By Sean Williams
As you may have heard, (click here) Social Security, the nation's most storied social program, is in a bit of a bind. Despite the fact that Social Security can't go bankrupt (which is a testament to how the program generates income), the 2019 report from the Social Security Board of Trustees estimates that the program is facing a $13.9 trillion cash shortfall between 2035 and 2093. If nothing is done to correct this widening funding gap, then-current retirees and future generations of retired workers can expect a reduction to their payouts of up to 23%.
The Trustees report, which is published annually, has been warning Congress since 1985 that long-term (75-year) revenue generation would be insufficient to cover costs, yet lawmakers haven't made any significant strides to overhaul the program. But according to recent commentary from President Trump, this could change if he's elected to a second term in the Oval Office....
...Should Trump win a second term, there are three factors to suggest he would look to reduce Social Security's expenditures (i.e., reduce lifetime benefits paid by the program).
First, there's the core proposal of the Republican Party to fix Social Security, which Trump would be likely to support. Whereas Democrats favor raising additional revenue by increasing taxation on well-to-do workers, members of the GOP believe that gradually increasing the full retirement age to as high as age 70 would be the best move. The full retirement age is the age at which you become eligible for 100% of your monthly payout, as determined by your birth year.
If the full retirement age were to increase from its peak of age 67 in 2022 to say 70, it would require future generations of retirees to either wait longer to receive their full payout or to accept a steeper monthly reduction by claiming early. No matter their choice, the program's long-term outlays would be reduced, and future generations of workers would receive lower lifetime benefits.
Second, Trump's presidential budget proposals have previously called for cuts to the Social Security program. In March, the president's federal budget proposal called for a $26 billion cut (in aggregate) to Social Security between 2020 and 2029. A good portion of this reduction was to come from the Social Security Disability program, with a proposed adjustment that would reduce retroactive pay to six months from the current 12 months. If adopted, this would reduce program outlays by an estimated $10 billion by 2029.
Third and finally, Mick Mulvaney, the director of the Office of Management and Budget, has not been shy about his plans to coerce the president to make tough decisions. Mulvaney is a fiscal hard-liner, and he strongly believes that entitlement reform, perhaps including cuts, should be on the table. Mulvaney is one of the president's top advisors, and his influence could be paramount if Trump wins reelection....
Toward the end of the interview (17:53 mark in the video, for those curious), Kernen got in one last question about "entitlements," which includes such programs as Social Security and Medicare.
Kernen asked the president, "One last question: Entitlements ever be on your plate?"
To which Trump replied, "At some point they will be."
These six words have completely shaken Social Security beneficiaries to the core, especially considering that Trump has been adamant about avoiding direct solutions since his presidential campaign began in 2015. The reason? Existing and future beneficiaries fear benefit reductions.
