Social Security in Dangerous Times: Thanks to Trump and Some of His Fantasies

Strong since 1935 — now in danger from Trump-GOP neglect

No matter what, payroll taxes still in effect

From the Motley Fool –key parts noted in • bullet format listed below:

Title: “Social Security is 16 years away from a major shift”

According to the most recent annual report from the Social Security Board of Trustees, the program is set to undergo a significant shift in 2018.

•  Beginning this year and continuing with each subsequent year, program expenditures are expected to outpace revenue collected.

•  Though we're only talking about a $1.7 billion net cash outflow in 2018 and $0.2 billion in 2019, these outflows are projected to really accelerate in 2020 and beyond.

•  By the year 2034, Social Security's $2.9 trillion in asset reserves is expected to be completely depleted.

•  The good news is that Social Security doesn't need any excess cash in its coffers to continue making payments to eligible beneficiaries. Its 12.4% payroll tax on earned income, along with the highly unpopular taxation of Social Security benefits on select recipients, ensures that money will keep flowing in for disbursement.

•  The bad news is that this net cash outflow and projected depletion of the program's asset reserves shows the unsustainability of the current payout schedule.

If Congress fails to deliver a solution to the estimated $13.2 trillion cash shortfall between 2034 and 2092, current and future beneficiaries could see their Social Security checks cut by 21%. 

That's terrifying news given the reliance of aged beneficiaries on the program.

A key part of this story from the smartest man in the world, or so he says he is: ergo Donald J. Trump – to wit: A handful of Trump’s proposals may actually be costing the program quite a bit of money over the long term (defined by the next 75 years on the recent Board of Trustees report). Let’s examine the “brilliant businessman” and his plan okay?

(I Note: Trump impact today’s senior citizens rely on Social Security a lot, and the thought of a 21% reduction to benefits is frightening. Reminder: The average retired worker is only receiving $1,412 a month, as of May 2018. Trump’s cut would push that down to just $1,115 a month. Additionally, the Federal poverty level for an individual on a monthly basis in 2018 is approximately $1,012.  Interesting, um?). 

•  Trump's stance on DACA and immigration could be seriously hurting Social Security:  In September 2017, the Trump administration announced its intention to end DACA for some 800,000 people known as “the Dreamers” who had entered the country illegally as children, plus one month prior to announcing an end to DACA, Trump announced a proposal to cut immigration in half over the coming decade. 

Impact on Social Security: Trump’s tougher stance on immigration could adversely impact Social Security. According to a September 2017 analysis from Social Security Works.org, his anti-immigration policies could cost the program up to $2.4 trillion over the next 75 years. 

This assumes a halving in immigration over the long term, as well as the ending of DACA, which would reduce Social Security contributions by an estimated $33.1 billion over the next decade. 

The reason we'd see such big dollar figures lost from Social Security is because immigrants contribute a lot to the program. For instance, the roughly 800,000 people protected by DACA are younger workers who'll be able to contribute to the program via the payroll tax for decades to come.

FACT: Immigrants in general tend to be younger which means there's a longer period of time with which to collect their payroll taxes long before they'd even have an opportunity to collect a Social Security benefit – assumes they have become citizens and eligible to draw benefits at their prescribed age, an if they never become citizens eligible benefits well their working wages have already paid into the systems for beneficiaries who are citizens and that helps sustain the program.

Key part that most GOPers floss over – mostly their hyper conspiratorial branch conservative branch peddles as yes, their own brand of “Fake News.” 

Non-citizens working in fact have their payroll taxes deducted just like all workers if their employers are honest – even if they have a temp SS card to be able to work is this:  In order to collect a Social Security retired worker benefit, immigrants would have to become legal citizens and earn the prerequisite 40 lifetime work credits needed to receive a monthly payout during retirement. Should these folks not follow a path to legal citizenship, they wouldn't be entitled to a retired worker benefit.

According to AARP, around $12 billion was collected in payroll tax in 2010 from undocumented workers who (barring a path to legal citizenship) have no chance of ever collecting a benefit. 

Conversely, the report notes that if immigration into the U.S. were doubled, Social Security would reap the rewards of an estimated $5 trillion in added income over the next 75 years.

My 2 cents: Also related also here from the Motley Fool – great site on such economic issues – check them out.

Simply put, watch Trump screw this up… bigly. 

So, stay tuned, and thanks for stopping by.