Although polling shows that few voters long for a presidential rematch, America seems destined for an electoral repeat of 2020, when Donald Trump and Joe Biden were a comparatively youthful 73 and 77.
Whoever wins will serve his second and final term, and the following president won’t be inaugurated until January 2029, just five years before Social Security is set to collide with a funding shortfall that has been decades in the making.
That could give the winner of November’s election an outsized role in the program’s future. Here’s what could be in store for Social Security if Donald Trump becomes the first president since Grover Cleveland to win a non-consecutive second term.
He Has Vowed To Leave the Program Unchanged
Trump blasted his last primary rival, Nikki Haley, for indicating her willingness to raise the retirement age for today’s younger workers. On his campaign website, he promises to “protect” Social Security and insists he won’t cut benefits or otherwise change the program if reelected.
“In the early 2000s, Trump was on record stating that the Social Security system needs an overhaul and to cut back on funding,” said Colin Ruggiero, co-founder of DisabilityGuidance.org, which provides information and resources related to the SSDI and SSI Social Security programs. “However, in recent years, Trump has said that he will do everything in his power to ‘not touch’ Social Security and leave it the way it is.”
In a Decade, the Consequences of Doing Nothing Will Lead to Something
Haley’s proposal to raise the retirement age is unpopular, but she withdrew from the race on March 6.
“While this may be a sigh of relief for many who need benefits or are close to retirement age, doing nothing could also be damaging to the program as a whole,” Ruggiero said.
That’s because the Social Security Administration (SSA) expects the trusts that fund the program to run out in 2034. When that happens, payroll taxes alone will support benefits, providing enough to fund only 80% of promised payouts.
“Short-term solutions to resolve this issue are either to increase the retirement age, increase payroll taxes or both,” Ruggiero said.
Trump says the fix lies in an alternative solution. During a town hall in December, the former president vowed to increase America’s oil production to come up with the money to plug the looming Social Security shortfall.
He Says He Won’t Raise Payroll Taxes, but Will He Cut Them?
Payroll taxes fund Social Security, with employers and employees each contributing 6.2%. The self-employed pay the full 12.4% tax themselves.
As Ruggiero said, raising payroll taxes is one way to delay the looming Social Security shortfall. Trump insists that won’t happen on his watch, but a look back at his first term indicates that he might go even further by lowering payroll taxes instead of just refusing to raise them.
“A second Trump presidency could introduce several dynamics to Social Security, primarily influenced by his previous administration’s approach to fiscal policies and social welfare programs,” said Dennis Shirshikov, who covers Social Security as an instructor of finance and economics at the City University of New York. “For example, during his first term, President Trump proposed payroll tax cuts as a means to stimulate economic growth.”
Short-Term Economic Stimulation vs. Long-Term Social Security Funding
In 2020, Trump signed an executive memorandum to defer the collection of payroll taxes. The New York Times reported that few companies acknowledged the deferral and that the order had “little to no effect on economic growth.” But if past proposals indicate future policies, permanent payroll tax cuts are on the table if Trump wins a second term.
“While such measures can provide short-term economic boosts, they could also lead to decreased funding for Social Security unless alternative funding mechanisms are established,” said Shirshikov, who is also the head of growth at the real estate investing firm Awning. “It’s essential to consider the broader context of his economic policies, which favored deregulation and tax cuts, potentially increasing the deficit. An increased deficit without a clear plan to support Social Security could put additional strain on the program’s long-term viability.”
Only Previously Scheduled Changes Will Impact the Program in 2025
No matter who wins in November, even the most radical changes the next president might make to Social Security wouldn’t impact the program until at least 2026.
For example, when Trump signed his August 2020 executive order to defer payroll taxes, CNBC reported that he said, “If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax.”
The report said Social Security Chief Actuary Stephen Goss warned that permanent payroll tax cuts could deplete the program’s funding by mid-2023. The problem with that is Goss’ calculation presumed the cuts would take effect on Jan. 1, 2021 — but Trump’s second term wouldn’t have started until 19 days later.
The next president will be inaugurated on Jan. 20, 2025, and even if he signs new tax legislation soon after, it would not take effect until the following tax year.
Similarly, the 2025 Social Security cost-of-living adjustment (COLA) will be determined in this year’s third quarter.
Raising the retirement age would be an even slower crawl that would phase in the change starting with today’s young workers. According to the Center on Budget and Policy Priorities, the last major increase came from a 1983 overhaul when the full retirement age was 65, and it didn’t reach 67 for those born in 1960 or later until 2022.
So, while a Trump victory won’t affect the program the year he’s inaugurated, his inauguration — or lack thereof — could determine the future of Social Security in the years that follow.
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