The future of Social Security, on which millions of Americans rely, is bleak, since it is supposed to go insolvent in the coming years. Recent proposals by former President Donald Trump have called into question the effect his plans could have on the financial stability of Social Security. His plans would likely expedite the draining of the Social Security trust fund, resulting in a significant cut in benefits by 2031.
Understanding Social Security’s financial landscape
Social Security is primarily paid for through payroll taxes under the Federal Insurance Contributions Act of FICA. In addition to this, some of its revenue actually emanates from income taxes that recipients pay on benefits. At the moment, about 40 percent of beneficiaries do pay federal income taxes on their Social Security payments. The program presently already is paying out more in benefits than it brings in through taxes. This is according to the projections of the Congressional Budget Office, which is an independent federal agency responsible for the analysis of budgetary implications of legislative proposals. Without intervention, the fund will run out in 2034 and such intervention would mean a cut in benefits to recipients by 23%.
Trump’s plans could accelerate that timeline significantly. One report by the Committee for a Responsible Federal Budget estimated that if his plans are implemented, it will deplete the trust fund by 2031-three years sooner than currently projected. That would translate into a 33 percent cut in benefits rather than the currently projected 23 percent cut under current law.
How Trump’s plans affect it
His campaign promises include abolishing income taxes that are currently levied on Social Security benefits, taxes on overtime pay, and tips. The measures sound very constructive to the recipients, but it takes away the essential sources of funding needed by Social Security. According to the estimate from CRFB, just the exclusion of benefits from taxes would cost the program nearly $950 billion over the next decade. Besides that, the exemption of taxes on overtime and tips can further reduce collections by as much as $900 billion because of a reduction in FICA tax collections.
But beyond that, Trump’s plan to slap tariffs on imports and to deport millions of undocumented immigrants would make the finances of Social Security even more precarious. Many undocumented workers pay into Social Security through payroll taxes but don’t collect benefits when they retire. If they were removed from the workforce, that would lower overall payments into the system and accentuate the financial squeeze it faces.
A looming crisis
These proposals have very serious consequences. If the Trump agenda is adopted, the cash deficit for Social Security would increase by about $2.3 trillion in the fiscal years from 2026 to 2035. This would do more than quicken the pace of insolvency; it would also substantially cut benefits for the millions of Americans whose retirement income depends on Social Security.
For example, a $1,907 average monthly benefit in 2024 would be cut by $629 each month under these proposals. Many retirees would not be able to make their rent or other bills, especially those who have no source of income other than Social Security.
Political implications and responses
Despite the president’s promises to protect Social Security, his proposals have come under fire from all corners. Protecting the program has become one of many points on which both Trump and Vice President Kamala Harris have agreed. Yet neither has so far unveiled specific plans to ensure its long-term solvency. A report by the CRFB frames the absence of real policy as a major omission in an important election cycle.
Harris’ campaign has drawn a sharp contrast between her position and Trump’s, highlighting the fact that she will always protect Social Security benefits without jeopardizing its financial foundation. In response to Trump’s proposals, Harris’ spokesperson said the senator is committed to fighting for seniors and seeing they get their benefits.
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