Impact of the Trump Presidency on Social Security in 2025: Despite the lack of enthusiasm among voters for a rematch for the presidency, it appears that America will be reliving the 2020 election, during which Donald Trump and Joe Biden were relatively young at the ages of 73 and 77, respectively.
The winner will start his final and second terms in office, with the incoming president’s inauguration not set until January 2029. This aligns exactly with the Social Security funding shortfall expected to occur in five years.
Such a scenario might grant the victor of the November election an excessive amount of influence throughout the program’s development. The potential consequences of Donald Trump becoming the first president since Grover Cleveland to secure a non-consecutive second term on Social Security are as follows:
Beneficiaries set to receive Social Security payments on February 28th
He has vowed to maintain the program’s current form.
He blasted Trump’s erstwhile primary opponent Nikki Haley for supporting a higher retirement age for younger workers. On his campaign website, he promises to “protect” Social Security and not cut benefits or change the program if re-elected.
In the early 2000s, Trump advocated for a Social Security revamp and funding cuts, according to DisabilityGuidance.org co-founder Colin Ruggiero. “However, Trump has maintained in recent years that he will do everything possible to assure Social Security remains untouched and “not touched.”
Something will result from the consequences of doing nothing for a decade.
With her retirement age proposal unpopular, Haley withdrew from the contest on March 6.
“Although this may provide some who are nearing retirement age or in need of benefits with a sense of relief, inaction could be detrimental to the program in its entirety,” Ruggiero said.
This is because the SSA expects the program’s funding trusts to run out in 2034. Payroll taxes will fund only 80% of promised benefits in this scenario.
“Whether the retirement age is raised, payroll taxes are increased, or both, there are short-term solutions to this problem,” Ruggiero said.
Trump says an alternative solution is best. At a December town hall meeting, the former president offered to increase US oil output to cover the Social Security deficit.
Although he claims he will not increase payroll taxes, does he intend to reduce them?
Payroll taxes are how both employers and employees contribute a total of 6.2% to Social Security. The self-employed are personally liable for the entire 12.4% tax.
Increasing payroll taxes is one method to postpone the impending Social Security shortfall, as Ruggiero stated. Despite Trump’s adamant denials, an examination of his first term reveals that he might even consider implementing payroll tax cuts as an alternative to merely refusing to raise them.
A second Trump presidency “could bring about several dynamics to Social Security,” according to Dennis Shirshikov, a finance and economics professor at the City University of New York who specializes in social welfare programs. “By way of stimulating economic growth, President Trump, for instance, advocated for payroll tax cuts during his first term in office.”
Pros and cons of long-term versus short-term Social Security funding
Trump attempted to delay the collection of payroll taxes in a memo from 2020. Few businesses acknowledged the deferral, and the order had “little to no effect on economic growth,” according to The New York Times. However, if past proposals are any indication of future policies, re-election would likely mean permanent payroll tax cuts.
The head of expansion of real estate investment firm Awning, Shirshikov, warned that such actions may boost the economy temporarily but could erode Social Security financing without alternative funding. His economic policies, which favored deregulatory measures and tax cuts and could have raised the deficit, must be considered. A rising deficit could threaten Social Security’s long-term sustainability without a strategy.
Changes that were previously planned will be the only ones to affect the program in 2025.
No matter the outcome in November, the incoming president’s most radical Social Security reforms wouldn’t take effect until 2026.
When signing his August 2020 executive order to defer payroll taxes, Trump said, “In the event of my victory on November 3, I intend to absolve myself of these taxes and institute lasting reductions to the payroll tax.”
Social Security chief acting auditor Stephen Goss warned that sustained payroll tax cuts could deplete program coffers by mid-2023. Goss’s assessment anticipated the cutbacks would begin on January 1, 2021, when Trump’s second term would not begin for 19 days.
The new president will be inaugurated on January 20, 2025, but will not enact new tax legislation until the next tax year.
The Social Security Administration will set the 2025 cost-of-living adjustment (COLA) in the third quarter.
Starting with younger workers, raising the retirement age would require a phased adoption. The Center on Budget and Policy Priorities reports that the full retirement age for people born in 1960 or later was 67 in 2022 after 1983 legislation set it at 65.
Thus, while a Trump victory will not immediately affect Social Security during his inauguration year, it could affect it in the future.
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