Not even one month ago, midterm elections came to a close in the United States. But as one election season ends, another begins, with prospective presidential candidates turning their eyes to the Oval Office in November 2024. One such candidate is former President Donald Trump.
Trump, the 45th president of the United States, who lost to Joe Biden in November 2020 election, announced his bid to be reelected to the nation's highest office on Nov. 15. Although voters are a long way from deciding who the two primary candidates will be for the 2024 election, Trump's previous victory in 2016, as well as his support base, gives him a good chance to win the Republican nomination.
Former President Trump signing paperwork. Image source: Official White House Photo by Shealah Craighead.
Whoever wins the presidency in 2024 will be tasked with tackling what's currently a $20.4 trillion cash deficit for America's top retirement program, Social Security, through 2096. In other words, hard decisions will eventually need to be made.
The $64,000 question is: If Donald Trump is reelected, would Social Security benefit cuts be on the table?
Trump's Social Security solutions have been all over the map
The first thing to understand about the former president's Social Security plan is that he never really had one while in office. At no point during his term did Trump lay out a specific plan to strengthen Social Security, short of reducing a few perceived inefficiencies with the Disability Insurance Trust Fund, as laid out in presidential budget proposals.
But if you look back to the beginning of the century, you'd find a number of Social Security proposals offered by former president Donald Trump that are all over the map.
For example, in his book The America We Deserve, which was published in 2000, Trump argued for a one-time 14.25% tax on the wealthy to pay off U.S. national debt and funnel a portion of what would have been interest payments to service this debt into Social Security. Specifically, Trump proposed applying this tax to individuals with a net worth of more than $10 million, then funneling $100 billion annually into Social Security every year for a decade to strengthen it.
Additionally, Trump made a case for a partial privatization of Social Security in The America We Deserve. Privatization would allow individuals to control a portion of how their future retirement benefits would be invested. It was an idea championed by former President George W. Bush, but it ultimately fell flat with lawmakers (even within his own party).
More recently, prior to being elected president in November 2016, Trump posited that means testing for benefits might be a smart move. With means testing, income thresholds would be used to reduce or remove benefits entirely. In other words, high earners who are unlikely to rely on Social Security income in any way during retirement would receive a reduced benefit, or perhaps none at all.
Image source: Getty Images.
Entitlements are on the table
However, it's important to recognize that just because Donald Trump never laid out a concrete plan to tackle Social Security's growing long-term cash shortfall, it doesn't mean a potential fix isn't on the table if he's reelected.
In January 2020, while at the World Economic Forum, CNBC host Joe Kernan squarely asked then-President Trump, "Entitlements ever be on your plate?" Trump responded, "At some point they will be."
This statement, coupled with Donald Trump's lack of a concrete Social Security proposal, would likely mean that any broad-stroke solution to resolve Social Security's shortcomings would feature the two core Republican Party proposals.
To start with, most Republican lawmakers in Congress believe the full retirement age should be gradually increased to as high as 70 -- it's currently 67 for anyone born in 1960 or later. The full retirement age is the age at which an eligible retired worker is able to receive 100% of their monthly benefit. Since retired-worker payouts began in 1940, the full retirement age has risen two years, while the average life expectancy has jumped by approximately 13 years.
Why increase the full retirement age? The simple reason would be to reduce Social Security's outlays over the long run. Regardless of whether future retirees choose to wait longer to receive their full payout or accept a reduced monthly benefit by claiming before their full retirement age, their aggregate lifetime payouts from the program would decline.
The second core Republican proposal would be to switch Social Security's inflationary measure away from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the Chained Consumer Price Index. The CPI-W is the measure that helps determine annual cost-of-living adjustments (COLA).
The Chained CPI differs from the CPI-W in one big way: substitution bias. If the price for a good or service rises, consumers may opt for a similar good or service at a lower cost. The Chained CPI accounts for this substitution. Using the Chained CPI would result in an annual COLA that's, on average, 0.3% lower than if the CPI-W were used.
Here's the likeliest outcome for Social Security if Trump were reelected as president
Now that you've had a closer look at Donald Trump's Social Security proposals throughout the years, as well as the broader Republican Party plan to tackle Social Security's greater than $20 trillion deficit over the next years, let's address the question at hand: Would Donald Trump cut Social Security benefits if reelected?
The answer is almost certainly no, and there's a key reason why.
Tackling Social Security's shortcomings will involve more than a president signing an executive order. To amend Social Security requires 60 yes votes in the U.S. Senate. To find the last time either party had a supermajority in the Senate, you'd need to go back more than four decades. This means any legislation that amends Social Security is going to require bipartisan support in the upper chamber of Congress -- and cooperation hasn't been on the menu for either party for decades when it comes to Social Security.
While Republican lawmakers have been opposed to increasing payroll taxation on high earners, Senate Democrats disagree with any attempt to raise the full retirement age or lower annual COLAs by switching to the Chained CPI. With neither party willing to meet in the middle and find some form of common ground, all proposed Social Security legislation has stalled.
Unless a supermajority of Republican lawmakers were to take shape in the U.S. Senate, Trump would likely have no impact on the Social Security program or the benefits being paid were he reelected as president.
