Trump's Tariffs, Tax Plans Could Bankrupt Social Security by 2031: Report

“Under our central estimate, we found these policies would add about $2.3 trillion to Social Security’s cash deficit between FY 2026 and 2035 — which is about 1.8% of current law taxable payroll once phased in,” the authors explain.

This includes $950 billion from ending the income taxation of Social Security benefits, about $900 billion from ending payroll taxes on tips and overtime pay, and roughly $400 billion from changes to tariffs and immigration.

“Under our low-cost scenario, we estimate the Trump campaign’s policies would add $1.3 trillion to Social Security’s 10-year cash deficit, and under our high-cost scenario they would add $2.8 trillion,” they add. “This would represent 1.0% to 2.2% of payroll.”

Other Effects to Consider

As a result of these higher cash deficits, Social Security trust fund reserves would be depleted much faster than under current law.

“Whereas CBO projects the trust funds to run out of money in FY 2034, we estimate they would run out of money three years earlier under President Trump’s agenda, in FY 2031,” the researchers warn. “Upon insolvency, the law calls for limiting Social Security spending to its revenue stream, which we’ve previously estimated would mean a $16,500 cut in annual benefits for a typical dual-income couple retiring in 2033.”

Under President Trump’s agenda, they estimate that benefit cut would total 33% by 2035, with a range of 29% to 36% depending on the scenario.

“Importantly, this cut somewhat overstates the average effect on beneficiaries, as ending taxation of benefits would increase average after-tax benefits,” the researchers point out. “In our central estimate, real after-tax benefits would be cut by the full 33% for about half of beneficiaries — those at lower income levels who don’t currently pay taxes on benefits.”

In comparison, benefits would be cut by closer to 30% for the seniors with just enough income to be paying taxes on benefits, 26% for a household with income in retirement at about $100,000 per year, and 3% for the very highest income households.

“Avoiding these cuts would require significant adjustments to Social Security taxes or benefits,” the authors conclude. “Under our central estimate … restoring solvency would require the equivalent of cutting all current law benefits for current and future retirees by roughly one-third or increasing all current law taxes by roughly one-half.”

Faster growth can reduce Social Security’s shortfall, the authors concede, but based on available analyses and understanding the effects of President Trump’s agenda on the national debt, it is unlikely his plans would significantly boost the size of the economy — and many estimates find his plans would reduce long-term output.