Bill Cassidy’s $1.5 Trillion Plan Could Prevent a 28.5% Social Security Cut

Senator Bill Cassidy has a proposal to shore up the Social Security program and help preserve senior benefits. Social Security faces an impending trust fund shortfall, which may result in an across-the-board benefits cut if Congress doesn't act. Cassidy says that his plan may help fund the program and support the individuals depending on those benefits.

Here's what you should know about Social Security's insolvency, Cassidy's plan, and what Congress is doing.

The projected Social Security insolvency date

The 2026 Social Security Trustees report projects that the Old-Age and Survivors Insurance (OASI) Trust Fund may become depleted by the fourth quarter of 2032. That's one quarter earlier than the 2025 report projected.

If the trust fund becomes depleted, the program's income may only be sufficient to pay 78% of the total scheduled benefits, which might result in an automatic benefits reduction.

Cassidy's warning about Social Security

Cassidy, a Republican from Louisiana, shared a warning about Social Security in a post on X. "Social Security faces a 28.5% benefit cut in just six years if Congress doesn't act," he wrote.

In a Business Briefing interview, Cassidy reported that the Congressional Budget Office anticipates that Congress may try to borrow money in an effort to solve the funding issue. "The negative impact of borrowing as much money as would be required cannot be modeled. It is so harmful to the economy," said Cassidy. He stated that the program's unfunded liability currently accounts for about 20% of the total U.S. debt; that liability could become 24% of the national debt.

Cassidy added that a 28.5% benefit cut "would double the rate of poverty among the elderly."

Cassidy's plan to fund Social Security

Cassidy is proposing the creation of a "pension investment fund" separate from the OASI Trust Fund. "We would set up an investment fund, a pension investment fund, separate from the Social Security Trust Fund, put $1.5 trillion in it over five years," he explains.

Cassidy proposes that the U.S. borrow $1.5 trillion, invest it in equities and other assets, allow the money to grow untouched, and then repay the Treasury the principal and interest on the money that was originally borrowed.

The advantages to Cassidy's plan

According to Cassidy, the borrowing required wouldn't increase the U.S. debt. "If you've got $1.5 trillion after five years in escrow, you could liquidate it and pay off the debt, so it's considered a wash," he says.

Cassidy explains that since the fund would be invested in the economy, it would end up "taking care of 60 to 70% of the unfunded accrued liability" over 65 to 70 years.

The Social Security payroll tax revenue

The plan could operate in conjunction with Social Security's payroll tax revenue. The program is primarily funded by payroll taxes that about 93% of workers pay. The total payroll tax is 12.4%, and that's divided between workers and employers. (Self-employed individuals are responsible for the entire 12.4% tax.)

Those payroll taxes help fund the OASI and Disability Insurance Trust funds. As the number of retirees collecting benefits has outpaced the number of workers paying for benefits, and income inequality means a lower percentage of wages are taxed for Social Security, those funds have declined. Cassidy's plan might help supplement the funds.

Problems with Cassidy's plan

Cassidy's plan has drawn some criticism. Alicia H. Munnell, senior advisor of the Center for Retirement Research at Boston College, explains that taxpayers bear the risk for the plan, calling it "a huge and risky financial maneuver with very little payoff." Investment returns aren't guaranteed, so the outcome of this plan is uncertain.

Munnell also explains that the act of trying to create a new fund diverts attention from creating balance between Social Security revenues and benefits.

Additional Congressional proposals

Several lawmakers have presented proposals to Congress. For example, The Bipartisan Social Security Commission Act of 2026, led by Representatives Tom Cole and Tom Suozzi, would establish a commission to develop legislation to keep Social Security solvent long-term and to prompt Congress to take action. If enacted, the bill would create a 13-member bipartisan commission; it would task the commission with creating recommendations and legislation to keep Social Security solvent for at least 75 years. The commission would have one year to produce that legislation.

The bill also includes rules to prompt Congress to act on the legislation. Both chambers are required to act within three legislative days once the commission reports, and the bill would be automatically discharged if the chambers fail to act.

Bottom line

At this point, Cassidy's plan is not law, and Congress has several potential solutions and reforms to review. Watch for updates as Congress works toward finding a solution for Social Security, especially after the midterms.

It may take time for Congress to agree on and implement solutions to preserve Social Security, but the cost-of-living adjustment (COLA) for 2027 may be the next concrete milestone; it's anticipated to be announced on October 14. The COLA might give you a benefits boost in 2027, potentially affecting your retirement plan.

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