Debt Digest | Withhold pay from Congress during shutdowns
Links & Fiscal Facts
Here are this week’s reading links and fiscal facts:
Withholding pay from members of Congress can motivate passing budgets on time. Alexander Bolton reports in The Hill: “The Senate on Wednesday unanimously voted to advance a resolution sponsored by Sen. John Kennedy (R-La.) to suspend senators’ pay during a government shutdown, something that could give lawmakers a powerful incentive not to shutter federal departments because of funding disputes in future years.” Senators voted 99–0 following the record 43-day shutdown in fall 2025 and the 76-day DHS shutdown this year. Boccia makes the case for tying congressional pay to performance: “As gimmicky as withholding congressional pay may seem, we know that this threat has worked before—motivating the Senate to pass a budget resolution for the first time in four years in 2013.” She concludes that withholding pay “would encourage members to grapple with the size and scope of federal spending and to put their policy priorities into the context of fiscal realities. At the very least, they’d face well-deserved embarrassment should they fail at adopting a budget and have their pay withheld.”
Trump IRAs are the wrong tool for low-income individuals. Allison Schrager writes in Bloomberg Opinion about President Trump’s executive order creating IRA access for lower earners with up to $1,000 in annual matching funds. Schrager explains why not everyone needs to save for retirement: “Low earners who qualify for full Social Security can expect to get more than 80% of their final salary as an annual benefit [...] But their working years can be financially precarious. In 2022, the median financial wealth of a single person earning less than $35,000 was $1,000. [...] lower-income people are also more financially vulnerable to disruptive events, such as divorce, unemployment or even car repair. They need liquid savings instead of retirement assets.” Boccia echoes this argument in her WaPo op-ed and points to a better alternative: “If policymakers want to help those Trump called ‘often forgotten American workers,’ they should focus on simplicity and flexibility. Tax-advantaged universal savings accounts, without withdrawal restrictions or government matching, would do much more to help these families. And all without increasing federal spending.”
Repealing Social Security retirement earning test improves work incentives. Rep. Greg Murphy (R-NC) recently introduced the Senior Citizens’ Freedom to Work Act, which would repeal the retirement earnings test (RET) that “reduces Social Security benefits that early retirees are eligible to receive by nearly fifty percent for earning more than $21,240 annually.” A study on the 2000 elimination of the RET above the full retirement age suggests that the change improves the incentive to work: “For men, removing the earnings test increased the likelihood of working past age 65, suggesting many either did not understand that withheld benefits are later returned through higher monthly payments or placed little value on those future adjustments. For women, the effects were less clear, likely because spousal benefits complicate the incentives.” Boccia made the case for ending these work disincentives: “The Social Security earnings test, which is broadly confused for a tax, also discourages work among those already receiving Social Security checks.” She points to another reform that would encourage work among older Americans while also shoring up Social Security’s finances: “lawmakers should phase in increases to both the early- and full-retirement ages, then index both to increases in life expectancy.”