Will Trump Keep His Promise Not to Cut Social Security?

[keypoints

Republican lawmakers have long been accused of wanting to cut programs like Social Security. So it may have come as a relief to some voters when President Trump made it clear during his campaign that he was not looking to cut so much as a dime from Social Security.

In fact, during Trump’s first term, cuts to the program were not made. And there’s reason to believe that Trump will do his best to avoid cutting Social Security this time around.

But while Trump may not have the intention of cutting Social Security, one plan of his could have that unwanted consequence.

A good idea gone bad

Some seniors don’t have to pay taxes on their Social Security benefits. But for seniors with outside income, taxes on benefits often apply — and at almost ridiculously low-income thresholds.

Worse yet, the thresholds where taxes apply to Social Security have not budged in decades while benefits have risen over time due to the program’s automatic annual cost-of-living adjustments. So now, a growing number of retirees are being forced to pay taxes on their benefits, which is a huge burden.

Trump wants to lift that burden by eliminating taxes on Social Security income. He feels that it’s enough that workers pay into the program during their years in the labor force. He thinks that once they’re eligible for their retirement benefits, they shouldn’t have to pay taxes on Social Security any longer.

Getting rid of taxes on Social Security would no doubt alleviate some seniors’ financial pressure. But eliminating those taxes could also push Social Security closer to insolvency and lead to broad benefit cuts.

The problem with eliminating taxes on benefits

Although Social Security gets most of its funding from payroll taxes, it also gets some funding from the taxes are that imposed on benefits. If that revenue source goes away, it could push Social Security closer to the point where benefit cuts become inevitable.

As it is, Social Security faces the possibility of having to cut benefits in about a decade from now. That’s when the program’s combined trust funds are expected to run dry according to the most recent estimates by the Social Security Trustees.

Eliminating taxes on Social Security income could push up that timeline and make benefit cuts more likely. So while President Trump may not be actively trying to cut Social Security, his well-intentioned plan to offer seniors relief could end up leading to benefit cuts.

That’s why his plan needs a closer look — and more sound numbers behind it. If taxes on Social Security benefits go away, the program will need replacement revenue. So unless Trump is able to find it, getting rid of taxes on benefits just isn’t a viable idea.

That said, one thing Trump could seek to do is change the thresholds for taxes on Social Security. It may not be unreasonable to expect wealthier retirees to keep paying those taxes. It’s relatively low-income seniors who desperately need to shed that burden.