U.S. Sen. Rand Paul told the NKY Chamber Tuesday that a gradual increase in the full Social Security retirement age to 70 over the next 20 to 30 years could “fix two-thirds of the problem” facing the program’s sagging reserves.
Kentucky’s junior senator indicated support for bucking up the entitlement program by gradually increasing the full benefit age from 67 to 70 over coming decades, a few months at a time, at an NKY Chamber event at the Holiday Inn Cincinnati Airport in Erlanger. Paul said he favors the change over eliminating the Social Security cap on annual taxable earnings—now at a maximum of $168,600.
“We have to look at the age of Social Security. It’s going to have to rise,” Paul told attendees. “We’re living longer. But if we just stick our heads in the sand and say we’re not going to do anything about this, the deficits are going to continue to grow. Someone has to say enough’s enough.”
The senator has proposed the creation of a joint bipartisan congressional committee on so-called entitlements – including Social Security benefits, Medicaid and Medicare etc. – to come up with solutions. So far, the proposal hasn’t advanced. As envisioned, the committee would “invite in economists, actuaries to crunch the numbers,” Paul told the Chamber. “They should discuss this every week.”
Increasing the Social Security full retirement age has been done before. In 1983, the federal government raised the age for full benefits from 65 to the current age of 67. The change was gradual, with eligibility bumped up “a month or two every year,” Paul told the crowd Tuesday.
“Republicans and Democrats finally got together and said we’re running out of money and said we’ll do it. You can raise the age to 70 over a 20 or 30-year period, which fixes two-thirds of the problem. If you means test (tie changes in benefits to levels of wealth) you can fix the remaining third. You can do either one,” said Paul.
Without some action, a recent study indicates Social Security will likely have to reduce its benefits starting in 2035. That study estimates that Social Security will only be able to pay 83% of scheduled benefits after 2035 as things stand now.
Cash reserves for the national program that funds benefits for nearly 70 million Americans were just below $2.8 trillion at the end of 2023, according to AARP. Total expenditures for Social Security last year were $1.39 trillion, with revenues totaling $1.35 trillion in 2023.
Joe Schlimm with Republic Bank asked Paul if tying Social Security tax to full earnings instead of maintaining an annual cap might be a solution to what he said is a “scare tactic” that Social Security is moving toward “bankruptcy.” Paul said he prefers keeping the cap to support business.
“The way I look at it is this: if you’re making $1 million a year and you’re paying it on $150 million, and I’m going to take it on $850 million more, what would have done with the $850 if you make $1 million a year and you’re in business? My guess is some of that goes either back into buying (what you need) or expanding,” Paul said. “I think that’s not as good for business. However, if you make $1 million and you’re turning 67, I think we could reduce what we give you. If it’s going to be a reduction, and rich people are either going to take less or pay more, I’d rather rich people give it up on the tail end than the front end.”
On the other hand, reducing Social Security benefits for low-income Americans could be a “real problem,” said Paul.
The program is “the major source of income” for older Americans, according to the Social Security Administration, with nearly 9 in 10 people age 65 or older receiving benefits as of Dec. 31, 2023.
Without a better solution to protect Social Security, however, Paul said the nation is looking at a general reduction of 20% over the next seven years. That would include a reduction in benefits for Americans living on as little as $700 in Social Security benefits per month.
“Now you’re looking at $500-560 a month. That’s what we’re facing if we don’t fix the problem,” he said.
Other topics addressed by the senator Tuesday included ideas for paying down the U.S. government’s $34 trillion national debt, streamlining entitlements (including cutting sugary drinks and “Ding Dongs” from food stamps, said Paul) and civil government discourse.
CVG CEO Candace McGraw asked the senator specifically about the “tenor and tone in Washington (DC).” McGraw said, “I have to say I am deeply concerned about the lack of civility that I see coming out of Washington, and I think it permeates throughout the rest of the country.”
Paul said folks in the nation’s capital get along “better than you think.” He said he has found agreement with Democrats on certain issues, mentioning ideas shared on privacy with progressive Oregon Democrat Sen. Roy Wyden as an example.
“There’s compromise that means ignoring party labels and finding areas of agreement,” Paul said. “I think that’s what I’m more into.”