Social Security has operated for years by using trust fund reserves to supplement payroll tax revenue, which has no longer been sufficient to cover annual benefit payments. According to the latest trustees’ projections cited by Fortune, that reserve is now expected to be exhausted by late 2032, at which point benefits could be reduced by 22% unless Congress enacts reforms.
The approaching deadline has renewed bipartisan debate in Washington, with senators introducing proposals that reflect sharply different approaches to preserving the program while avoiding disruptions for current and future retirees.
Lawmakers Propose Different Paths to Strengthen Social Security Finances
One bipartisan proposal from Sens. Bernie Moreno of Ohio and Elizabeth Warren of Massachusetts would remove the current cap on earnings subject to Social Security payroll taxes. According to their New York Times opinion article, workers currently pay Social Security taxes only on wages up to $184,500 in 2026, while earnings above that level are exempt from the tax.
The senators argue that this structure means most workers pay Social Security taxes on all of their wages, while the highest earners contribute on only part of their income. According to Moreno and Warren, eliminating the payroll tax cap would treat all wage income equally and could generate approximately $3 trillion for the program over the next decade, citing estimates from the Peter G. Peterson Foundation.
Another proposal from Sen. Sheldon Whitehouse and Rep. Brendan Boyle would increase the taxable wage threshold to $400,000 while also applying Social Security taxes to investment income. Fortune also reported that these proposals seek to increase dedicated revenue rather than reduce benefits.
Other lawmakers have focused on limiting future benefit payments. The Committee for a Responsible Federal Budget has proposed a plan that would cap annual Social Security benefits for couples currently receiving the highest payments, while adjusting the limit based on marital status and retirement age. During a Senate hearing in March, Sen. Lindsey Graham said he would support receiving less in benefits if that proved necessary to preserve the program.
Alternative Financing Plans Face Scrutiny as Insolvency Approaches
A separate bipartisan proposal from Sens. Bill Cassidy and Tim Kaine would rely on federal borrowing and long-term investment returns instead of immediate tax increases or benefit reductions. The plan calls for borrowing $1.5 trillion to establish an investment fund holding stocks and other higher-risk assets while borrowing additional funds over 75 years to cover Social Security’s financing gap.
According to the Center for Retirement Research at Boston College, historical stock market returns could theoretically generate enough gains to offset the borrowing under favorable conditions. The center’s analysis also found that market volatility significantly affects the outcome, making the proposal uncertain over the long term.
The same report concluded that the most common outcome would leave taxpayers with substantial remaining debt after 75 years, even under optimistic return assumptions. Researchers also found that equity investments could improve Social Security’s finances if combined with measures that first restore long-term solvency, such as higher payroll taxes or lower benefits.
Meanwhile, Sen. Ted Cruz has linked recently created tax-advantaged “Trump accounts” for children to broader discussions about retirement policy. Fortune reported that Cruz said expanding personal investment accounts could eventually encourage Americans to support directing part of their payroll taxes into similar investment-based retirement savings rather than relying entirely on the existing Social Security system.
