When President Biden leaves the Oval Office in January, the Social Security plan will be nine years away from insolvency—but that timeline would shrink to six years if Donald Trump goes ahead with his campaign platform. That’s according to a new warning by nonpartisan watchdog group The Committee for a Responsible Federal Budget, which says neither Kamala Harris nor Donald Trump have offered realistic plans to fix the program’s finances. The cost of Trump’s proposals, though, would cause Social Security to collapse more quickly, the group warns.
The reasons for this are the projected economic fallout that would ensue as a result of Trump’s plans to end taxation on Social Security benefits as well as on overtime pay and tips, and his call for large new tariffs and mass deportation of unauthorized immigrants. As the chart below shows, the cumulative drop in revenue for the program over a ten year period would be $1.3 trillion at the low-end and, in the worst case, $2.75 trillion.
Currently, the committee projects social security’s trust funds will run out by 2034, causing benefits to be cut by 23%. The Republican nominee’s agenda would advance that date to 2031, the organization said, and result in payments to retirees being slashed by one-third.
An average monthly benefit check totals $1,907, according to the Social Security Administration. A 33% cut would reduce that payment by $629 per month, leaving such a recipient with just $1,278. (This number reflects present dollars—all of these figures would be higher in 2031 as a result of inflation adjustments).
“The so-called experts at CRFB have been consistently wrong throughout the years,” Karoline Leavitt, press secretary for the Trump campaign, said in a statement emailed to Fortune. “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.”
Why would Trump’s plans drain Social Security?
Income taxes on Social Security benefits currently account for 4% of the program’s financing. The committee said eliminating that revenue stream is probably the biggest threat to social security among Trump’s proposals, projecting that it will cost the program $950 billion over the next decade. Not far behind is the estimated $900 billion that would be lost by removing taxes on overtime and tips, which would reduce payroll tax collection.
Mass deportations and tighter border restrictions would also further deplete social security’s coffers, according to the committee. While Leavitt claimed illegal immigration could cause the program to collapse, many undocumented workers pay into the system but aren’t qualified to claim benefits.
Finally, the committee said Trump’s calls to significantly increase U.S. tariffs would also take a toll. These taxes on imports would be paid by Americans, either reducing taxable payroll or forcing Social Security to boost distributions to keep up with inflation.
Leavitt cited past claims by President Trump that increased drilling for oil and natural gas, along with other supposedly pro-growth policies, would close social security’s budget shortfall.
“President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come,” she said, “all the while eliminating taxes on Social Security for America’s well-deserving seniors.”
According to previous analysis from the committee, dedicating all federal lands to drilling operations would generate $5 trillion, using today’s prices, less than one-fourth of social security’s $22 trillion shortfall for the next 75 years.
Many estimates, the report noted, find Trump’s plans would reduce America’s long-term output. Even if they’re wrong, the committee said, claims that economic growth could close Social Security’s long-term funding gap are highly unrealistic.
Credit: Source link
