How a second Trump term could affect Social Security benefits

By Tami Luhby, CNN

(CNN) — Though President-elect Donald Trump has often promised to protect Social Security, he has not explained exactly how he would save the beloved – but financially troubled – entitlement program. Nor did he take any meaningful steps to shore up Social Security during his first term in the White House.

Moreover, several of his recent campaign pledges – including to eliminate taxes on Social Security benefits – could wind up costing seniors in coming years.

Many presidents and presidential candidates have vowed to address Social Security’s looming insolvency. The program’s trust funds are expected to run dry in 2035 without congressional intervention, according to the latest Social Security trustees’ report. After that, payroll tax revenue and other income would only be able to cover 83% of benefits owed.

But there’s a reason why the entitlement program is considered the third rail of politics: Any politician who dares to float reforms, be it hiking payroll taxes or raising the minimum retirement age or modifying the benefit formula, is quickly criticized.

Social Security advocates have feared past Republican proposals to address the program’s problems. Last year, when House Speaker Mike Johnson promised to form a debt commission, advocates quickly warned of the risk that it could harm benefits, which many senior citizens rely on. The Republican Study Committee, which Johnson chaired several years ago, has proposed solutions that advocates contend would reduce benefits.

Trump sparked worries in March when he suggested in a CNBC interview that he was open to making cuts to Social Security and Medicare.

“There is a lot you can do in terms of entitlements, in terms of cutting and in terms of also the theft and the bad management of entitlements,” Trump said. “There’s tremendous amounts of things and numbers of things you can do.”

His campaign quickly sought to clarify the remarks, saying Trump was referring to cutting waste.

Since then, Trump has sought to reinforce his intention to protect the program. He and the Republican National Committee in July released a platform that indicated it was a top goal should he win the presidency.

“FIGHT FOR AND PROTECT SOCIAL SECURITY AND MEDICARE WITH NO CUTS, INCLUDING NO CHANGES TO THE RETIREMENT AGE,” the platform reads, though it doesn’t provide details on how Trump and the GOP would address the program’s insolvency and accompanying benefit cuts.

During his first administration, Trump largely focused on so-called program integrity, such as reducing improper payments in Social Security’s disability programs. While his officials claimed the actions would save billions of dollars, the nonpartisan Congressional Budget Office found the savings to be negligible, said Charles Blahous, senior research strategist at the Mercatus Center at George Mason University and a former public trustee for Social Security and Medicare.

Trump’s second stint in the White House probably won’t produce any significant proposals to address the program’s fiscal troubles, Blahous told CNN.

“The most likely scenario is avoid and delay and evade the problem,” he said. “That would result in an even greater certainty of insolvency in a subsequent presidential term.”

Trump and Social Security taxes

During his campaign, Trump unveiled a series of targeted tax breaks as he sought to appeal to key blocs of voters.

But that agenda would drain critical tax revenue from Social Security’s trust funds, leading them to run out of money by 2031 – three years earlier than currently projected by the Congressional Budget Office, according to a recent analysis from the Committee for a Responsible Federal Budget, a nonpartisan government watchdog. And it would force a roughly 30% cut in benefits unless Congress acts.

As it is, Social Security doesn’t take in enough tax revenue. As the nation ages, the ranks of beneficiaries have surged while the number of workers contributing to the system has shrunk.

The Trump campaign lashed out at the committee’s report when it was released last month, saying that the watchdog has been “consistently wrong throughout the years.”

“By unleashing American energy, slashing job-killing regulations, and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come, all the while eliminating taxes on Social Security for America’s well-deserving seniors,” Karoline Leavitt, who was then the campaign’s national press secretary, said in a statement at the time.

No taxes on Social Security benefits

Overall, Trump’s platform would slash revenue going to the entitlement program by about $2.3 trillion over a decade, the committee found.

The costliest proposal is eliminating federal income taxes on Social Security benefits. This would drain the program’s revenue by $950 billion over 10 years, according to the committee.

Currently, around half of beneficiaries – mainly those with higher incomes – pay federal income tax on their Social Security payments. They owe taxes on their benefits if they earn more than $25,000 per individual, or $32,000 for married couples, of so-called combined income.

Initially, Trump’s measure would favor those earning between roughly $63,000 and $206,000, who would see the largest average boost in their share of after-tax income, according to the Tax Policy Center. Those making more or less wouldn’t see much of a change, if any.

Once Social Security’s trust funds run out of money, though, lower-income recipients would be hit the hardest. They generally would not qualify for the tax break so they’d feel the full brunt of the benefit reduction, Marc Goldwein, the committee’s senior policy director, said. For better-off recipients, the tax relief would offset at least some of the benefit cut.

The president-elect has also promised to jettison federal taxes on tips and overtime pay. While he has not provided details on either proposal, he indicated that he would eliminate both income and payroll taxes on tips. Those moves would cut about $900 billion in revenue to Social Security, the committee found.

The committee also looked at Trump’s tariffs and immigration measures, which it estimated would cut revenue to Social Security by $400 billion over a decade. The president-elect’s vow to hike tariffs could lead to higher inflation, which would prompt a larger annual cost-of-living adjustment for Social Security. And clamping down on unauthorized immigration and increasing border security could reduce the number of undocumented immigrants paying into the Social Security system.

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