During his presidential campaign, Donald Trump promised to put an end to the federal taxes of the benefits for retirement in social security. This is not something that he can do unilaterally. Witte Huis Pers Secretary Karoline Leavitt told reporters that the president and Republican legislators have discussed, including this step in a budget package.
But so far in his second term, President Trump has made some changes that directly or indirectly influence social security. Here are four things you need to know.
Image Source: Official photo of the White House by Shealah Craighead.
One of Trump's actions on the first day of his return to the White House can influence the operational aspects of social security. He mentioned several acting cabinet members and department heads, including selecting Michelle King as acting commissioner of the Social Security Administration (SSA).
King has an extensive background at the SSA. In 1994 she joined the office as a bilingual claim representative. Over the years she moved to higher positions. Before she was appointed acting commissioner, she was the deputy commissioner for operations.
President Trump set Tesla CEO Elon Musk charged with the Department of Government Efficiency (Doge), a temporary organization set up to identify ways to reduce federal expenditure. Musk and Doge have been quite in the news with their efforts to lower the government costs. They are now focusing on social security.
Musk recently posted X, the social media site that he has previously Twitter, that he believes that there is significant fraud in law programs, including social security. He also claimed that more than $ 100 billion is paid to people without a social security number every year.
According to Musk, the goal of Doge is to cut $ 2 trillion for federal expenses. Achieving this goal without reducing the benefits of social security would be extremely difficult.
However, DOGE's efforts are mainly focused on administrative efficiency and productivity. Any cuts on social security should assume the congress and signed by President Trump in the law.
Cost-Living adjustments of Social Security (Colas) are based on inflation. That is why everything that President Trump does, which increases or decreases inflation can ultimately influence future colas.
Shortly after his inauguration on January 20, 2025, Trump ordered the heads of all federal departments and agencies “to offer emergency price lighting, in accordance with the applicable legislation, to the American people and the prosperity of the American employee.”
But taking down inflation is easier said than done. It is still to be seen which steps of federal officials will move the needle with inflation and ultimately influence social security Colas.
Other movements made by Trump can cause inflation to rise. In particular, it has placed 25% rates for all steel and aluminum input for the US and 10% rates for most products imported from China.
He has also threatened 25% rates for most imports from Canada and Mexico, but has temporarily paused their implementation. Many economists think that these rates ensure that inflation will rise, which could lead to higher social security cola's.
The president has issued various executive orders with regard to enforcement of immigration. Can these actions influence social security? Maybe.
A significant occurrence of immigration would possibly reduce the labor supply in some industries. This can lead to higher prices for some products and services, whereby the resulting inflation influences Colas for Social Security.
Trump's immigration policy can also speed up the timeline for when the trust funds of the program are exhausted, which is currently expected to take place in 2035. A study last year due to the non -party -related Institute for Tax and Economic Policy has shown that immigrants without papers paid $ 25.7 billion in Federal Fica taxes that Social Security Fund.
The financial news website Business Insider has recently reported that the SSA estimates that the president's plans for massive deportations can reduce social security financing by around $ 20 billion a year.
If President Trump gets his way to terminate federal taxes in the field of pension benefits, overtime and tips, the program can no longer have any money. The non -party -bound committee for a responsible federal budget estimates that these and other proposals from Trump as a presidential candidate would lead to the social security to become Insolvent three years earlier than was currently expected.
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Keith Speights has no position in one of the aforementioned shares. The Motley Fool has positions and recommends Tesla. The Motley Fool has a disclosure policy.
President Trump's social security so far: 4 things you should know was originally published by De Motley Fool
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