For most Americans, Social Security is a program they couldn’t live without. For 22 consecutive years, national pollster Gallup has questioned retirees about their reliance on Social Security income and found that no fewer than 80% in any given year need their payout to cover at least some portion of their expenses.
Despite Social Security being vital to the financial well-being of our nation’s aging workforce, data shows that its foundation is crumbling. This means whoever voters elect as president in November — incumbent Joe Biden or former President Trump — will be tasked with financially shoring up Social Security for future generations of retirees, workers with disabilities, and survivor beneficiaries.
Then-President Donald Trump on a conference call. Image source: Official White House Photo by Tia Dufour.
But according to President Biden in a recent post on X (the platform formerly known as Twitter), entrusting Social Security to Donald Trump would be a mistake. If Donald Trump were re-elected to a second term, Biden claims that he would be “coming for your Social Security.”
Would the re-election of Donald Trump as president be a threat to your Social Security income as Biden has implied?
Let’s do a little fact-checking and lay out what’s at stake for more than 67 million current Social Security beneficiaries, as well as the tens of millions of workers who’ll qualify for a payout during their golden years.
Social Security is facing a greater than $22 trillion long-term funding shortfall
Before digging into the specific proposals, it helps to know the background of how Social Security got into this mess.
Since 1985, every annually released Social Security Board of Trustees Report has noted that the program’s long-term (75-year) revenue collection would be insufficient to cover outlays over the coming 75 years. Put another way, America’s top retirement program is facing a long-term funding obligation shortfall. Since the mid-1980s, this estimated shortfall has grown to a mammoth $22.4 trillion.
To be transparent, this shortfall doesn’t (I repeat, doesn’t) mean Social Security is going bankrupt or is insolvent. Rather, it intimates that the current payout schedule, inclusive of annual cost-of-living adjustments (COLAs), isn’t sustainable over the coming 75 years.
US Old-Age and Survivors Insurance Trust Fund Assets at End of Year data by YCharts.
The bigger concern is what could happen in less than a decade. The 2023 Trustees Report estimates the Old-Age and Survivor’s Insurance Trust Fund (OASI), which provides monthly benefits to 50.7 million retired workers and around 5.8 million survivor beneficiaries, could exhaust its asset reserves by 2033. If this excess cash is fully depleted, sweeping benefits cuts of up to 23% may be necessary to avoid any further reductions through 2097.
While social media myths like “Congress stealing funds” and “undocumented workers getting benefits” often take the blame for the program’s crumbling foundation, the truth is that a number of ongoing demographic shifts explain its struggles. In addition to baby boomers retiring and longevity increasing since the first retired-worker benefits were paid in January 1940, the U.S. birth rate is near a historic low, income inequality is on the rise, and net-legal migration into the U.S. has declined 58% since 1998.
Would Donald Trump be “coming for your Social Security” if re-elected as president?
Now that you have a better understanding of what’s wrong with this storied program, let’s return to the question at hand: Would Donald Trump be “coming for your Social Security” if re-elected, as President Biden plainly stated in his post on X?
Trump is coming for your healthcare and Social Security.
We won’t let it happen. pic.twitter.com/gbCSyILNWd
— Joe Biden (@JoeBiden) April 21, 2024
The straightforward answer is no. And the reciprocal is true as well — a second term for Biden wouldn’t mean he’s coming for your Social Security income, either.
The incorrect belief that lawmakers are “coming for your Social Security” stems from a misunderstanding of how both political parties would attempt to “fix” the program’s problems.
Former President Donald Trump has largely avoided discussing Social Security because it’s a sensitive topic. Every proposal to “fix” America’s top retirement program results in some group of people being worse off than they were previously.
Republicans on Capitol Hill have two core proposals they’d like to see implemented.
First, GOP lawmakers want to gradually raise the full retirement age from 67 to perhaps as high as age 70. Your “full retirement age” is the age you become eligible to receive 100% of your payout, as determined by your birth year. Since life expectancy at birth has risen roughly 13 years since payouts began in 1940, raising the full retirement age would require future generations of retirees to either wait longer to collect their full benefit, or to accept a steeper permanent reduction to their monthly payout if claiming early. Either way, increasing the full retirement age is designed to lower lifetime benefits paid.
Secondly, Republicans prefer swapping out the current COLA measure, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), for the Chained CPI. The latter takes substitution bias into account, which involves consumers trading down to a similar good or service at a lower cost. The Chained CPI would result in lower annual COLAs, and therefore reduced outlays for Social Security over time.
Neither of these two proposals is a direct threat to your Social Security income. Rather, it’s a method of reining in long-term spending for a program that’s facing a large funding shortfall.
As for Joe Biden and Democrats, they, too, have two core proposals to strengthen Social Security.
As Biden laid out in a proposal while on the campaign trail in 2020, Democrats would like to reinstate the 12.4% payroll tax on earned income (wages and salary, but not investment income) above $400,000. As of 2024, all earned income above $168,600 is exempt from the payroll tax. Increasing the payroll tax on the rich and making them “pay their fair share,” in Biden’s own words, would generate added income for Social Security.
Meanwhile, Democrats wants to swap out the CPI-W in favor of the Consumer Price Index for the Elderly (CPI-E). The CPI-E would strictly track the spending habits of households with persons aged 62 and above. This presumably more-accurate measure of inflation would result in higher annual COLAs over the long run.
Image source: Getty Images.
Both proposals have flaws, which is why a bipartisan solution is so important
As I pointed out earlier, the reason lawmakers tend to avoid tackling Social Security’s glaring funding shortfall is because every solution has a loser. The Republican proposal that aims to pare back long-term spending would mean less lifetime income for the future generations of low-earning workers who’ll likely need their Social Security benefit to make ends meet.
On the other hand, the Democratic proposal hurts high earners by taking additional income via taxation without providing an extra cent in added benefits.
These single-party proposals have shortcomings, as well.
Although Donald Trump and his Republican colleagues wouldn’t be “coming for your Social Security,” increasing the full retirement age and using the Chained CPI as the program’s inflationary tether would take decades to yield meaningful cost savings. This wouldn’t provide any assistance to the OASI’s asset reserve exhaustion that’s estimated to occur in 2033.
Likewise, Democrats taxing the wealthy would, by itself, only extend the solvency of the OASI’s and Disability Insurance Trust Funds’ asset reserves, collectively, by about 35 years. This benefit would actually be much less with President Biden’s proposal, which redistributes much of the tax revenue collected from high earners. In short, taxing the rich, by itself, doesn’t come close to resolving Social Security’s $22.4 trillion long-term funding gap.
To really strengthen Social Security, lawmakers from both parties will need to work on a bipartisan solution.
For example, the Social Security Amendments of 1983, which were overwhelmingly passed by both parties in Congress and signed into law by then-President Ronald Reagan, helped build a peak $2.9 trillion asset reserve surplus for Social Security in just under four decades. The Amendments of 1983 gradually increased payroll taxation on workers, introduced the taxation of benefits, and provided for a gradual increase to the full retirement age. It contained core proposals from Democrats and Republicans, and its demonstrably improved the financial well-being of Social Security.
Regardless of whether Donald Trump or Joe Biden leads the nation for the coming four years, cooperation and collaboration will be necessary to shore up the foundation of America’s top retirement program.
