On Social Security, Seniors Left to Choose Between Biden's Plan and Trump's Promises

Social Security has long been called the "third rail" in American politics—touch it at your own peril—but now it's future may hinge on who wins the general election this November.

President Donald Trump and Democratic nominee Joe Biden have both stated support for the immensely popular program, through which 65 million Americans currently receive retirement and disability benefits, but the two candidates have a different perspective on what changes need to be made.

Trump inadvertently pushed Social Security into the 2020 spotlight when he signed an executive order calling for a "payroll tax holiday" for the millions of employees who pay into the system. He argued the move would save families thousands of dollars amid the economic downturn caused by the coronavirus pandemic.

The president followed up the payroll tax holiday by announcing that if he won a second term, he intended to cut the tax completely—a move decried by lawmakers and advocates on both sides of the aisle.

"We will be, on the assumption I win, we are going to be terminating the payroll tax after the beginning of the new year," Trump told reporters at a press conference in August.

Trump asserted that gutting the payroll tax would have no impact on Social Security because the money needed for the program would be taken from the government's general tax revenue fund, but experts are skeptical about how well that plan would work.

"It would not be as successful as the current arrangement," said Alicia Munnell, a professor at Boston College who directs the Center for Retirement Research. "The Congress would likely have to decide every year how much it wanted to spend on Social Security. If you have a majority of one party, they may want to spend a lot. If you have a majority of another party, they may want to spend just a little. The important thing is that it would be uncertain and could vary over time."

Trump's statement on eliminating the tax was enough to cause some advocacy organizations to endorse the Biden-Harris ticket. The National Committee to Preserve Social Security and Medicare, a seniors advocacy group founded by the late son of President Franklin Delano Roosevelt, broke 38 years of tradition by voicing support for Biden last month.

Max Richtman, the president and CEO and the group, said Trump's plan is a "recipe for bankruptcy" for the program. Richtman said he's "very skeptical" that the federal government would welcome spending more money from the general revenue on top of the accumulated national debt.

But other experts say Trump's plan is too vague to know for sure how Social Security would be impacted.

"It's hard to evaluate how Trump might change Social Security because he hasn't come out with a detailed plan," said Richard Johnson, the director of the Program on Retirement Policy at the Urban Institute.

Johnson said it's been presumed that Trump would continue to provide the same benefits that are currently available, but he has not released much information on how exactly the benefits would be financed if the tax is cut and what the cut would mean for Social Security's long-term financial stability. The board that runs the cash-strapped agency has already projected that the program will run out of money in 2035.

"Those are some really big unknowns," he said.

Biden, on the other hand, has released what Johnson called a "very ambitious plan" that would "represent one of the biggest benefit expansions we've seen in decades."

social security demonstration WH 2015
Activists participate in a rally urging the expansion of Social Security benefits in front of the White House July 13, 2015 in Washington, D.C. President Donald Trump and Democratic nominee Joe Biden have two different perspectives on the future of the program. Win McNamee/Getty

The proposal includes an increase to the minimum benefit, which would boost low-income workers. Biden has called for setting the figure at 125 percent of the federal poverty line for people who worked more than 30 years. The change would raise the minimum benefit from $886 per month to $1,301 per month, according to an analysis by the Penn Wharton Budget Model at the University of Pennsylvania.

"The concept is that after a lifetime of work, no one should retire in poverty," said Nancy Altman, the president of Social Security Works.

The former vice president would also make benefits more generous for widows and older Americans. Under his plan, seniors between the ages of 78 and 82 would receive gradual increases in their annual benefit amounts. The amount collected by widows and widowers would increase by about 20 percent.

The benefit changes would be paid for by imposing a 12.4 percent payroll tax on income earned above $400,000, evenly split between employers and employees. Today, people only pay taxes on earnings each year up to $137,700. Experts at the Urban Institute have estimated that in addition to covering the benefits, the tax increase would also expand the life-span of the Social Security trust fund by at least five years.

While Biden's plan would move the Social Security program toward a more solid financial footing, it doesn't "get it all the way there," Munnell said.

"I think if he wins, he's going to have to have a more fleshed-out program, but people can expect the Social Security in the future that they've enjoyed in the past," Munnell said of Biden. "While under the Trump proposals you don't really know what is going to happen."

New polling from the Retirement Confidence Index revealed that more Americans feel confident in the future of Social Security if Biden wins as opposed to Trump. The survey found 63 percent of U.S. adults said they felt more confident in the program's continued existence under Biden, compared to 43 percent for Trump.

Johnson said given the financial problems looming over the Social Security Administration, it's more important than ever that presidential candidates lay out their plans for the program.

"We're getting to the point where policymakers really need to address this issue, and the longer they wait the harder the problem becomes to fix," he said.