Social Security remains one of the most crucial federal programs, impacting millions of Americans. Yet, its financial future is uncertain, with the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds projected to run out of money by 2035. President-elect Donald Trump is poised to take office in 2025, raising questions about whether he will address this pressing issue.
Looming Crisis
Let’s clarify a common misconception: Social Security isn’t going bankrupt. Even if the trust funds are depleted, the program will still be able to pay reduced benefits thanks to ongoing Federal Insurance Contributions Act (FICA) taxes. However, the depletion of trust funds will result in a significant drop in benefit payments:
- 2035: Around 83% of scheduled benefits will be paid.
- 2098: Payments could decline to 73% of scheduled benefits.
The core issue is that FICA taxes—6.2% from employees and employers—don’t generate enough revenue to fully cover benefits. This gap creates a long-term funding shortfall that needs urgent attention.
Trump’s Approach
During a 2023 town hall, Trump stated, “You don’t have to touch Social Security,” suggesting that tapping into U.S. oil and gas reserves could resolve its fiscal challenges. However, Trump’s campaign provided no specific details on how this would work.
The GOP platform for 2024 promised to restore economic stability to ensure the program’s sustainability, but again, no concrete strategies were outlined.
Gas Revenues
The Committee for a Responsible Federal Budget analyzed Trump’s idea to use oil and gas leasing revenues for Social Security. Their findings were clear:
- Allocating all current oil and gas revenues to Social Security would cover less than 4% of the funding shortfall.
- Opening all federal lands for drilling would still be insufficient to fix the program’s long-term challenges.
While increasing federal taxes on oil and gas production could generate additional revenue, it would likely lead to higher consumer costs, undermining Trump’s pledge to reduce inflation.
Impacts
Some of Trump’s other policies could inadvertently worsen Social Security’s funding woes:
- Eliminating Federal Taxes on Social Security Benefits: This would reduce the revenue flowing into the program, potentially accelerating the depletion of the trust funds by three years.
- Tariffs on Imports: Higher tariffs could spur inflation, leading to larger cost-of-living adjustments (COLAs) and increasing Social Security’s cash outflows.
- Deporting Unauthorized Immigrants: Removing millions of undocumented workers would reduce the amount of payroll taxes contributed to Social Security.
A Tough Road Ahead
Fixing Social Security’s biggest problem requires difficult choices. Options could include raising the retirement age, increasing payroll taxes, or modifying benefit formulas—all politically sensitive moves.
Trump’s stance of avoiding direct changes to Social Security aligns with public sentiment but does little to address the underlying financial challenges. Without clear action, the program will remain on track for significant benefit reductions in the coming decades.
Change
History shows that surprising political moves are possible. Just as President Nixon’s groundbreaking visit to China redefined U.S.-China relations, a future leader could take bold steps to reform Social Security. For now, however, it seems unlikely that Trump will prioritize fixing the program’s financial issues in 2025.
FAQs
Is Social Security going bankrupt?
No, but trust funds could be depleted by 2035.
What will happen if the trust funds run out?
Social Security can still pay 83% of benefits initially.
How did Trump propose to fix Social Security?
He suggested using U.S. oil and gas revenues.
Would oil revenues fully fund Social Security?
No, they would cover less than 4% of the shortfall.
What could worsen Social Security’s problems?
Higher tariffs and reduced payroll taxes from deportations.