Report: Trump's plans could force Social Security benefit cuts in 6 years

A new report by a nonpartisan budget organization in Washington concluded Monday that while neither Democratic Vice President Kamala Harris' or Republican former President Donald Trump's plans would address Social Security's looming insolvency, Trump's would "dramatically worsen" the social safety net program's finances.

The Committee for a Responsible Federal Budget issued an analysis reported in the Washington Post that indicated that Trump's sweeping campaign promises of tax cuts on tips, overtime and Social Security benefits, along with higher prices caused by tariffs and mass deportation efforts he has said he would order would put Social Security in a position of becoming insolvent in as short a time as six years and requiring benefits to be cut by a third if enacted.

Harris' plans, on the other hand, which also include cutting taxes on tips, increasing border security and extending some parts of the 2017 tax cuts would "likely expand Social Security’s deficits," the report said, but proposed minimum wage increases and other measures could boost payroll tax collections. "On net, these changes are likely to modestly increase ten-year deficits and advance insolvency by several weeks or months," the report said in a footnote.

The group, which was founded more than 40 years ago to address and research fiscal policy, has a long history of bipartisan involvement and its current co-chairs include former Indiana Gov. Mitch Daniels, a Republican, and former Defense Secretary Leon Panetta, a Democrat.

The analysis comes near the end of a fractious campaign between Harris and Trump, with Michigan a key battleground state where polling shows them effectively tied. Both candidates have promised to protect Social Security's finances but neither has put forward a specific plan for staving off the social safety net's insolvency.

More: Silent mic, 'Black girl magic', crying baby: 1 day in Michigan as Trump, Harris woo it

The Congressional Budget Office (CBO), in testimony provided to Congress, has estimated that under current payroll tax revenues and expected benefit payments, the Old Age and Survivors Insurance trust fund, which pays out to retirees, would likely see benefits cut by 25% beginning in 2034 because of a shortfall and the Disability Insurance trust fund would see benefits cut by 13% in 2065. If the two were combined — which is not allowed under current law but could be to shore up a shortfall — estimated revenues will equal 77% of scheduled payments in 2035, requiring benefits to be reduced by 23% absent an increase in payroll taxes, the CBO said.

The Committee for a Responsible Federal Budget report found that while Harris' proposals would have a negligible effect on that prediction, Trump's would exacerbate it, cutting the time of predicted insolvency for a combined program from fiscal year 2034 to FY 2031 or 2032.

"Upon insolvency, the law calls for limiting Social Security spending to its revenue stream, which we've previously estimated would mean a $16,500 cut in annual benefits for a typical dual-income couple retiring in 2033. CBO estimates that benefits would have to be cut by 23% by 2035 under current law," the analysis said. "Under President Trump's agenda, we estimate that benefit cut would total 33% by 2035, with a range of 29% to 36% depending on the scenario."

The analysis relied on the group's other estimates of the effects of both Harris' and Trump's economic proposals and what they would mean if fully implemented. Those estimates, which included a range of potential outcomes, concluded that Harris' plan could be anywhere from deficit neutral over a decade to worsening it by up to $8.1 trillion, with a central estimate of costing $3.5 trillion.

Trump's plans, the group said, would cost at least $1.45 trillion on the low end and up to $15.15 trillion over a decade, with a central estimate of $7.5 trillion.

In the current analysis, the Committee for a Responsible Federal Budget said ending taxation of Social Security benefits, as Trump has proposed, will remove as much as $950 billion in revenue from the program over a decade, and ending taxes on tips and overtime wages could deny it more than $1 trillion. It also concluded that tariffs promoted by Trump as a way to cut imports and spur manufacturing in the U.S. but which most economists say would increase costs on Americans, as well as plans for a mass deportation of immigrants in the country illegally, could cost the program as much as $750 billion over 10 years.

Workers in the country illegally cannot collect Social Security benefits but still pay billions in payroll taxes, including those that go into bolstering Social Security.

Social Security, while doling out benefits to retirees, their families and disabled workers, is paid for through a trust fund supported largely by current payroll tax collection, not merely those that workers contributed while they were employed. Under the law, if revenues were to fall short of benefits, benefits would have to be reduced unless additional revenue, through taxes or other means, were added to the trust funds.

There were some 2.3 million Social Security beneficiaries living in Michigan as of December 2023.

Responding to the report, Trump Campaign National Press Secretary Karoline Leavitt maintained Trump protected Social Security during his previous term. "By unleashing American energy, slashing job-killing regulations and adopting pro-growth America First tax and trade policies, President Trump will quickly rebuild the greatest economy in history and put Social Security on a stronger footing for generations to come," she said.

Trump, however, also saw historic job losses due to the COVID-19 shutdowns at the end of that term, while Democratic President Joe Biden's tenure has seen some 16 million new jobs created, though there was a period of particularly high inflation for much of that time that offset wage gains. As for the Social Security trust funds, CBO estimated they would be exhausted in 2030 in 2017, Trump's first year in office; that moved only a year out, to 2031, in his last year in office in 2020.

“Donald Trump’s agenda poses an imminent threat to Social Security, and seniors could have their benefits cut by a third," said Joseph Costello, a spokesman for the Harris campaign. "This is yet another reason that Americans simply cannot afford the risk of another Trump term."

Contact Todd Spangler: [email protected]. Follow him on Twitter@tsspangler.

This story has been updated to add new information.

This article originally appeared on Detroit Free Press: Report: Trump's plans could force Social Security cuts in 6 years