Trump Policies Would Bankrupt Social Security Much Sooner

 

We know that the Social Security Trust Fund will be depleted in only a few more years. But the Committee for a Responsible Federal Budget (which is bipartisan and non-profit) says the policies being proposed by Donald Trump would deplete those funds much sooner. Here is part of what they write:

We find President Trump’s campaign proposals would dramatically worsen Social Security’s finances.

Social Security will be only nine years away from insolvency when the next President takes office. If President Trump’s campaign agenda were enacted in full, we estimate it would shrink that window by one-third, to only six years.

Proposals from President Trump that would weaken Social Security’s finances include:

• Ending taxation of Social Security benefits, which would eliminate a revenue stream currently used to help finance Social Security.
• Ending all taxes on overtime pay and tips, which would reduce payroll tax collection accruing to the Social Security trust funds.3
• Imposing large tariffs on imports, which would either increase cost-of-living adjustments (COLAs) through higher inflation or reduce taxable payroll.
• Enhancing border security and deporting unauthorized immigrants, which would reduce the number of immigrant workers paying into the Social Security trust funds.

 To estimate the effects of these policies on Social Security trust funds, we looked to the high, low, and central estimates in our recent analysis of the Trump campaign plan. We then estimated the impact of each relevant policy on Social Security revenue and/or spending, making additional high and low assumptions where appropriate.

Under our central estimate, we found these policies would add about $2.3 trillion to Social Security’s cash deficit between FY 2026 and 2035 – which is about 1.8 percent of current law taxable payroll once phased in. This includes $950 billion from ending the income taxation of Social Security benefits, about $900 billion from ending payroll taxes on tips and overtime pay, and roughly $400 billion from changes to tariffs and immigration.

Under our low-cost scenario, we estimate the Trump campaign’s policies would add $1.3 trillion to Social Security's ten-year cash deficit, and under our high-cost scenario they would add $2.8 trillion. This would represent 1.0 to 2.2 percent of payroll.

As a result of these higher cash deficits, Social Security trust fund reserves would be depleted much faster than under current law. Whereas CBO projects the trust funds to run out of money in FY 2034, we estimate they would run out of money three years earlier under President Trump's agenda.