Social Security is headed for a day of reckoning, and Congress is running out of time to save boomers. Lawmakers are proposing some hard choices | Fortune

Congress has long dodged any Social Security reforms that would cut benefits, hike taxes, or do both. But those days of procrastination are coming to an end, and some lawmakers are facing up to that reality.

The clock is ticking and getting louder. New projections this month showed that the Social Security trust fund will run out of money sooner than previously thought, meaning benefits would face a 22% cut by 2032 unless adjustments are enacted.

For years, revenue from payroll taxes has been insufficient to fund current benefits, and the trust fund covered the gap. But once it runs out, Social Security will only be able to distribute what comes in.

With the insolvency cliff just six years away, senators elected in this year’s midterm races will likely cast votes on a solution. Already, some proposals have emerged.

Sens. Bernie Moreno, R-Ohio, and Elizabeth Warren, D-Mass., recently touted their plan to raise more revenue via payroll taxes in a New York Times op-ed.

Right now, annual pay up to $184,500 is subject to Social Security taxes. But above that threshold, any additional income avoids the tax.

But the senators pointed out that the vast majority of Americans make less than that, meaning Social Security taxes apply to 100% of their income while top earners only pay on a fraction of theirs.

“Why should a middle-class nurse pay a larger share of her paycheck than a wealthy corporate lawyer?” they wrote. “This is doubly unfair in an economy in which top earners’ wages, over time, have pulled far ahead of those of the average worker.”

Moreno and Warren proposed removing the tax cap, citing a report from the Peter G. Peterson Foundation that estimated such a change would generate about $3 trillion for the program over 10 years.

Sen. Sheldon Whitehouse, D-R.I., and Rep. Brendan Boyle, D-Pa., have also offered a plan to raise more revenue. Rather than eliminate the cap, however, it would lift the payroll tax income threshold to $400,000 and also subject investment earnings to the levy.

Of course, attempts to get more revenue out of taxpayers would carry political risks, but voters have been open to squeezing the wealthy. Still, Congress has trended in the opposite direction, with last year’s One Big Beautiful Bill Act showering new tax cuts on workers and Social Security recipients.

Another proposal by Sens. Bill Cassidy, R-La., and Tim Kaine, D-Va., would maintain current benefits and continue avoiding any pain for recipients or taxpayers by instead relying on the stock market—along with a mountain of fresh debt.

Their idea is for the federal government to borrow $1.5 trillion for an investment fund that would be loaded with stocks and other risk assets, which would accumulate gains for 75 years and offer better returns than Treasury bonds would.

At the same time, the Cassidy-Kaine plan would require another $25.1 trillion in borrowing to cover the gap between Social Security’s revenue and benefits during those 75 years. Returns from the investment fund would then pay down the $26.6 trillion in new total borrowing.

But Boston College’s Center for Retirement Research ran some simulations recently and found that the senators’ plan is unlikely to work.

While the historical average of stock returns could deliver more than enough revenue—assuming they continue that way over the next several decades—the market doesn’t go in a straight line.

“After incorporating the volatility in equity returns, however, the results show that the gamble does not always pay off,” authors Anqi Chen, Alicia Munnell, Jean-Pierre Aubry wrote in a report last month.

On the other side of the ledger is lowering what Social Security pays out. This could be an even dicier option politically as seniors are a reliable bloc of voters and wield outsized influence in elections.

The nonpartisan Committee for a Responsible Federal Budget has proposed a fix that targets couples receiving Social Security benefits of $100,000 or more. The plan, dubbed the “Six-Figure Limit,” would set a maximum of $100,000 for couples who are now receiving the top benefits. 

The lid would be adjusted for marital status and age of collection. For example, a single person wouldn’t receive more than $50,000, and a husband and wife retiring at 62 would see their payments capped at $70,000. 

During a Senate hearing in March, Sen. Lindsey Graham, R-S.C., sounded sympathetic to the idea of capping benefits for those receiving the biggest payouts.

“There was a time in my life where that Social Security check really, really mattered,” he said, referring to Social Security survivor benefits after his parents passed away. “Now, there’s the time in my life where I could probably get by with less, and if that’s what it takes to save Social Security, count me in.” 

Sen. Ted Cruz, R-Texas, suggested last month that so-called Trump accounts for American children are part of an effort to revamp Social Security.

The One Big Beautiful Bill Act allowed parents and other authorized individuals to open tax-advantaged savings accounts for any child under 18 with a Social Security number. 

During a panel discussion at the Milken Institute’s Global Summit, he said U.S. conservatives have been trying to mimic Australia’s superannuation program, which requires employers to pay into an employee’s investment fund to be accessed upon retirement as a way to reduce reliance on public pensions. 

Cruz added that as parents see their kids’ Trump accounts surge, they will become more open to changing how their own payroll taxes are spent.

“Wouldn’t you like to be able to keep a portion of your tax payments that you’re paying already, and instead of sending it to Uncle Sam, wouldn’t you like to have a Trump account just like your kid does?” he explained. “And my prediction is within five years, that is going to have a really compelling constituency because people will have seen it, and that is I think powerful and transformational.”

Jason Ma is the weekend editor at Fortune, where he covers markets, the economy, finance, and housing.