Kamala Harris Vs. Donald Trump On The Future Of Social Security

The future of Social Security has been a long-term concern for many Americans. In 1983, financial reforms were put in place that helped Social Security not only avoid immediate insolvency, but that were also intended to ensure funding, at the time, through 2060. However, those 1983 predictions failed to account for overall weaker economic performance. Similarly, significantly higher rates of disability claims, combined with the country's baby-boom population, have shortened the time frame for Social Security's solvency. As it stands today, Social Security beneficiaries can expect just 83% of their earned benefits (or an annual reduction of roughly $3,900) when the funds run out in 2035.

Many of the problems with Social Security's future funding is exacerbated by the influx of baby boomers retiring. Known as Peak 65 or the silver tsunami, a record number of Americans will hit retirement age every year through 2027. This will place unprecedented pressure on Social Security's existing programs and contribute to the fund's eventual depletion. While there are many ways to potentially solve Social Security's existing funding problems, the increasingly polarizing nature of the political process has created a sharp divide on policy between Democrats and Republicans.

Unfortunately, Social Security has become one of many issues that's suffered a lack of necessary policy progress due to the country's increasing political divide. The upcoming presidential election presents two candidates with vastly different visions for not just the American economy, but how Social Security will function in the future.

Much like the current Biden administration's policies, Vice President Kamala Harris has stated she intends to protect and expand Social Security benefits. Many assume the money for these policies will come from creating Social Security payroll taxes specifically for higher-income individuals. It is worth noting that, as of 2024, those earning more than $168,600 don't pay Social Security payroll taxes for any earnings over that amount.

While President Biden has introduced the idea of expanding these payroll taxes to incomes over $400,000, Harris previously offered a less conservative number. Back in 2019, while still a senator, Harris cosponsored legislation known as the Social Security Expansion Act. The bill was intended to extend the Social Security payroll tax to annual incomes over $250,000 as a way not only to help fund existing programs, but also potentially expand current program benefits.

An important consideration is that funding decisions for Social Security must come from Congress, not the president. Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, explained to Newsweek that Harris' ability to affect change within Social Security would ultimately depend on "whether she can find the votes in Congress to support a push." A big factor here would be how many Democrats win in November. Similarly, working within the Democratic party to pass legislation could lead to certain disagreements over things like taxable income levels, benefits, and even cost of living (COLA) rate considerations (COLA is currently expected to be around 2.5% in 2025).

Recently, Donald Trump announced a plan to eliminate taxation on Social Security benefits. While, on its surface this policy seems like a clear way to help Social Security beneficiaries put more money into their pockets, the financial implications are concerning. Estimates project this policy would lead to a $1.5 trillion deficit over a decade, on top of the fact the program is already facing a funding cliff in roughly a decade. Plus, it's worth mentioning that only about 40% of Social Security beneficiaries actually pay income taxes on their benefits, meaning this policy wouldn't have any financial impact for the majority of recipients.

Another consideration is that, during former President Trump's term in office, he passed a series of tax cuts that are still being debated today. While tax cuts might not seem relevant to Social Security, it's important to realize just how much revenue the federal government loses as a result of these tax cuts — revenue that would help fund things like Social Security's programs.

Trump has stated he would extend these cuts (they are currently due to sunset at the end of 2025). The Republican Study Committee, which comprises the majority of Republican lawmakers in the House of Representatives, have suggested significant cuts to Social Security. Most notably, in their 2025 budget proposal they propose pushing the full retirement age to 69. According to the Center for American Progress, when calculating the benefit reduction of this policy compared to full Social Security benefits, a median-wage retiree between 55 and 64 years old would lose between 25% to 54% of their retirement account balance.