April 5, 2026
You want to talk about things that are insolvent? I’ll give you one to watch. Let’s talk about Social Security. Because we’re all paying for it with every one of our paychecks and as of right now – if nothing is done– it will not be there for us the way it is for seniors receiving social security benefits today.
While there are lots of ideas on how to fix this massive problem that will become real for everyone in this country in just seven years (2033) – believe it or not – and I don’t want to jinx it — Republicans and Democrats seem to be in agreement on several ways to fix this mess.
So – let me quickly lay out the problem with Social Security – in case you haven’t seen all of my videos on this topic. You know how you get taxes taken out of every single one of your paychecks for Social Security? Well – the way the system works is – that money isn’t held in a separate account just for you when you retire. That money goes into the system that pays for all the people who are retired and receiving social security benefits right now. The idea is once its your turn to retire – the younger people in this country who are working will be paying those Social Security taxes out of their paychecks and that money will pay for you. Right? Well – because of too many things to count – that system has broken down. I could do a whole separate video on what those things are…but we’ll save it for another time. The bottom line is — it boils down to this — people are living longer and drawing on the social security program for longer and there isn’t enough money coming in to the system to keep up. So – there’s a trust fund that has been supplementing Social Security benefits to fill the hole — but that trust fund – according to the most recent estimates by the Social Security Trustees will be gone by 2033 – at which point – if you are receiving Social Security benefits, you will only receive 77% of the benefits that people are receiving today.
Ok – so that’s the problem in a nutshell. And by the way – congress hasn’t made any significant changes to social security since 1983 – that’s more than 40 years ago and obviously things have changed a lot since then. So major reforms are long overdue. And generally there are only three ways to fix it. What’s behind – door number one? — you can raise more revenue. How about door number 2 — you can borrow more money to keep up the current system a float….which gets dicey because of our $39 trillion of debt – as I reported in this video. Or door number three — you can cut the social security benefits by raising the legal retirement age which is currently 67 or you can cut down on who gets benefits and how much of a benefit they receive.
Now – the Senate budget committee just held a very interesting hearing on all kinds of proposals behind each of these doors. And I think the general consensus from both democrats and republicans was like we have to do something now and it can’t just be one thing – it’s going to be a combination of all things behind these doors. Let’s start with what lawmakers were generally not on board with. They were generally – not on board with increasing the retirement age any higher than 67. They were also not fans of reducing benefits for most retirees. But there was definitely bipartisan support for three solutions.
One – there was bipartisan support for a suggestion from Republican Senator Bill Cassidy. He is proposing a combo that includes borrowing money that then would raise revenue. He is proposing borrowing $1.5 trillion over the next 10 years and putting that money into an investment fund. That money would not be able to be touched for 75 years but then after that – it would help to fund social security. The fund would be invested the way for example your 401 k is invested. And the US government has done this before with the federal railroad retirement system.
Now – there are some downsides of this proposal – of course it would require borrowing that $1.5 trillion in seed money which would add to our massive $39 trillion in debt – and there are a lot of assumptions that have to be made about how well the market will do and how large the returns would be on that money at the end of 75 years.
But that wasn’t the only proposal discussed. Believe it or not – there is some bipartisan support for another revenue raising plan – to raise the cap on social security taxes. In case you didn’t know – you pay social security taxes out of your paycheck but only up to $184,500 of your wages. But any amount of money you make over that you pay zero in Social Security taxes. That’s why you hear people saying a firefighter or a teacher pays more in taxes than a millionaire…because a millionaire is only paying social security tax on the first $184,500 – and everything after that is not subject to Social Security taxes. But that could be changing.
The downside to this suggestion is that rich people who are making millions or billions of dollars a year – don’t necessarily take their compensation in wages – so their taxable income may not fully reflect their wealth and that means they still may not be paying the same percentage of their income in Social Security tax like an average American worker does. Now there was a lot of bipartisan talk – yes – republicans too — about coming up with a way to determine a person’s full wealth and assets for social security tax purposes and not just wages. It’s definitely something Senators are looking at.
And then believe it or not – there was bipartisan support for what Senators call a means test. Meaning – if you’re a millionaire or billionaire – you probably don’t need a monthly Social Security check – you’re financially set…so the suggestion is, if you’re in that category then you wouldn’t get full Social Security benefits so that there’s more money to distribute for other retirees who are on the poverty line.
Look – the bottom line here is – in 2033 in just seven years – Social Security will be insolvent and if congress doesn’t do something soon – every single person who receives social security now and who will receive it in the future will receive only 77% of the benefits that they’ve been promised.
Watch the Senate Budget hearing here.
See the most recent Social Security Trustee’s Report here.
Read more about Sen. Cassidy’s proposal here.
