Donald Trump on Social Security: 9 Things You Should Know
In approximately 17 months, Americans will go to the polls to decide who should lead our great country for the next four years. On one side of the aisle are nearly two dozen declared, or expected-to-declare, candidates for the Democratic ticket. On the other is incumbent Donald Trump, who announced last week that he’d be seeking his second term as president under the Republican ticket in 2020.
While there are no shortage of issues that concern the American public heading into this election, perhaps none impacts more folks, especially our nation’s elderly, than the long-term well-being of Social Security.
Everything you need to know about Trump’s views on Social Security
According to the newest report from the Social Security Board of Trustees, the $2.9 trillion in asset reserves that have been built up since the program’s inception more than eight decades ago are expected to be completely exhausted by the year 2035Opens a New Window.. This expected net cash flow, which is forecast to begin in 2020 and grow in size with each subsequent year, is the result of a multitude of ongoing demographic changes, as well as inaction on the part of lawmakers in Washington, D.C. Should Congress fail to act, then-current and future retirees could see their monthly retired worker checks cut by as much as 23%.
Because of Social Security’s known importance — 62% of current retireesOpens a New Window. lean on their monthly benefit for at least half of their income — it pays for the American public to understand how each candidate, including the sitting president, views the program and potential solutions. With that being said, here are nine things you should know about Donald Trump’s views on America’s greatest social program.
1. Trump believes in “honoring the deal”
For starters, President Trump doesn’t buy into the thesis that Social Security is an entitlement to Americans — and he’s right. Although most folks will qualify for a retired-worker benefit or disability insurance protection as a result of their work and earnings history, not all Americans will do so, meaning it’s not an entitlementOpens a New Window..
However, Trump does believe that lawmakers need to hold up their end of the bargain and come through for those workers who’ve paid into the system for decades to support older generations of Americans. Said Trump in his book Time to Get Tough (2011):
2. His views have changed dramatically over time
As is the case with current Democratic ticket front-runner Joe BidenOpens a New Window., Trump’s views on Social Security have evolved considerably over the years. As you read about his existing views on America’s most important social program, keep in mind that he’s offered solutions to the program that have included raising additional revenue through taxation, or reducing benefits through long-term expenditure cuts. All of these previous ideas will be touched on in the points to come.
3. He believes that Social Security policy changes will cost votes
One of the more interesting aspects of Trump’s views on Social Security is that he’s been willing to state a painful truth about the program to the public. Namely, he realizes that no matter what solution is offered, be it from the Republican Party, Democratic Party, or a middle-ground fix, some group of folks is going to be worse offOpens a New Window. than they were before. That means fixing Social Security could cost members of the majority party votes and elected seats in upcoming elections.
Here’s what the president had to say about resolving Social Security’s issues in 2013 at the Conservative Political Action Conference:
4. Trump currently favors indirect solutions to resolve the program’s cash shortfall
Keeping the previous point in mind, it shouldn’t surprise anyone to learn that Trump’s existing position on Social Security is that it shouldn’t be directly amended. Rather, the president favors bolstering the program by improving growth for the U.S. economy.
In December 2017, Trump signed his flagship legislation to this point, the Tax Cuts and Jobs ActOpens a New Window., into law. This major overhaul of the U.S. tax code provided a modest tax cut for most workers, while reducing peak marginal corporate income tax rates to 21% from 35%.
How does this benefit Social Security, you ask? The 12.4% payroll tax on earned income is the program’s workhorse. It brought in $885 billion of the just over $1 trillion collected in 2018. If more people are working, and wages are rising, the assumption is that more payroll tax is being collected. That, in turn, could improve Social Security’s outlook, which appears to have been what occurred in 2018Opens a New Window..
Keep in mind, though, that no amount of fiscal policy can prevent a slowdown in growth or a recession, meaning the indirect approach to fixing Social Security will fail over the long run.
5. He vehemently opposes the idea of investing Trust reserves in the stock market
If there were a list of ways to improve Social Security’s financial well-being, at the absolute very bottom of that list for “The Donald” would be the idea of investing the program’s asset reserves into the stock marketOpens a New Window..
In his book The America We Deserve, which was released in 2000, during the beginnings of the dot-com bubble, Trump had this to say about investing the program’s excess cash into stocks:
6. However, he once supported the idea of a partial privatization of Social Security
Despite offering no support for investing the program’s asset reserves into the stock market, Trump at one time did believe it would be a good idea to partially privatize Social Security, thereby giving workers some degree of control over how a portion of their benefits are invested. Privatization involves setting aside a portion of income derived from the payroll tax into a separate account that a worker would control from an investment perspective.
More specifically, in The America We Deserve, Trump suggests that workers should have their choice of stocks, bonds, diversified mutual funds, and bond funds for their personal accounts, with federal guidelines ensuring that personal retirement accounts remain diversified. He proclaimed that this added investment would “swell national savings, pumping hundreds of billions of dollars into jobs and the economy.”
Although privatization was a popular idea in the mid-2000s with former President George W. Bush, it failed to garner much support in Congress, even among GOP lawmakers. The biggest knock against privatizationOpens a New Window. is that it does nothing to resolve Social Security’s cash shortfall, and could actually make things worse by taking away funds from existing retirees by redirecting a portion of payroll tax revenue to the personal accounts of nonretirees.
7. Trump once proposed taxing the rich as a roundabout way of shoring up the program
Yes, you are reading that correctlyOpens a New Window..
Despite using the Tax Cuts and Jobs Act as a means to improve Social Security’s well-being today, in 2000, in The America We Deserve, Trump proposed the idea of imposing a one-time 14.25% tax on individuals and trusts with a net worth of over $10 million. According to Trump’s calculations, this would have raised $5.7 trillion, allowing the U.S. to pay off its then-entire national debt, saving the government $200 billion a year on interest payments.
With $200 billion in annual savings in hand, Trump proposed $1 trillion in tax cuts for middle-class working families over 10 years ($100 billion a year), and taking the other $100 billion and adding it to Social Security’s asset reserves. By his assessment, Social Security would have $3 trillion in reserves by 2030, and be solvent for the next century.
8. He’s tossed around the idea of means-testing to rein in costs
And, as you might have expected, Trump has also proposed Social Security cuts as a means of strengthening the program over the long run.
While on the campaign trail prior to winning the presidency in 2016, Trump loosely tossed around the idea of instituting means-testing for benefitsOpens a New Window.. Means-testing involves partially reducing benefits once an individual or couple crosses above a predefined income threshold, and perhaps even eliminating those benefits entirely once a second income threshold is reached. The idea here being that the wealthy are unlikely to be reliant on Social Security income to make ends meet during retirement, so these payouts should be saved for those who need the money.
If there is an expenditure cut to Social Security that could find bipartisan support, means-testing, which would impact only well-to-do individuals and couples, might be it.
9. Aligned with core GOP ideology, Trump has proposed very modest cuts to SSDI
Last, but not least, Trump has partially broken his campaign promiseOpens a New Window. of not touching Social Security by proposing cuts to the Social Security Disability Insurance (SSDI) program in his fiscal 2020 budget. Contained in the president’s budget proposal was a $26 billion reduction to Social Security over the next 10 years, primarily from SSDI.
Then again, this wasn’t the first time Trump proposed budgetary cuts to Social Security. In the president’s 2018 budget, he proposed $72 billion in cuts to Social Security, most of which were again directed at SSDI.
Although presidential budget proposals are more of a talking point than final-word legislation, it nevertheless demonstrates that Trump’s current thinking likely aligns with the core Republican ideology of fixing Social Security’s long-term problems by reducing expenditures over time.
And that, folks, is everything you need to know about Donald Trump’s views on Social Security.
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