leaning groups.