In teaching my class at Pepperdine University’s School of Public Policy last fall (along with insightful professor Dan Schnur), I talked about candidate Donald Trump’s pledge not to tax Social Security benefits. As I told the students at the time, it was questionable economics considering the wobbly fiscal foundation of Social Security, but it was brilliant politics. Why? Because seniors, who directly benefit from Social Security, are the most reliable voter block.
Thank you for reading this post, don't forget to subscribe!Indeed, Trump won the senior vote last November.
The question is can he hold the loyalty of seniors as negative stories about the functioning of the Social Security Administration continue to occupy the news.
Social Security and other entitlement programs have financial problems. The Social Security program’s trustees recently concluded that by 2033 Social Security would have to cut old age benefits 21%, mostly due to an aging population. This prediction and the actions of the Trump administration toward Social Security has caused an increase in people claiming their benefits early, putting more strain on the funds.
Trump has said emphatically for years that he won’t cut Social Security but that hasn’t stopped Democratic critics from making the charge.
Still, the threat of diminished resources in a decade or less hangs over the system. Proposals to fix the situation abound but none have garnered majority support. Some want to raise the age for recipients to receive Social Security benefits. Others would like some of the retirement funds be invested in private retirement accounts, a proposal that did not go over well during the George W. Bush administration. Still others want to lift the cap on earnings that pay into the system. Then there is the proposal that doesn’t seem to die to increase taxes on the wealthiest Americans.
But with no consensus, the focus has been on Trump’s Department of Government Efficiency closing offices, cutting personnel and hampering customer service which makes it harder for citizens to deal with the agency.
While the administration claims it is only making changes to modernize the system, closing offices temporarily, and seeking out fraud and abuse, the immediate effects have scared the elderly. Seniors don’t like to be put on hold for hours on phone calls to discuss benefits or be concerned if some of the allegations of reductions are real. Negative feelings about the Trump administration’s handling of Social Security are taking hold.
President Trump can reverse these negative feelings from seniors if he can get Congress to reduce or eliminate taxes on Social Security benefits as he promised. But because of the program’s financial weakness, that might be a step too far for members of Congress.
In the meantime, those Social Security voters that boosted Trump’s presidential run could well turn on him and allied congressional members during the coming mid-terms if chaos around the Social Security program continues. The way the Trump administration handles the Social Security situation may very well result in a make-or-break turning point at the polls.
The income limits could be lifted so that the wealthy pay a reasonable percentage of their earnings into Social Security, but combine this with reducing or eliminating taxation for those collecting benefits. The exemption from taxation could be limited to those who start Social Security no earlier than the retirement age (now 67?), or even limited to older seniors (70s? 80s?). This compromise may be welcomed by seniors over 67, not so much by everybody else.
So much wrong with this article.
1. Social Security is NOT, nor ever has been, an “entitlement” for those who paid in to it. Deductions are taken from working people’s paychecks with no option to opt out.
2. DODGE is trying to remedy the following:
A. Stop the politicians who are stealing from the fund that was set up to save money for those who pay into it for their retirement. Politicians have been stealing for things other than this.
B. Stop people from taking from it that have not put into it: e.g., non-citizens who do not pay into it, criminals, fraudsters, dead people, etc. I.e., those who have not paid in.
I agree that the income limits could be removed, but first, I think people should be allowed to opt out of paying into a system that has so obviously been corrupted. If things were truly just, these same people should be paid back for all they have paid in with interest.
I also think that once the system has been fixed and participation made voluntary, then taxation could be restored in the same way 401k funds are taxed today. In fact people should be able to take out loans of their funds in the same way these are allowed with 401k funds today as well.
The Social Security issue was never a Trump created problem, though people would like to blame him. It has been a cesspool of corruption long before that.