The GOP presidential nominees’ proposals could affect Social Security more than you think.
Few politicians would go on record saying they wanted to slash Social Security benefits. The presidential candidates from the two major political parties in the current election are no exception. Both Vice President Kamala Harris and former President Donald Trump have promised to “protect Social Security.”
But what politicians say isn’t always what they do. Could Trump’s Social Security plan cut benefits by 33% instead of protecting the popular federal program? An analysis published this week by the nonpartisan Committee for a Responsible Federal Budget (CRFB) provides a shocking answer.
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How Trump’s proposed policies impact Social Security
Trump has made two key proposals squarely aimed at Social Security. First, he pledged to end the taxation of Social Security benefits. Second, the former president said he would boost revenue for Social Security by increasing drilling for oil and gas in the U.S.
At first glance, those might sound like positive changes. However, CRFB determined that not taxing Social Security benefits “would eliminate a revenue stream currently used to help finance Social Security.” Taxes from Social Security benefits contributed revenue of $51 billion in 2023, according to the Social Security Administration.
What about Trump’s proposal to help fund Social Security through increased drilling? CRFB performed a detailed analysis of the idea. It found that “increased energy exploration is unlikely to have a meaningful effect on Social Security” and “would require unrealistically fast economic growth to close Social Security’s existing long-term funding gap.”
Other policies proposed by Trump could also impact Social Security, according to CRFB. The GOP presidential nominee’s pledges to end all taxes on overtime pay and tips would further reduce payroll taxes used to fund Social Security. Trump’s promise to deport millions of unauthorized immigrants would also likely reduce Social Security payroll taxes. His proposed steep tariffs on all imports could cause higher inflation, which would in turn increase the annual cost-of-living adjustments (COLAs) and cost Social Security more money.
The cumulative effect
Trump’s Social Security plan itself, which is relatively limited in scope, wouldn’t cause benefit cuts of 33%. However, CRFB projects that the cumulative effect of all of his proposed policies would.
CRFB estimates that Trump’s tax cuts, tariffs, and other proposals would increase Social Security’s 10-year cash shortfall by roughly $2.3 trillion through 2035. The organization concluded that these policies would cause Social Security’s trust funds to run out of money in 2031 — three years earlier than currently projected by the Congressional Budget Office.
One caveat to CRFB’s projections, though, is that only around half of Social Security recipients would see their benefits cut by 33% under Trump’s policies. This group includes individuals who make lower incomes and don’t currently pay federal taxes on their Social Security benefits. Those who currently pay lower levels of federal taxes on their benefits would see a benefit reduction of around 30%. The Social Security benefits of Americans with a household income of around $100,000 per year would be cut by roughly 26%, according to CRFB. The wealthiest households would have a benefit cut of only around 3%.
The most important thing to know is that most of CRFB’s projected Social Security cuts with Trump’s proposals stem from these policies’ failure to prevent the program from becoming insolvent. CBO estimates that Social Security benefits will be reduced by 23% in 2035 if no reforms are made to the program.
Reality check
It’s possible the negative impact of Trump’s proposals wouldn’t be quite as bad. CRFB’s most optimistic scenario is that the GOP presidential nominee’s policies would cause Social Security to run out of money in 2034 and require benefit cuts of 29%. Unfortunately, the organization also has a pessimistic scenario where benefits would be slashed by 36%. Analyses of political proposals require making assumptions that may or may not be correct.
Of course, politicians frequently make campaign proposals that they quietly discard once elected. They also often encounter difficulties implementing their ideas because of an uncooperative Congress. The bottom line is it’s too early to assume dire consequences for Social Security if Trump is elected for a non-consecutive second presidential term. And it’s too early to know if he will win in November.
Arguably the most important takeaway from CRFB’s analysis of the impact of Trump’s proposals on Social Security is the need to reform the program sooner rather than later regardless of which party is in control in Washington. Benefit cuts are coming unless major changes are made — assuming they’re the right kind of changes.
