By Richard Cowan
WASHINGTON (Reuters) – A Republican U.S. senator’s accusation on Thursday that Treasury Secretary Janet Yellen had lied during a fight over the future of the Social Security program clouded months of behind-the-scenes negotiations between the White House and lawmakers. according to sources.
The war of words came in a Senate Finance Committee hearing when Republican Sen. Bill Cassidy asked Yellen if Democratic President Joe Biden was aware that Social Security funds will run out within the next decade unless Congress supports the popular pension program with 66 million beneficiaries.
When Yellen responded that Biden “stands ready to work” with lawmakers, Cassidy fired back: “That’s a lie, because when a bipartisan group of senators has repeatedly asked to meet with him on Social (Security) … has We haven’t heard anything about our requests.”
For months now, Cassidy and independent Sen. Angus King, who caucuses with Democrats, have been trying to address the underfunding of Social Security as about 10,000 baby boomers retire each day.
Within a decade, tax revenues and a backup dedicated trust fund will be insufficient to meet payouts for what is often considered the most successful program the federal government has administered since Social Security’s inception in 1935.
Central to Cassidy-King’s bipartisan effort is the possible creation of another trust fund that, for the first time, would allow money to be invested in the stock market instead of traditional, lower-yielding government bonds.
It would be modeled after a railroad pension fund that invests in stocks.
However, the past week of bank crashes and worries about a broader crisis could give lawmakers second thoughts about investing Social Security funds in stocks.
Cassidy and King lead a group of workhorse senators that includes Republican Mike Rounds, Democrat Tim Kaine and independent Kyrsten Sinema.
Although no meetings are scheduled between the senators and Biden, a source familiar with the discussions said White House aides are engaged in talks with the Senate. But a formalized plan to present to Biden has not yet been made, 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 drag it out. But there are serious conversations in the Senate … about a package that would improve Social Security’s finances,” said Shai Akabas, economic policy director at the Bipartisan Policy Center, a think tank in Washington.
The senators’ effort isn’t the only Social Security bailout being crafted.
Democrats in Congress may rally around a bill that Representative John Larson will unveil in early April that would increase benefits across the board along with other changes, with an emphasis on helping those who receive the least.
“There are close to 5 million Americans who receive checks below the poverty level from Social Security,” Larson said. His bill would create a new floor for benefits at 125% of the poverty level, “ensuring that no one can ever retire into poverty.”
To succeed, any proposal would require the support of Democrats, who control the Senate, and Republicans, who hold the majority in the House of Representatives.
Several House Republicans have pushed for an outside commission to recommend reforms under a fast-track approval process, like one that was part of a successful effort in 1983.
“If somebody has a better idea that they can pass, that’s great. I tend to be conservative and say this worked once, let’s try it again,” Republican Representative Tom Cole told Reuters.
“It’s really just a way to get cuts to (benefits) 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.
(Reporting by Richard Cowan; Editing by Scott Malone and Josie Kao)
