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Trevor Jennewine, The Motley Fool
4 min read
In June 2024, President Donald Trump told supporters at a campaign rally, “As president, I will not cut one penny from Social Security or Medicare.” He made a virtually identical statement in July 2024 on social media. “I will not cut one penny from Social Security or Medicare, and I will not raise the retirement age by one day.”
President Trump has so far kept those campaign promises since returning to the White House for a second term. However, he has mentioned (and in some cases set in motion) changes that impact the Social Security program. Here’s what retired workers should know.
In January, President Trump signed an executive order creating the Department of Government Efficiency (DOGE). The agency was initially tasked with improving productivity by modernizing federal technology and software, but more recent executive orders have expanded its purview to include workforce optimization, cost efficiencies, and deregulation.
The Social Security Administration (SSA) has responded by reducing its staffing target to 50,000 employees, down from the current level of approximately 57,000 employees. The agency has also identified cost savings opportunities in contracts, grants, property, and technology, as well as “common-sense approaches to printing, travel, and purchase card policies.”
The total savings will exceed $800 million in fiscal 2025, according to the SSA. While that’s a material portion of the estimated $6.5 billion in administrative spending, the sum is still inconsequential, compared to the $110 billion deficit built into its budget for fiscal 2025.
During his campaign, President Trump wrote on social media, “Seniors should not pay tax on Social Security.” He has doubled down on that promise since the election. In February, White House press secretary Karoline Leavitt said President Trump would implement the “largest tax cut in history,” including the elimination of taxes on Social Security.
Trump was quick to identify inefficiencies and effect spending cuts through DOGE, but I’m skeptical about his plan to eliminate taxes on Social Security. While the idea certainly has merit, the Social Security trust fund is already on pace to be depleted by 2035. Ending taxes on benefits would accelerate the timeline and bring potential benefit cuts closer.
To elaborate, the trustees estimate tax revenue will cover only 83% of scheduled benefits when the trust fund becomes insolvent in 2035. That means benefits would automatically be cut by 17% unless Congress finds a fix for the funding problem.