Social Security Is Changing Under President Trump, but Benefit Cuts Are Still Possible in the Next Decade

President Trump during his campaign proposed ending taxes on Social Security benefits. But that change is unlikely for one reason: Social Security already faces a serious financial problem that may lead to trust fund insolvency and benefit cuts within 10 years. Ending taxes on benefits would make that problem worse and hasten the timeline to benefit cuts.

Importantly, while Social Security has undergone other changes since Donald Trump's return to the White House, none are large enough to prevent trust fund insolvency. Here are the important details.

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Image source: Official White House Photo by Shealah Craighead.

The Department of Government Efficiency (DOGE) is shaking up Social Security

President Trump started his second term with a flurry of executive orders and memos to make good on campaign promises. He created the Department of Government Efficiency (DOGE) on his first day in the White House. The agency was initially tasked with "modernizing federal technology and software to maximize governmental efficiency and productivity."

Trump has since given DOGE more agency, including the ability to review grants and contracts, worker productivity, and regulations to identify cost savings opportunities. In response, the Social Security Administration said it can save $800 million annually by shrinking its workforce, limiting overtime, and canceling nonessential contracts, as well as "commonsense approaches to printing, travel, and purchase card policies."

The Social Security Administration in February reduced its staffing target to 50,000, a reduction of 7,000 employees. Importantly, the agency says it will "prioritize customer service by streamlining redundant layers of management." But critics argue the headcount reductions will lead to longer wait times for retirees and other beneficiaries.

Social Security is strengthening its identity proofing requirements to prevent fraud

President Trump has repeatedly said Social Security pays benefits to millions of deceased individuals. He recently told Congress that government databases list more than 19 million people between ages 100 and 149. "Money is being paid to many of them," said Trump. But those claims have been largely debunked, according to The Wall Street Journal.

Acting Social Security Commissioner Lee Dudek explained, "The reported data are people in our records with a Social Security number who do not have a date of death associated with their record. These individuals are not necessarily receiving benefits." Also, data from the Social Security Administration shows less than 125,000 people aged 99 and older were paid benefits in December 2024.

However, the Social Security Administration has recently taken steps to curb allegations of fraud. The agency will require anyone claiming benefits or changing direct deposit status to verify their identity online through the my Social Security portal, or else in person at their local Social Security office. That means beneficiaries will no longer be able to verify their identity over the phone.

President Trump during his campaign often promised not to cut Social Security. But former Associate Commissioner Laura Haltzel says the administration is using the guise of fraud to effectively cut benefits. She argues new identity proofing requirements will create an "environment where the very beneficiaries we're trying to serve are simply not going to be able to access the benefits they've paid for."

Social Security will be more aggressive in recovering overpayments

A July 2024 report from the Office of the Inspector General shows Social Security payments totaled $8.6 trillion between fiscal years 2015 and 2022. The report also indicates that $72 billion of that sum were "improper payments, most of which were overpayments." In other words, about 0.8% of benefit payments made during that period were incorrect.

The Social Security Administration recovered a good portion of that sum, but still reported $23 billion in uncollected overpayments at the end of fiscal 2023. To correct the problem, the Social Security Administration recently increased its withholding rate to 100%. It had been 10%. That means retirees who receive overpayments may have all benefits withheld until the imbalance is corrected.

Importantly, the Office of the Chief Actuary estimates recovering more overpayments will save Social Security about $7 billion in the next decade. That is certainly a positive change, but the total savings identified under the Trump administration come nowhere close to offsetting the $2 trillion funding deficit the program is forecast to run in the next decade.

That means the Social Security trust fund is still on course to be insolvent by 2035 unless Congress intervenes. And the consequence of trust fund depletion would be a 17% cut in benefits, according to the latest report from the trustees.

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