Here’s the Biggest Threat President Trump’s Policies Present for Social Security — and It Has Nothing to Do With Elon Musk and DOGE…see more 👇 👇

Here’s the Biggest Threat President Trump’s Policies Present for Social Security — and It Has Nothing to Do With Elon Musk and DOGE…see more 👇 👇

newsfeedback@fool.com (Keith Speights)
President Donald Trump’s second term is off to a chaotic start. Much of the chaos results from the actions taken by the temporary government organization called the Department of Government Efficiency (DOGE) led by Elon Musk.

Musk and his DOGE team have targeted multiple federal agencies and programs for sweeping budget cuts. They have even set their sights on Social Security. But the biggest threat that President Trump’s policies pose to the popular federal program has nothing to do with Musk and DOGE.

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Image source: Official White House photo by D. Myles Cullen.
Misplaced concern?
Musk recently said in an interview with podcaster Joe Rogan that Social Security is “the biggest Ponzi scheme of all time.” He also told Fox Business Network, “Most of the federal spending is entitlements. That’s the big one to eliminate.”

These and other comments have caused some to speculate that the Trump administration, influenced by Musk and DOGE, could slash spending in ways that hurt Social Security beneficiaries. But those worries appear to be overdone.

President Trump has repeatedly said that he won’t cut Social Security benefits, and a transcript of Musk’s Fox Business Network interview shows that he was referring to cutting waste and fraud in entitlement spending and not benefits.

The White House on March 11 — a day after Musk’s comments to Fox Business Network — released a statement saying, “The Trump Administration will not cut Social Security, Medicare, or Medicaid benefits.” It backed up Musk, and reported this as Musk’s statement, adding bolding: “The waste and fraud in entitlement spending — which is most of the federal spending is entitlements — so, that’s, like, the big one to eliminate. That’s the, sort of half-trillion, maybe $6-700 billion a year.”

The main threat to Social Security from Trump’s policies
The controversy over Musk’s comments detracts attention from the main threat to Social Security from Trump’s policies. Although the president says he doesn’t plan to cut Social Security benefits, other moves by his administration could lead to benefit cuts sooner than anticipated.

It’s no secret that the Social Security trust funds are running out of money. Based on the latest analysis by the Social Security Trustees, the program’s two trust funds will be depleted by 2035. While ongoing payroll taxes would still fund most of the scheduled benefits, steep benefit cuts would be required. (The trustees include the Secretary of the Treasury, the Secretary of Labor, the Secretary of Health and Human Services, and the Commissioner of Social Security. Two public trustee seats were vacant when the last report was signed.)

President Trump has proposed eliminating federal taxes on Social Security benefits. He has also said he wants to end federal taxation of overtime pay and tips. These tax cuts would reduce the revenue flowing into Social Security by $1 trillion to $2 trillion between 2026 and 2035, according to estimates from the nonpartisan Committee for a Responsible Federal Budget (CRFB). The president would need support from Congress for these changes, though, which could be challenging with the GOP’s slim majority in the House of Representatives and the lack of a filibuster-proof majority in the Senate.

The president’s efforts to reduce illegal immigration could also negatively impact the program’s revenue since many immigrants pay the FICA taxes that partially support Social Security. The Social Security Administration estimated mass deportations could reduce cash flowing into Social Security by $20 billion per year, according to Business Insider.

In addition, many economists believe that Trump’s tariffs could cause inflation to rise. If they’re right, Social Security cost-of-living adjustments (COLAs), which are based on inflation, would be higher. This means the program would pay out more benefits than projected.

A combination of policies that would reduce revenue to Social Security and potentially increase the program’s spending would likely accelerate how quickly the trust funds run out of money. CRFB estimates that Trump’s proposals would cause the two Social Security trust funds to be exhausted by 2032 at the latest and perhaps as soon as 2031. Again, this means that there wouldn’t be any money left in the trust funds, but Social Security benefits would continue to be partially funded by payroll taxes.

Will the Trump administration solve the problem?
Importantly, the negative storyline assumes Trump won’t take other steps to solve the program’s fiscal problems.

During the presidential campaign, Trump suggested that revenue generated from increased oil and gas drilling could be used to fund Social Security. However, CFRB evaluated this possibility and concluded this solution wouldn’t help much. The organization stated, “Dedicating current oil and gas leasing revenues to Social Security would cover less than 4 percent of its shortfall, and it would be impossible to fix Social Security even if all federal land were opened to drilling operations.”

Trump has also proposed creating a sovereign wealth fund for the U.S. A sovereign wealth fund is a fund where a government puts money in and invests in assets such as stocks, bonds, and real estate. These funds can generate solid returns. For example, a Norwegian sovereign wealth fund has delivered an average annual return of 6.3% since 1998.

Sen. Bill Cassidy, R-La., thinks that a sovereign wealth fund could help “save Social Security.” However, the White House hasn’t commented on Cassidy’s idea to use a sovereign wealth fund to bolster Social Security. There’s no guarantee the fund would be established or, if it is, that it would benefit Social Security.

While Social Security faces challenges, Social Security beneficiaries don’t need to worry about the DOGE initiative. However, they might want to keep their eyes on the Trump administration’s policies that could accelerate the timeline for the depletion of the Social Security trust funds.

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