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Could Donald Trump Fix Social Security's Biggest Problem in 2025?

From Yahoo! Finance

Could Donald Trump Fix Social Security's Biggest Problem in 2025?

President Joe Biden and President-elect Donald Trump share at least two things in common when it comes to Social Security. They've both been eligible to receive their full retirement benefits for more than a decade. Additionally, neither Biden nor Trump pushed hard for major Social Security reforms during their respective first presidential terms.

However, Trump is about to have a second chance to do something about the federal program that impacts millions of Americans. Could he fix Social Security's biggest problem in 2025?

First, let's address a common misconception about Social Security. The program is emphatically not going bankrupt. To officially be bankrupt, Social Security would have to be unable to pay its obligations. Such a scenario isn't on the horizon.

However, Social Security is running out of money. To be specific, the program's two trust funds -- the Old-Age and Survivors Insurance (OASI) trust fund and the Disability Insurance (DI) trust fund -- are on track to be depleted. The current timeline for the combined trust funds running out of money is 2035, according to the 2024 annual report published by the Social Security trustees.

What will happen then? Social Security will be able to continue paying around 83% of scheduled benefits at first. This level is projected to decline to 73% by 2098.

Social Security will be able to pay reduced benefits because the program will still receive ongoing revenue from Federal Insurance Contributions Act (FICA) taxes. Employees pay 6.2% of their wages to fund Social Security, with another 1.45% going to fund Medicare. Employers pay the same percentages. However, these taxes currently don't generate enough money to fund Social Security benefits at full levels.

So, does President-elect Trump have a plan to prevent future Social Security benefit cuts? Sort of.

In a town hall in December 2023, Fox News host Sean Hannity asked Trump about Social Security. He responded, "You don't have to touch Social Security." He added, "We have money laying [sic] in the ground far greater than anything we can do by hurting senior citizens with their Social Security." Trump argued that tapping the U.S. oil and gas reserves would allow the country to solve many of its fiscal problems, including Social Security's looming insolvency.

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