There's no denying it any longer -- Social Security is in some pretty big trouble.

Since 1985, the annually released Social Security Board of Trustees report has cautioned that the program wouldn't bring in enough revenue over the long term (defined as the subsequent 75 years following the release of a report) to cover its outlays. As of 2020, Social Security's unfunded obligations had swelled to an estimated $16.8 trillion between 2035 and 2094. Without intervention, benefit cuts of up to 24% may be needed for then-current and future retired workers by 2035.

The future of the Social Security program depends on the actions of lawmakers in Washington, and it all starts at the top with the president. Although Donald Trump has largely kept his distance from Social Security, preferring instead to focus on indirect solutions to grow the U.S. economy and increase payroll tax collection, he has made or suggested three proposals that would ultimately result in cutting Social Security's outlays.

President Trump standing behind the presidential podium.

President Trump standing behind the presidential podium. Image source: Official White House Photo by Joyce N. Boghosian.

Trump's federal budget proposals have called for overhauls to the SSDI program

The most direct jab President Trump has ever taken at Social Security can be found in each of his four presidential budget proposals. Although presidential budgets tend to be more of a talking point than a concrete piece of legislation, they nevertheless tend to help the public understand where a president's priorities lie.

In each of Trump's federal fiscal-year budget proposals (a fiscal year in Congress begins on October 1), he's called for increased oversight of Social Security to remove inefficiencies and save the program money over the long run. More specifically, Trump has singled out the Social Security Disability Insurance (SSDI) program as a prime source of inefficiency. According to Trump's budget proposals, the president aimed to cut the following dollar amounts from Social Security (in aggregate) over a 10-year time frame:

  • Fiscal 2018: $72 billion
  • Fiscal 2019: $64 billion
  • Fiscal 2020: $26 billion
  • Fiscal 2021: $24 billion

Please keep in mind that, while these might seem like big numbers, they represent a mere fraction of the $15 trillion-plus in outlays expected from the Social Security program over the next decade.

The one specific action outlined in recent presidential budget proposals would be to limit retroactive SSDI benefits to six months from the current 12 months that approved long-term disabled workers can collect.

A chalkboard drawing of a rich person weighing down a seesaw with a surprised family on the other end.

Image source: Getty Images.

Trump has tossed around the idea of means-testing for benefits

Another way President Trump has proposed reducing Social Security's long-term outlays is through means-testing, which is a fancy way of saying that benefits would be reduced or phased out altogether for individuals or couples once they cross above set-income thresholds. In other words, it would ensure that well-to-do folks who are extremely unlikely to be reliant on Social Security in any meaningful way don't receive any benefits. Trump has previously suggested that folks like himself (i.e., wealthy individuals) shouldn't take a Social Security benefit.

It's worth pointing out that means-testing isn't something Trump has proposed while in office. Rather, it's an idea he loosely proposed while on the campaign trail prior to being elected president.

What's most interesting about means-testing is it's perhaps the only Social Security change that Democrats and Republicans might actually agree on. While Democrats have focused much of their attention on expanding benefits, not cutting long-term outlays, reducing benefits to a group of high-income individuals who don't need this income might be something both parties would consider.

However, you should also understand that means-testing wouldn't come close to resolving the program's $16.8 trillion funding shortfall or necessarily go over well with higher-income individuals and families. Even though these folks may not lean on their Social Security benefits to the same extent as the average retiree, they've still paid their fair share into the system and would therefore qualify for a payout.

Two Social Security cards lying atop a W2 tax form.

Image source: Getty Images.

The president has been a major advocate of payroll tax cuts during the COVID-19 pandemic

A third way Donald Trump has proposed Social Security cuts is by advocating for payroll tax reductions during the coronavirus disease 2019 (COVID-19) pandemic.

Since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, we've witnessed about a dozen second-stimulus proposals get introduced on Capitol Hill. While many of them have involved putting money directly into the hands of workers via a check or debit card, the solution Trump favors most is a payroll tax holiday.

Social Security's payroll tax is a 12.4% tax on earned income (i.e., wages and salary) of up to $137,700, as of 2020. It should be noted that if a worker is employed by someone else or a company, their payroll tax liability is split evenly with their employer (6.2% each). Trump's proposal calls for the worker's liability to be reduced or eliminated, thereby increasing the take-home paychecks of tens of millions of working Americans.

The reason a payroll tax cut is actually a Social Security cut is because the payroll tax accounted for 89% ($944.5 billion) of the program's collected income in 2019. Removing or eliminating the payroll tax -- even if it's just applied to workers and not employers -- would cripple Social Security's revenue-collecting capacity and almost assuredly drain its asset reserves even faster than currently predicted.

While not designed as a purposeful outlay reduction, a payroll tax holiday would expedite the likelihood of across-the-board benefit cuts to maintain the program's long-term solvency.