How Trump could make Social Security's fiscal outlook gloomier
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Former President Trump campaigns last weekend. Photo: Charly Triballeau/AFP via Getty Images
The Social Security trust fund is on track to run out of money in a decade — but that day would come three years earlier if several of former President Trump's proposed policies are enacted, according to new analysis from a fiscal watchdog group.
The big picture: Under current law, the trust fund is set to be depleted in 2034, triggering automatic benefit cuts absent Congressional action. Trump's policies would move that day of reckoning to 2031, Committee for a Responsible Federal Budget finds.
- Trump seeks to eliminate the taxation of Social Security benefits and end taxes on tips and overtime income, which would reduce tax revenue to support the program.
- He also seeks tariffs that CRFB finds could add to inflation — and hence the Social Security cost of living adjustment — and reduce taxable income. Moreover, amped-up deportations would reduce the number of workers paying into the system.
- The group finds that Vice President Kamala Harris' proposed policies would have only modest effects, speeding up insolvency by "several weeks or months."
By the numbers: In CRFB's analysis, the combined Trump policies are projected to worsen the net financial position of the Social Security system by $2.3 trillion in 2035, about 1.8% of that year's projected payroll.
- That would mean a 33% automatic cut to benefits in 2035, not the 23% projected under current law.
- (It's worth noting that Congress would almost certainly take some action to prevent benefits from falling so precipitously.)
Reality check: Both candidates have pledged to protect the wildly popular Social Security program. But neither has offered proposals that might delay or prevent its insolvency.
- Every year that passes, the scale of the policy changes needed to bring the program into fiscal balance increases because there is less time remaining to phase them in.
- It has been known for decades that demographic forces would eventually strain Social Security's finances as the extra-large Baby Boom generation leaves the workforce and goes from paying into the system to receiving benefits.
- But there has been no political consensus — or will — to either gradually trim benefits or raise taxes to stabilize the program.
What they're saying: "While we can still protect current retirees if we act quickly, they will be hit with annual benefits cuts of roughly $16,000 if our political leaders continue to drag their feet," CRFB president Maya Macguineas tells Axios.
- "Frankly, every lawmaker should explain to today's retirees why that is the plan they are currently embracing," she adds. "And the last thing we should do is adopt measures that make the program's finances even worse."
The other side: "The so-called experts at CRFB have been consistently wrong throughout the years," said Trump campaign national press secretary Karoline Leavitt in a statement to Axios.
- "President Trump delivered on his promise to protect Social Security in his first term, and President Trump will continue to strongly protect Social Security in his second term."
