Donald Trump & Social Security: Short-term vs. Long-term - AMAC & The Motley Fool
Kailey Hagen analyzes former President Trump’s bold plans for Social Security. She finds there would be appeal in the short run but problems in the long term because additional revenues are not there. Insolvency looms for the popular program in 2034, which is when benefit cuts to all of about 20% will occur. But Trump has tapped into growing anger at a real problem, in that the amount of benefits subject to income tax has never been adjusted for inflation since the last change in1993. Thus, more people are ensnared by taxes each year. He has proposed making ALL benefits free of income tax. The Congressional Budget Office report indicates that Social Security payroll taxes would have to climb from 12.4% to 16.7% to make up for the shortfall, thus shifting the burden to workers. Of course, no president has the authority to make this change, as only Congress can change Social Security law. Adjusting the thresholds for taxes to account for inflation might be a reasonable compromise. Full piece here.
As an example of the leading thoughts on reforming Social Security, the Association of Mature American Citizens (AMAC, Inc.) believes Social Security must be preserved and modernized. This can be achieved without tax increases by slight modifications to cost of living adjustments and payments to high income beneficiaries plus gradually increasing the full (but not early) retirement age. AMAC Action, AMAC’s advocacy arm, supports an increase in the threshold where benefits are taxed and then indexing for inflation, and calls for eliminating the reduction in people’s benefits for those choosing to work before full retirement age. AMAC is resolute in its mission that Social Security be preserved for current and successive generations and has gotten the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade.