Some Republicans might be coming around to the idea of using tax hikes to fix Social Security’s finances.
In a chat with Semafor, Sen. Mike Rounds, R-S.D., shared some of the plans being batted around by a bipartisan gang of lawmakers working on a bill to shore up the retirement and disability program’s trust funds, which are set to be depleted by 2035. One of the options in play: raising the payroll tax cap on wages for higher-earning Americans to extend its lifespan.
“This is clearly I think the right direction to move,” Rounds told Semafor.
That would amount to a remarkable break for Republican lawmakers, who have revolted against any type of tax increase over the past decade. Rounds added that lawmakers were drawing “close” to a broader deal.
Semafor broke the news on Friday that a group of senators led by Sens. Bill Cassidy, R-La and Angus King, I-Me. are currently hashing out a Social Security bill. Rounds confirmed that an eye-catching plan to invest federal cash in the stock market is part of the talks.
Rounds said the idea made sense because the long term return on stocks is traditionally much higher compared to the interest payments from Treasury bonds, which the Social Security Trust Fund now invests in.
Matt Bruenig, founder of the socialist-leaning People’s Policy Project and a sovereign wealth fund proponent, estimated in a 2018 analysis that investing in the S&P 500 between 1990 and 2017 would have yielded a return of about eight percent for the U.S.
“The basic idea of pulling a bunch of money into a fund is pretty well established and even the idea of having a government do it and manage it is pretty well established,” Bruenig said, citing the success of similar funds in Norway and Alaska.