Donald Trump is poised to make a historic return to the presidency in January 2025. If he succeeds, he will join Grover Cleveland as the only U.S. presidents to serve non-consecutive terms. Unlike in Cleveland’s era, when Social Security didn’t exist, today around 73 million Americans depend on the program. So, what potential changes could Trump bring to Social Security in his second term?
Key Proposals from Trump on Social Security Benefits
Although Trump didn’t campaign on comprehensive Social Security reform, he did offer some ideas during his first term and in his recent bid for re-election. In a Fox News town hall, Trump emphasized that “you don’t have to touch Social Security,” suggesting that his priority might be to leave it largely unchanged. However, he has floated a few proposals, which could have significant implications for the program.
- Utilizing Oil and Gas Reserves to Fund Social Security Trump proposed using the nation’s oil and gas reserves to help fund Social Security. He mentioned that the U.S. could increase oil and gas production to generate revenue for the program, although specifics about how this would work have not been provided.
- Eliminating Federal Taxes on Social Security Benefits One of Trump’s more notable proposals is eliminating federal taxes on Social Security benefits. Before 1985, Social Security benefits were not taxed, and today, 41 states do not impose state taxes on these benefits. Trump’s proposal to eliminate federal taxes would be a return to this pre-1985 structure, which could provide financial relief for many retirees.
- Opposition to Social Security Benefit Cuts or Raising the Full Retirement Age (FRA) Trump has been clear that he opposes reducing Social Security benefits or raising the full retirement age (FRA). These positions differentiate him from many other politicians who have proposed these reforms as a way to address the program’s long-term funding issues.
Additional Measures That Could Affect Social Security
While Trump has not proposed major overhauls to Social Security itself, some of his broader policy initiatives could indirectly impact the program and its beneficiaries:
- Department of Government Efficiency (DOGE) Trump has suggested creating a Department of Government Efficiency (DOGE) to identify ways to cut waste and streamline government operations. If the Social Security Administration (SSA) is included in this initiative, it could lead to cost savings, potentially benefiting the program’s sustainability.
- Tariffs and Inflation Trump has advocated for imposing a 20% tariff on all imports, with higher tariffs on goods from specific countries like China. While these tariffs could raise inflation, they might also lead to higher cost-of-living adjustments (COLAs) for Social Security beneficiaries, as inflation would likely drive up the rates. However, these tariffs could also strain the economy in other ways, so the overall impact remains uncertain.
- Deportation of Undocumented Immigrants Trump has long campaigned for the deportation of millions of undocumented immigrants. While this could increase inflation and possibly lead to higher COLAs, the broader economic effects remain complex. Notably, undocumented immigrants contribute billions of dollars in Social Security taxes. The American Immigration Council estimates that these immigrants contribute around $22.6 billion to the program’s revenue. Removing them from the workforce could hurt this revenue stream.
Evaluating the Likelihood of These Changes
While these proposed reforms could be implemented during a second Trump term, the feasibility of each varies:
- Operational Efficiencies for SSA: Streamlining the Social Security Administration to cut costs is one of the more realistic reforms. This could be achieved without needing Congressional approval, making it a likely outcome.
- Tariffs and COLAs: Trump has shown flexibility with tariffs and could use them to influence Social Security COLAs, especially if inflation rises due to tariff-related price increases. This would likely be a focus of his second term.
- Oil and Gas Funding for Social Security: The idea of using oil and gas revenue to fund Social Security faces challenges. According to the Committee for a Responsible Federal Budget (CRFB), even if all federal land were opened to oil and gas drilling, it would only cover less than 4% of Social Security’s projected deficit.
- Deportations and Social Security Revenue: While deportations could affect the economy, especially in terms of labor costs and inflation, the logistical and financial hurdles make large-scale deportation unlikely to have a substantial immediate effect on Social Security’s funding.
- Tax Reforms and Benefits: Eliminating taxes on Social Security benefits is a more controversial proposal. While it could provide relief to retirees, it could also accelerate the program’s insolvency. This idea is likely to face strong opposition in Congress, especially from those concerned about the program’s long-term solvency.
Conclusion
While some of Trump’s proposals could lead to changes in how Social Security operates or how beneficiaries are impacted, major shifts are unlikely to occur without significant challenges. Efforts like streamlining SSA operations or adjusting COLAs through tariffs are more probable, while initiatives like oil funding or full tax elimination face major political and economic hurdles. As a result, retirees should not expect radical changes to Social Security benefits in the near future, but adjustments may come over time, particularly through administrative changes or policy shifts tied to broader economic initiatives.
