Trump's Tax Plan Could Slash Social Security Benefits 33% By 2035, Ramsey Show Host George Kamel Weighs In

President Donald Trump's tax proposals are reigniting concerns about the future of Social Security. During his campaign for the presidency, Trump proposed tax cuts to benefit workers and small businesses – but critics warn these changes could accelerate Social Security's financial challenges, among other concerns. 

According to the Committee for a Responsible Federal Budget (CRFB), the potential impact could include a 33% reduction in Social Security benefits by 2035 if no alternative funding solutions are implemented. 

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Trump's tax plan builds on the 2017 Tax Cuts and Jobs Act by extending lower tax rates and increasing the standard deduction. George Kamel, a host on The Ramsey Show, explains that this means many middle-class households could save around $1,000 annually on taxes. However, other tax proposals, like those to cut taxes for Social Security, tips and overtime – which in theory would benefit millions of Americans directly – could have expensive long-term consequences. 

"Cutting taxes means less government revenue, which experts say could add $7.75 trillion to the national debt," Kamel said, adding, "I’m a big fan of the average American paying less in taxes. But we do have to figure out how to replace that revenue so that it doesn’t lead to an even bigger dumpster fire with the national deficit."

With Social Security already facing insolvency by 2034, reducing federal revenue could put further strain on the program, hastening its financial difficulties.

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To offset the revenue loss, Trump has proposed increasing tariffs on imported goods. Tariff revenue currently contributes a small fraction of the federal budget, but Trump envisions it as a significant funding source. His team estimates that a 10% across-the-board tariff could generate $350-$400 billion annually, according to Reuters. 

While tariffs might help, experts doubt they could fully fund the tax cuts. Erica York, vice president of federal tax policy at the Tax Foundation, told Reuters that tariffs are a “highly inefficient way to raise revenue. They create a larger burden on poorer households than they do on richer households, which means many lower- and middle-income households could be worse off under the proposed combination of tariffs and tax cuts.” 

Moreover, long-term reliance on tariffs could hurt economic growth, further straining federal revenues.

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The CRFB's analysis suggests that Trump's proposals would advance Social Security insolvency by three years, from 2034 to 2031. Without new revenue streams or benefit adjustments, retirees could face a 33% reduction in benefits by 2035. This could result in a typical couple’s annual loss of $16,500, significantly impacting their financial security. 

Throughout his campaign, Trump reiterated his commitment to protecting Social Security. However, no comprehensive plan has been outlined to address the program's funding gap. Experts say that resolving this issue will take increasing government revenue and adjusting benefits – neither of which Trump's platform focused on. 

As Congress debates the merits of Trump's proposals, retirees and near-retirees should monitor these developments closely. Consulting with a financial advisor can help individuals prepare for potential changes and safeguard their retirement plans.

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