Social Security is in trouble: it is running low on funds.

The federal government warns that the Social Security trust fund will experience a deficit, resulting in a 17% cut in benefits by 2035.

For about 20% of seniors, Social Security payments account for over 90% of their income. In surveys, many Americans consider Social Security a significant issue that matters greatly to them.

Both Kamala Harris and Donald Trump have stated they will not permit cuts to benefits, but neither has offered a clear strategy to resolve the issue. Their approaches differ: Harris supports increasing tax revenue for Medicare and Social Security by boosting contributions from high-income earners, whereas Trump, against nonpartisan budget analysts and fact-checkers, attributes the funding issue to illegal immigration.

Trump also plans to introduce tax breaks that may weaken the funding for these programs, according to studies from nonpartisan organizations like the Committee for a Responsible Budget. Recently, this watchdog projected that Trump’s policies could bring the Social Security trust fund’s insolvency closer by three years.

“Social Security’s future hasn’t been a significant topic in this election, but it deserves attention,” remarked Alex Lawson, executive director of Social Security Works, a left-leaning organization focusing on retirement benefits, to YSL News. “Congress must take action on Social Security before 2035 to stop automatic benefit cuts. The presidential candidates have vastly different plans for the Social Security system.”

‘Ensuring the Wealthy Contribute Equitably’

Social Security and Medicare are funded by specific tax channels, known as payroll taxes. Employees typically contribute 6.2% of their income in payroll taxes, while their employer matches that amount. Those who are self-employed pay 12.4%.

According to the Medicare Board of Trustees’ 2024 report, the Medicare trust fund is set to deplete its funds by 2036.

During the first presidential debate, when asked about the funding deficit, President Joe Biden suggested eliminating the income cap currently in place for Social Security and Medicare taxes. Currently, only earnings below $168,000 are taxed; hence, an average worker making under $60,000 annually pays 6.2% while someone earning $1 million annually pays less than 1%.

Biden’s proposal includes taxing payroll on earnings above $400,000, which would prevent the trust fund from running out until 2066, as per the Social Security Office of the Chief Actuary. This proposal was also part of the Democratic National Convention’s platform.

According to her campaign, Harris aims to “secure Social Security and Medicare for the future by ensuring millionaires and billionaires contribute their fair share in taxes.”

When YSL News inquired about the specifics of these proposed tax changes, Harris’s campaign did not provide further details.

“Vice President Harris and Governor Walz are committed to reducing costs and will always protect and strengthen Social Security and Medicare,” said campaign spokesperson Mia Ehrenberg in an email. “In stark contrast, Donald Trump has a history of attempting to cut Social Security and Medicare for millions of Americans dependent on these services, proposing cuts while in office and promising to do so again if re-elected.”

The Trump campaign insists he will not reduce Social Security benefits, which are essential for 67 million elderly and disabled Americans.

Some advocates pushing for increased funding for Social Security believe that Harris would support legislation aimed at raising payroll taxes for high earners, partly due to strong backing from Democratic lawmakers for such measures.

“Her overall agenda aligns with the continuation of the Biden-Harris presidency,” Lawson noted. “Her stance is evident because the Democratic position is clear, and her alignment with Biden is unmistakable, alongside her commitments made public on her website.”

Trump’s Approach to Social Security

Donald Trump has not presented a distinct plan to enhance the financial stability of the Social Security trust fund. When addressing questions about the program during a debate, he maintained his assertion from earlier in the campaign that illegal immigration is behind the projected deficit in the fund.

“These millions coming in are trying to get on Social Security,” Trump stated during the debate. “(President Biden) will destroy Social Security. He will destroy Medicare.”

Fact-checkers have highlighted inaccuracies in Trump’s claims, noting that individuals in the U.S. unlawfully cannot access Social Security or Medicare benefits. However, many of these workers contribute to the system through tax payments.

According to Garrett Watson, a senior policy analyst at the Tax Foundation, a center-right think tank, “Immigration can boost trust funds since many still contribute taxes without receiving benefits.” For instance, a Social Security Administration study indicated that unauthorized immigrants added $12 billion to the Social Security Trust Fund annually in 2010, while a 2016 report by the pro-immigration organization New American Economy calculated a $13 billion contribution.

The Trump campaign contends that Democrats would offer a citizenship pathway — thus granting access to crucial benefits, including Social Security — to people living in the U.S. illegally. Harris has supported providing a pathway to citizenship for certain undocumented immigrants.

“Kamala Harris wants to put our country in financial jeopardy with free healthcare for 11 million illegal immigrants and benefits like Social Security and Medicare, siphoning resources away from American citizens,” stated Karoline Leavitt, national press secretary for the Trump campaign. “President Trump is advocating for the largest deportation initiative since President Eisenhower to halt the financial strain on our healthcare system and ensure we can continue to support American citizens dependent on Medicaid, Medicare, and Social Security—not unauthorized immigrants.”

Will Trump Reduce Social Security Benefits?

Throughout this campaign, Trump has consistently affirmed that he would not make cuts to Social Security or Medicare benefits.

“As president, I pledge not to deduct even a penny from Social Security or Medicare,” Trump told a gathering of the Faith and Freedom Coalition in June.

However, in the past, Trump has supported potential cuts to these programs. During his presidency, he proposed cutting $25 billion from Social Security and $575 billion from Medicare over ten years in 2019. Additionally, in 2020, he suggested a $45 billion reduction in Social Security disability benefits.

In March, Trump hinted that he might cut benefits by stating, “There’s a lot you can do regarding entitlements, in terms of cutting and in terms of also addressing theft and mismanagement of entitlements.” The Trump campaign clarified that he meant focusing solely on trimming waste and fraud.

“He stated that he isn’t planning to reduce benefits and I take him at his word,” said Stephen Moore, an advisor for the Trump campaign and a senior fellow in economics at the Heritage Foundation, a conservative think tank, in an interview with YSL News.

‘We must enhance economic growth’

Some studies indicate that − regardless of his goals − Trump’s tax proposals could indeed expedite the Social Security funding shortfall, leading to cuts in benefits.

Initially, Trump suggested that Social Security benefits should be exempt from taxation. Currently, these benefits are taxed to fund the Social Security trust fund; removing this tax could result in a revenue drop of about $1.6 trillion to $1.8 trillion through the year 2035.

Recently, he has also proposed to eliminate taxes on tips and overtime pay. With these forms of income not being subject to payroll taxes, there would be an additional drop in payroll tax revenue.

Exempting overtime income from employee payroll taxes could lead to a reduction in Social Security and Medicare revenue by at least $419.6 billion over a decade, according to the Tax Foundation. If employers are also exempted from their payroll taxes, it would further increase the revenue loss.

“This would worsen the issue and might hasten the insolvency of the trust fund,” Watson mentioned. “We could be looking at insolvency in the early 2030s or even sooner in a worst-case scenario.”

The Committee for a Responsible Budget estimated that Trump’s proposals could add approximately $2.3 trillion to the Social Security deficit between 2026 and 2035, leading to a potential one-third reduction in benefits by 2035, according to their findings.

Harris has proposed only exempting tipped wages from income tax, not payroll tax, while Trump has not clarified if he would impose any limits on his payroll or overtime tax exemptions or whether employers would be exempt from paying their payroll taxes as well.

Moore claims that Trump can avoid cutting Social Security benefits by boosting payroll tax revenue through increased economic activity. He points out that the current shortfall predictions are based on a 1.7% average annual economic growth rate, asserting that Trump’s policies, like tax cuts, can lead to higher economic growth.

“It’s vital to grow the economy,” Moore expressed. “I often tell the (former) president that if we can achieve a consistent growth level of 3%, then the problem will be resolved. There will be sufficient revenue.”