Although most of America is likely focused on the coronavirus disease 2019 (COVID-19) pandemic, it's important not to lose sight that we're now less than six months away from Election Day. With a record-breaking field of presidential candidates now whittled down, we'll either be electing former Vice President Joe Biden (D) to his first term as president or reelecting Donald Trump (R) to his second term.
No matter who winds up in the Oval Office come January 2021, one of the biggest issues that needs attention is the most successful social program in history, Social Security.
Recently, the Social Security Board of Trustees released its annual report detailing the short-term (10-year) and long-term (75-year) outlook for the program. Similar to last year's report, Social Security is expected to completely deplete its nearly $2.9 trillion in asset reserves by 2035, with the total cash shortfall between 2035 and 2094 now standing at a staggering $16.8 trillion.
How will the next president "fix" Social Security and shore it up for future generations? If incumbent Donald Trump is reelected, chances are he'll aim to reduce long-term expenditures -- i.e., make cuts to the Social Security program -- to strengthen it. Here are five telltale clues that suggest outlay reductions may be in the cards if Trump wins a second term.
1. GOP ideology favors outlay reductions
First off, let's start with the obvious: He's a Republican.
Both Democrats and Republicans have a core solution that would work to strengthen the Social Security program. However, they each approach this solution from opposite ends of the spectrum.
Democrats prefer raising or eliminating the maximum taxable earnings cap associated with the 12.4% payroll tax on earned income. As of 2020, this maximum cap is $137,700. Raising or eliminating this cap would require a small percentage of well-to-do workers to pay more into the system, thusly boosting revenue for Social Security.
Meanwhile, Republicans favor a gradual increase to the full retirement age – i.e., the age at which you become eligible to receive 100% of your monthly Social Security payout, as determined by your birth year. Since retired worker benefits began paying out in 1940, the full retirement age hasn't even increased two years. Comparatively, the average life expectancy has risen more than 16 years since 1940. By raising the full retirement age, future retirees would have to wait longer to collect their full payout or accept a steeper reduction for claiming early. Either way, it reduces long-term outlays.
If Trump does take a stance on direct changes to Social Security, it's likely to align with the GOP's solution.
2. Trump's presidential budgets have all called for Social Security spending cuts
Secondly, Trump's four presidential budget proposals tell quite the tale. Although presidential budget proposals tend to be more of a talking point than any foundation for concrete legislation, they help people understand where a president is planning to focus their priorities. In each of Trump's four fiscal-year budgets, he's proposed a 10-year outlay reduction.
Keeping in mind that federal fiscal years start on October 1 and end September 30, Trump has proposed outlay reductions of:
- Fiscal 2018: $72 billion
- Fiscal 2019: $64 billion
- Fiscal 2020: $26 billion
- Fiscal 2021: $24 billion
According to these released budget proposals, most of the outlay reductions would come from removing perceived inefficiencies with the Social Security Disability Insurance (DI) program, as well as limiting SSDI retroactive pay to six months from the current 12 months that approved disabled workers are able to collect.
Note, though, that these outlay reductions are a drop in the bucket compared to the $15 trillion in estimated total spending from Social Security over the next 10 years.
3. He'd no longer have reelection concerns
Another important point to consider is that Trump winning a second term would remove any concerns about having to campaign for another election. This lack of worry about future elections is what often inspires second-term presidents to take on issues that they may have previously swept under the rug.
This would bring a Trump quote from the Conservative Political Action Conference in 2013 into greater focus. Said Trump:
As Republicans, if you think you are going to change very substantially for the worse Medicare, Medicaid, and Social Security in any substantial way, and at the same time you think you are going to win elections, it just really is not going to happen ... What we have to do and the way we solve our problems is to build a great economy.
At the time, this was Trump's way of suggesting that direct fixes to Social Security will cost the GOP votes. That's because any direct fix will make some group of people worse off than they were before. However, without any future elections to concern himself with, a second-term president might be willing to tackle direct changes to Social Security head-on.
4. Trump has previously commented on his intent to scale back entitlement spending
A fourth clue that suggests Trump may attempt to reduce Social Security's long-term outlays can be found from snippets of commentary throughout his presidency.
For example, Joe Perticone of Business Insider reported in December 2017 that Trump had told a Republican member of Congress that "he was willing to go after Social Security and other entitlement programs at the beginning of his second term." Again, this ties back into no longer having reelection concerns and being able to take a bolder stance on issues during a second term.
Trump also walked back commentary about possible entitlement cuts as recently as two months ago. When speaking at a Fox News town hall in early March, the president said, "Oh, we'll be cutting [entitlements], but we're also going to have growth like you've never had before."
Although Trump has never concretely stood by the idea of making long-term spending cuts to Social Security, he's certainly intimated that idea on a handful of occasions over the past 3.5 years.
5. The coronavirus-fueled federal deficit will command attention
Fifth and finally, take your cues from the ballooning federal deficit caused by the coronavirus pandemic.
According to the latest projections from the Congressional Budget Office, the federal budget deficit in fiscal 2020 is expected to be $3.7 trillion! For comparison, that's nearly as much of a federal deficit as 2009, 2010, and 2011, combined... and this was coming out of the steepest recession the U.S. had seen in 70 years. The fact is, this $3.7 trillion figure could move even higher depending on how quickly nonessential businesses are able to reopen, as well as what additional stimulus measures are needed to support the currently fragile economy.
With U.S. debt soaring, Trump may have little choice but to tackle the United States' worsening deficits. Presumably, this would mean substantive cuts to the third rail of American politics, Social Security.
To be clear, even if Trump was in favor of Social Security outlay reductions, there's no guarantee he would have House or Senate support for such a move. Nonetheless, the clues appears to suggest that, should Trump win reelection, Social Security spending cuts might be a genuine focus.