Washington, D.C. — A new analysis from the Center for American Progress shows just how quickly Social Security’s trust fund would be exhausted and benefits cut if President Donald Trump permanently cuts payroll taxes, as he said he wanted to do in recent days.
In “Trump’s Plan To Defund Social Security,” Seth Hanlon and Christian E. Weller find that cutting payroll taxes for the last four months of the year would delay about $100 billion in tax revenue from going to the Social Security trust fund. However, if the president were to eliminate the employee payroll tax not only for this fall but permanently, as he vowed to do in a second term, the trust fund would run dry by either 2025 or 2026. This threatens a dramatic loss of income for tens of millions of retirees, disabled people, and surviving spouses and children of workers.
Trump’s latest comments on Social Security come on the heels of his comments he made in January that Social Security and Medicare cuts would be on the table in his second term. Trump famously pledged not to touch Social Security but then his administration proposed cuts to the program in each of it’s budgets.
Based on the latest Social Security trustees’ projections, Hanlon and Weller estimate:
- Cutting (not just delaying) the tax due for the last four months of this year, as Trump said he wants, would result in the combined Social Security trust fund being exhausted in 2034 rather than 2035, as under the trustees’ April projections.
- Under President Trump’s plan to permanently terminate the employee share of the Social Security tax along the lines that he has proposed for his temporary tax delay, the combined trust fund would be exhausted five years after enactment, in 2026, or nine years sooner than the actuaries predicted in April of this year. With the trust fund exhausted, remaining revenues would only be able to pay for 59 percent of promised benefits, and that portion would decline over time. For an average earner who retires at the age of 65, a 41 percent benefit cut in 2026 would be a loss $731 per month, or $8,772 over a year, in today’s dollars.
- Under an alternate assumption of the Trump administration’s policy—permanently eliminating the tax for wages under that threshold, including for workers earning more—the combined trust fund would be exhausted in 2025. With the trust fund exhausted, remaining revenues would only be able to pay for 50 percent of promised benefits, declining over time. For an average earner who retires at the age of 65, a 50 percent benefit cut in 2025 would be a loss of $859 per month, or $10,313 over a year, in today’s dollars.
“Sixty-five million Americans count on Social Security, and for most retirees and disabled workers, it is their largest source of income,” said Seth Hanlon, senior fellow at the Center for American Progress. “President Trump is now taking dead aim at the program’s dedicated funding, jeopardizing the benefits that workers have earned.”
Read: “Trump’s Plan To Defund Social Security” by Seth Hanlon and Christian E. Weller
For more information or to speak to an expert, contact Julia Cusick at [email protected].