A new report concludes borrowing $26.6 trillion to invest in equities would not resolve Social Security’s funding gap.
A proposal to borrow $1.5 trillion and invest Social Security funds in the stock market would not prevent the program’s looming shortfall, according to a new analysis. The plan, backed by Senators Bill Cassidy and Tim Kaine, aims to leverage higher equity returns to cover benefit gaps but would require an additional $25.1 trillion in borrowing over 75 years, totaling $26.6 trillion.
Social Security’s trust fund is projected to deplete by 2031, reducing payouts to 77% of scheduled benefits without reforms. Lawmakers have debated raising payroll taxes, lifting the $184,500 earnings cap, or increasing the retirement age. The study warns that market volatility could undermine the strategy’s effectiveness.
The report highlights that while stocks historically outperform Treasury securities, the risks of such a large-scale bet may outweigh potential gains. No immediate market reaction was noted.