Former President Trump is blasting GOP primary rival Nikki Haley for wanting to restore Social Security solvency by increasing the age when today’s young workers receive full retirement benefits. In a new ad titled “Threat from Within,” Trump says he’ll “never let that happen.”
On his campaign website, Trump insists he “will always protect…Social Security….” What are the implications of these strong, but exceedingly vague, promises from the runaway leader in the GOP presidential race?
The Cost Of Doing Nothing
As you think about Trump’s words, remember the status quo. Social Security’s trustees currently predict the program’s retirement trust fund will be insolvent beginning in 2033. The actual date will depend on demographics and the state of the economy. But the bottom line has been clear for many years: Barring congressional action, Social Security will be unable to pay retirees their full promised benefits within a decade.
If Congress does not enact a massive tax increase or borrow trillions of dollars more, benefits would have to be reduced across-the-board by about 23 percent. Think of it this way: Social Security’s average monthly benefit this year is $1,907. A 23 percent reduction would cut that benefit by $438 to just $1,469.
In short, doing nothing will not, as Trump implies, “protect…Social Security.” It would doom beneficiaries, especially low-income seniors who rely on the program to pay all or most of their daily expenses, to deep reductions in their monthly incomes and quality of life.
Trump’s last remaining primary opponent, former South Carolina Governor Haley, favors ideas such as raising the retirement age and limiting benefits for wealthy retirees. And while she deserves credit for confronting the issue, Haley never says exactly whose retirement age would be raised or by how much. She sometimes talks about “people in their 20s” but often is more vague.
Then there is the matter of timing. Social Security has both a long-term and a short-term problem. Raising the retirement age for people who won’t collect benefits for another 40 years will help in the long term. But it will do nothing to fill Social Security’s coffers in 10 years, when it will start to need an infusion of money to pay benefits to those already retired.
But at least Haley is talking about the need to revise the program in some way. That step is necessary, if not sufficient, to control the federal debt, another of Haley’s campaign promises.
Biden: A Plan But No Follow Up
President Biden, in his 2020 campaign, did include a modest package of Social Security reforms that would have extended the program’s solvency for at least a few years. But, as president, he never included these ideas in a budget. And in last year’s state of the union address, he demanded that all lawmakers promise “we will not cut Social Security,” effectively killing any chance for bipartisan reforms to the program.
Trump leans into bold promises to protect even future beneficiaries from reductions. But how, if benefit cuts are inevitable without reforms? Let’s say it again: If nothing is done, current and future retirees will receive smaller checks than they have been promised. And as my Urban Institute colleague Gene Steuerle and Damir Cosic show, failing to increase the retirement age hurts low-income workers the most.
Trump never has shown much interest in the federal deficit. His website is silent on the subject. Indeed, his MO as president was to liberally dispense tax cuts and new spending to potential voters. The Committee for a Responsible Federal Budget calculates that in his four years in the oval office, Trump signed into law $8.4 trillion in tax reductions and spending hikes.
Social Security Reality
There is little reason to believe that Trump would change his borrow-and-spend ways in a second term, though with higher interest rates the costs of profligacy would be substantially higher than in his first. But Social Security needs to be fixed for the sake of its beneficiaries, not just to reduce federal deficits.
There are dozens of ways to restore the program’s solvency by raising payroll taxes, redesigning benefits, or some combination of both.
Trump’s anti-Haley ad is especially interesting because it ran on MSNBC, a cable outlet that attracts independents and Democrats, many of whom oppose raising the retirement age. New Hampshire allows independents to vote in the GOP primary, where Haley is polling relatively well.
The ad may hurt Haley some. But however Trump’s bold promises play politically, they fly in the face of Social Security’s reality.