President Donald Trump's Sweeping Social Security Reforms Are Failing to Address the Real Challenge Facing America's Seniors

During the 2024 U.S. Presidential campaign, Donald Trump promised to protect Social Security for seniors. Since taking office in January, he's gone to work making some significant reforms to the program through executive orders.

While certain promises, like ending taxation on Social Security income, require congressional approval, he's been able to enact several executive orders that have directly or indirectly impacted Social Security. Here's some of what Trump's done since starting his second term:

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• Established the Department of Government Efficiency (DOGE), authorizing staffing cuts and other cost-saving opportunities.
• Terminated leases on thousands of office locations.
• Mandated that the federal government stop sending paper Social Security checks.
• Reduced phone support, including requiring in-person or online identity verification for new applicants or changes to benefits.
• Withheld up to 100% of a beneficiary's monthly benefits payments to recover overpayment errors.

The government estimates that the above efforts will save the program over $1.5 billion per year. That might sound great, especially for seniors concerned about the health of Social Security. But the truth is, all of these reforms fail to address the real challenge facing the government program over 60 million Americans count on for retirement income.

Image source: The White House.

Retirees face a grim reality in just eight years

It's important to understand the current state of Social Security before diving into how Trump's reforms will impact the program. As things stand today, retirees are facing a significant cut in benefits in just eight years. Here's why.

The government initially established a trust fund for Social Security in 1939. The taxes collected on wages go into the trust fund, and any benefits paid to retirees come out of the trust fund. The trust is also responsible for covering the administrative expenses and other costs of running the program. Those expenses are highly targeted by Trump's recent reforms.

For the first 80 years or so of the trust's existence, it accumulated excess capital as the standard of living pushed wages higher and the workforce expanded. The trust invests all that extra capital into stable government bonds that pay a small amount of interest.

However, that trend started to reverse at the end of the last decade. The trust fund is now paying out more than it's taking in, and the deficit is growing bigger and bigger each year. At this rate, the Social Security trustees estimate the Old Age and Survivors Insurance Trust will run out of excess reserves by 2033. At that point, the income from taxes is expected to cover just 79% of benefits owed to retirees.

Here's the impact of Trump's Social Security reforms

As mentioned, the changes enacted on Social Security so far can save the program more than $1.5 billion per year, mostly by lowering administrative expenses. Last year, administrative expenses accounted for a grand total of $7.5 billion for Social Security, so the savings are quite substantial from that perspective.

But if you zoom out and look at the real challenge facing Social Security, it's clear the changes Trump and his administration are making won't save Social Security. Those administrative expenses accounted for just 0.5% of the entire program's expenses. Nearly all of the rest went toward paying out benefits.

The Old Age and Survivors Insurance Trust Fund ran a deficit of $103.2 billion last year. And the challenge is growing worse and worse each year. The table below shows the estimated deficit for the Old Age and Survivors Insurance Trust Fund through 2032.

Data source: Social Security Administration.

As mentioned, Social Security will have to cut retirement benefits in 2033, as it will deplete its reserves and no longer be able to run a deficit. $1.5 billion in annual cost savings isn't going to change that timeline one bit. If nothing is done, seniors can expect a massive 21% cut across the board.

The only way to change that trajectory is with major Social Security reform, which will require bipartisan cooperation in Congress. The longer it takes, the harder the task becomes.

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