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(ThyBlackMan.com) Donald Trump’s tax and spending plans would add enormous amounts to the national debt, with some estimates as high as $15 trillion over a decade. But some of his tax cuts stand apart in threatening one of America’s most revered programs, Social Security. They would essentially bankrupt it by 2031.
This is not some far-off worry. We’re talking like six years from now. And the source of this scary news is the reliable and nonpartisan Committee for a Responsible Federal Budget.
How would Trump pull the legs out from under it? Start with his vow to stop taxing Social Security benefits. That sounds nice, but these taxes help fund the program. Add to that his call to exempt taxes for overtime pay and tips, further eating into Social Security payroll tax collections.
Seemingly unrelated stances would also speed up cuts in scheduled benefits. Trump’s tariffs would unleash inflation, thus raising the program’s cost-of-living adjustment. And his immigration plans would remove workers who pay into the system.
What a lot of people don’t understand about Social Security is that there is no magical pile of government money to back up its promises. Social Security is largely self-funding by law. (Medicare is another story.) Social Security must pay for itself. Unlike the Treasury, it’s not allowed to borrow.
This is how it works: Social Security payroll tax collections go into a trust fund. Any surplus funds left after benefits are disbursed get invested in special U.S. Treasury securities. These are loans to the federal government. Like other bonds, they collect interest and have to be paid back.
Foes of Social Security have long complained that general revenues are used to make good on these special Treasuries. True, but let us repeat. These securities represent loans to the government, not some new kind of spending. The Treasury must repay this debt just as it must back Treasury bonds held by China, Japan and investors all over the world. (Some on the right make the ludicrous tough-luck claim that the dough is already gone.)
The point here is that monkeying around with the flow of money going into the Social Security program is a way of deep-sixing public support for it. As president, Trump applied the same sneaky tactics in his attempt to kill the Affordable Care Act. Recall how he went repeatedly after its funding.
Shoring up Social Security will be necessary even without Trump’s sabotage. The program is still forecast to be unable to meet promised payouts in 2035. But this is fixable with some overdue changes. One obvious step is raising the income level at which payroll taxes are charged. The maximum is now $168,600.
The Heritage Foundation, author of Project 2025, has an alternative plan: reduce benefits. It calls for raising the age, already hiked to 67, for collecting full benefits. So much for Americans worn out from years of hard physical labor.
Heritage also proposes lowering benefits to higher-income retirees. Two problems here. One is that, as noted, benefits to wealthier retirees are already taxed. The other is that reducing the program’s value to better-off participants turns what was conceived as an earned benefit into something resembling welfare.
And there’s Heritage’s perennial plan to privatize the program, that is, expose beneficiaries to the whims of the stock market and other investments. Of course, no one is stopping future retirees from putting their money in stocks, crypto or trading cards. Social Security is best kept dull and simple.
Without changes in how Social Security is currently funded, benefits would be cut 23% by 2035. With Trump’s tax plans, benefits would be slashed 33%. No two ways about it. Trump is threatening Social Security’s stability.
Written by Froma Harrop
Official website; https://twitter.com/FromaHarrop
