In case you haven't heard, Social Security is currently in quite the bind. According to the 2019 Social Security Board of Trustees report, the most successful social program in our nation's history is facing an estimated cash shortfall of $13.9 trillion between 2035 and 2093 due to a number of ongoing demographic changes.
Worse yet, the magnitude of this shortfall has been widening annually, with the program projected to expend more money than it collects in 2020. This would be the first time Social Security has finished the year with a net-cash outflow since 1982.
The good news, if any is to be pulled from this mess, is Social Security can't go bankrupt. Even if every cent in the program's asset reserves is depleted, Social Security's two recurring sources of income -- the 12.4% payroll tax on earned income and the taxation of benefits -- would ensure that payouts continue to eligible beneficiaries. No matter what happens, eligible retired workers will receive a benefit from Social Security, whether they're set to retire in five years or 50 years.
The downside is that Social Security's payout schedule is clearly unsustainable. If the program's $2.9 trillion in asset reserves (i.e., its net-cash surpluses since inception) are exhausted, retired workers could face an across-the-board benefit cut of up to 23%.
If reelected, would Trump seek to cut Social Security benefits?
Something needs to be done to fix Social Security, and it starts at the top with the president. The question is, if Donald Trump is reelected to a second term as president -- because nothing is getting done on the Social Security front during an election year -- would he specifically be looking to cut Social Security benefits in order to strengthen the program?
The answer isn't as cut and dried as you think.
Before digging in, let's get some housekeeping out of the way. First, we don't know who's going to win the November 2020 election, and Trump hasn't outlined any concrete plans as to how he'd directly "fix" Social Security. Thus, everything I'm presenting here is based on clues to how the president has so far approached or suggested Social Security be dealt with via commentary or through his presidential budgets.
In other words, no one can answer the question of whether Trump is coming for your Social Security with concrete certainty -- at least right now. But as I've noted, there are some intriguing clues.
Trump's federal budget proposals have regularly called for cuts to Social Security
For example, President Trump's federal budget proposals have called for Social Security outlay reductions all four years he's been in the Oval Office. Between fiscal 2018 and fiscal 2021 (a federal calendar year runs from Oct. 1 to Sept. 30), Trump's budget proposals reduced Social Security outlays by $72 billion (2018), $64 billion (2019), $26 billion (2020), and $24 billion (2021) over a 10-year period. Most of the benefit reductions Trump has called for would apply to the Social Security Disability Insurance (SSDI) Trust. In particular, the president has called for changes to the way retroactive pay is divvied out to long-term disabled workers.
Rather than providing retroactive pay for up to 12 months, Trump's budget suggests reducing this figure to six months. Few, if any, of the president's proposals have focused on retired-worker payouts, which comprise the lion's share of Social Security benefits paid.
Of course, it's also worth noting that these outlay reduction proposals for Social Security represent a very small fraction of estimated payouts over this 10-year period. For instance, the $24 billion in reduced outlays called for in the 2021 budget proposal would only cut spending 0.17% over the next decade. That's because Social Security is projected to pay out $15 trillion between 2021 and 2030. Thus, Trump's proposal to clean up some of SSDI's perceived inefficiencies would hardly make a dent in the program's potential cash shortfall.
Also, if reelected to a second term, Trump would no longer have to concern himself with a future election. This would, in theory, allow him to get more aggressive with policy proposals that he believes are important. Whether that involves Social Security remains to be seen.
However, reports from various news outlets in December 2017 suggest that the president confided in a small number of Republican congressmen that he would, indeed, seek Social Security reform "on the first day of his second term." In a more recent interview with CNBC anchor Joe Kernen, Trump also seemed to confirm that entitlement reform would be on his plate at some point.
Here's why it's highly unlikely that Trump will be able to make any cuts to Social Security
Open and shut case, right? Not exactly.
Even though the president has pushed forward budget proposals that outline cuts to Social Security (but predominantly SSDI), it's important to realize two factors.
One, presidential budgets are virtually always a talking point for the media and a starting point for debate among members of Congress. Rarely, if ever, do initial budget proposals from the president resemble a passed spending bill put forth by Congress. Presidential budget proposals can certainly be telling about what projects and programs the head of the U.S. wants to tackle, but they're typically taken with a grain of salt.
Second, Trump would need the support of both houses of Congress to pass amendments to the Social Security Act, and he's not going to get it. While it remains to be seen what sort of political divide occurs in the 117th Congress, Trump would need Republicans to take back the House and gain a significant number of seats in the Senate to have any chance at reform. Without 60 favorable votes in the Senate, Trump's efforts to make direct changes to Social Security would likely fall on deaf ears.
Is Trump coming after your Social Security? Probably not. But even if he does, there's likely not enough support in Congress to get any meaningful Social Security reforms passed.