Retirement Social Security

Lawmaker Claims Social Security Shortfall Could Turn U.S. Into Venezuela by 2032

The program's financial problems could spur a major crisis.

By Maurie Backman , Edited by Laura Hohenstein

Updated April 7, 2026

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Many retirees need Social Security for a stress-free retirement. But the program is deep in the throes of a funding crisis.

The Congressional Budget Office estimates that Social Security's Old-Age and Survivors Insurance (OASI) Trust Fund will be depleted by 2032. At that point, benefit cuts may be inevitable unless lawmakers intervene.

But now, one senator is sounding a warning that if Social Security's financial issues aren't addressed promptly, it could trickle down to the entire U.S. economy in a very bad way.

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Why one lawmaker fears the U.S. could be "the next Venezuela"

As Newsweek recently reported, Republican Senator Bill Cassidy is sounding alarms that failing to act on Social Security's impending funding shortfall could force deep benefit cuts or heavy borrowing on the part of the U.S. to sustain benefits at their scheduled level. He specifically warned that failing to act could either result in a 25% benefit cut or borrowing close to $700 trillion, which would put the U.S.'s debt-to-GDP ratio similar to Venezuela's.

Not only has Venezuela been plagued with high levels of government debt, but the country's inflation rate also reached 475% in 2025, the world's highest level. It's easy to see why Cassidy would not want the U.S. to end up in a similar spot.

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Concern over Social Security is valid

The fact of the matter is that Social Security, in the coming years, is expected to owe more in benefits than it takes in revenue-wise. Benefit cuts could be catastrophic for the millions of older Americans who rely on them heavily today, and for future retirees who are depending on those benefits as well.

But solutions to fix Social Security's financial shortfall all seem to come at a cost. Lawmakers could opt to raise the payroll tax rate to pump more money into Social Security. But that, in turn, could burden workers and their employers with higher taxes.

Lawmakers could also opt to raise Social Security's full retirement age, forcing workers to wait longer to collect their benefits without a reduction. That could not only wreck some people's retirement plans, but in some cases, put workers who can't delay retirement due to health issues in a very tough spot.

Borrowing a huge amount of money to avoid benefit cuts is not necessarily a solution lawmakers are looking at. But Cassidy wants to make sure things stay that way.

His proposal to address Social Security's shortfall is to pre-fund a $1.5 million fund from the U.S. Treasury and invest it similarly to private retirement plans. The money would be held in escrow for 75 years, allowing returns on the fund's investments to offset borrowing.

An imbalanced comparison

While it's easy enough to see why Cassidy may have chosen to compare the U.S. to Venezuela in the context of Social Security's financial turmoil, his analogy is really an exaggeration. His warning reflects fears of economic strain if a reasonable solution isn't met. And he clearly cautions against borrowing and taking on more debt at the government level.

His warning is valid. Taking on massive debt to fund Social Security could eventually destabilize the U.S. economy. But that's probably a true worst-case scenario. Lawmakers would more likely vote to cut benefits, or take the aforementioned steps to avoid having to cut benefits, before adding enormous amounts to the national debt.

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It's best to prepare

Social Security is not at risk of disappearing completely, and even benefit cuts aren't a sure thing at this point. But it's important to recognize that lawmakers have to take some sort of action to shore up Social Security's finances. That means tax changes or changes to the program may be incoming, and soon.

These changes may impact current workers more so than retirees. If the payroll tax rate is raised, workers could not only face a higher tax burden, but fewer employer benefits, since companies might need to cut corners to cope with their higher tax bills. And if Social Security's full retirement age is changed, workers may need to adjust their long-term plans.

Bottom line

If Social Security ends up having to cut benefits, your retirement plans could change for the worse. While lawmakers have never allowed that to happen, it's not out of the question.

Preparing for potential cuts could put you in a stronger position to retire comfortably. That means increasing your IRA or 401(k) contributions and investing your savings for growth.

If you make these key moves and Social Security benefits aren't cut, you'll have that much more money to spend as a retiree. And if benefits are cut, a generous nest egg could take the place of that missing money, allowing you to maintain a good quality of life despite that gigantic loss.

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