Former President Donald Trump’s economic proposals, including promises to eliminate taxes on Social Security benefits, tips, and overtime, could significantly weaken Social Security’s financial stability, according to a recent report by the Committee for a Responsible Federal Budget.
The nonpartisan group concluded that Trump’s plans would add trillions to Social Security’s shortfall, further accelerating the depletion of its trust funds.
Key Findings
Trump’s proposed tax cuts, while appealing to many working Americans, would result in a massive $2.3 trillion increase in Social Security’s cash deficit over the next decade.
If enacted, the Social Security trust funds would run out of money by fiscal year 2031—three years earlier than currently projected. Here’s how each of his proposed changes would contribute to the increased deficit:
- Elimination of Social Security benefit taxes: This would add $950 billion to the shortfall by 2035.
- Ending taxes on overtime and tips: This would increase the deficit by another $900 billion.
- Tariffs and immigration restrictions: These would further exacerbate the situation, contributing an additional $400 billion to the deficit.
While Trump has made these promises part of his broader economic vision, the report makes it clear that such plans would result in deeper cuts to Social Security benefits.
Under current law, benefits are projected to decrease by 23% by 2035 if no changes are made. However, with Trump’s proposed tax cuts, benefits would have to be slashed by 33%—affecting lower-income earners the most, as they already pay no taxes on benefits.
Comparison with Vice President Harris
Vice President Kamala Harris has also voiced support for eliminating taxes on tips, and she has pledged not to raise taxes for those earning less than $400,000 annually.
While the Committee for a Responsible Federal Budget didn’t analyze her plans in this report, Harris has promised to protect Social Security and Medicare, and she has co-sponsored legislation aimed at expanding benefits.
Her economic platform includes making the wealthiest Americans pay their “fair share” in taxes to bolster these essential programs.
Economic Implications
This analysis is part of a broader concern among economists about Trump’s fiscal policies. A recent Wall Street Journal survey found that 68% of economists believe inflation would be higher under Trump’s economic plans compared to Harris’.
Another poll by the Financial Times and the University of Michigan showed that 42% of respondents trust Harris to handle the economy better than Trump—a slight edge over the former president.
While Trump has positioned himself as a defender of Social Security, his past comments about cutting waste within entitlement programs have raised eyebrows.
In March, Trump suggested there could be room for cuts within Social Security and Medicare, though his campaign later clarified that he was referring to reducing waste, not benefits.
What’s Next for Social Security?
With Social Security’s future already facing challenges, Trump’s tax plans would deepen the program’s financial crisis.
As the 2024 election approaches, voters will have to weigh the benefits of tax cuts against the potential impact on a program that millions of Americans rely on for financial security in retirement. Both Trump and Harris have pledged to protect Social Security, but their approaches to achieving that goal are strikingly different.
The future of Social Security is undoubtedly a key issue in this election cycle, and Americans will need to closely examine the long-term consequences of each candidate’s plans.
