Will Donald Trumps Policies: Social Security, a critical safety net for millions of Americans, is on the brink of a financial crisis, with the Congressional Budget Office (CBO) warning it could face insolvency as early as fiscal year 2034. If left unresolved, beneficiaries may experience a devastating 23% reduction in their payments, threatening the financial stability of retirees nationwide. Addressing this looming crisis will require tough decisions, such as cutting benefits by 24% or increasing revenue by 35% over the next 75 years.
Mounting Challenges
Both outgoing Vice President Kamala Harris and incoming President Donald Trump have vowed to protect Social Security. However, neither has outlined a concrete solution to this escalating issue. The stakes are enormous—retired couples could lose an average of $16,500 annually if the system becomes insolvent.
President Trump’s proposed policies, including eliminating taxes on Social Security benefits and tips, imposing tariffs, and expanding deportations, may worsen the program’s financial woes by increasing its cash deficits.
Exploring Oil and Gas Revenue
One of Trump’s ideas involves leveraging revenue from oil and gas leases to bridge the Social Security funding gap. While this approach circumvents the politically sensitive options of raising payroll taxes or reducing benefits, its feasibility has been widely questioned.
- Potential Revenue: Opening federal and private lands for oil and gas extraction could yield an estimated $5 trillion over time.
- Funding Gap: The Social Security shortfall over the next 75 years stands at $22.6 trillion.
- Current Revenue: In FY 2022, oil and gas leases brought in only $20 billion—far short of what is needed.
To close the funding gap using this method, revenue from leases would need to increase by 27 times—a target deemed highly unrealistic by most experts.
Other Possible Solutions
There are alternative strategies to ensure Social Security’s solvency, many of which involve changes to tax policies or benefit structures.
- Adjusting the Earnings Cap: Currently, only the first $176,100 of annual earnings is subject to Social Security taxes. Raising or eliminating this cap could significantly boost revenue, primarily from high-income earners, while sparing low- and middle-income workers from additional taxes.
- Increasing Payroll Tax Rates: The payroll tax rate, presently set at 12.4% (split between employers and employees), could be raised to 16.7% as per the CBO’s recommendation. While this measure would fully close the funding gap, it would also impose higher taxes on all workers. For example, someone earning $60,000 annually would see an increase of $1,290 in taxes each year.
- Gradual Retirement Age Increase: Aligning the retirement age with longer life expectancies could reduce the number of years retirees collect benefits, easing financial strain on the program.
Means-Testing for Benefits
Another option is means-testing, which would reduce or eliminate Social Security benefits for higher-income retirees. This approach could conserve funds for those most dependent on the program. However, critics argue it could transform Social Security into a welfare program, eroding its broad public support.
The Need for Bipartisan Solutions
Addressing Social Security’s funding challenges will require courageous, bipartisan action. Lawmakers must balance difficult trade-offs between raising revenues, cutting benefits, and implementing systemic reforms to preserve the program’s long-term viability.
Postponing action will only exacerbate the problem, increasing the financial burden and narrowing available solutions. Policymakers must act promptly to secure the future of Social Security and protect the millions of Americans who depend on it for their retirement security.