President Donald Trump swore to office on January 20 and he has already begun an ambitious agenda. As the Trump administration is trying to make significant cost redundancies, many retirees may wonder what the plans of the 47th Social Security President are, which distributes the benefits of tens of millions of Americans each month.
Social security has long been in a position. The program will need to reduce benefits after 10 years if the Congress does not make changes to reduce its finances. Although it is still early, let’s look at three things that President Trump has discussed that would affect social security.
Recently, on February 18, Trump promised not to reduce benefits. At Fox News, Trump told Sean Haniti that “social security would not be touched unless there was a scam or something. This will be strengthened. But it won’t touch. ” Trump also said his administration would not cut Medicare and Medicaid.
However, Trump may be in a difficult position on Medicaid. Earlier this month, the Chamber’s Budget Committee voted for a minimum of $ 880 billion for compulsory cost programs observed by the Chamber Energy and Trade Committee. One of these programs is Medicaid. All this is part of the budget resolution of the house that Trump supported.
Trump’s reluctance to reduce social security, Medicare and Medicaid returns to the comments he made in 2013 when he said he was making cuts for these programs and winning the election “really won’t happen”. Obviously, it was a long time ago and Trump can be unpredictable, so as he says that the reduction of benefits is not on the table, people have to watch carefully what is actually happening in the congress.
A formal photo of the White House by Joyce N. Bogosian.
Not all are subject to taxation on social security income. The rule is based on a combined income that the internal revenue service defines as half of the social security benefits of the pensioner plus other income from sources such as pensions, salaries, dividends and capital profits.
Single files can see up to half of the taxed with their social security if they make between $ 25,000 and $ 34,000, and up to 85% of the benefits if they make more than $ 34,000. For married couples, which are jointly submitted, the thresholds ranked from $ 32,000 to $ 44,000 for half of their benefits, and over $ 44,000 for 85% of the benefits taxed. Remember that these are not the actual tax rates, but only the share of retirement benefits that could be taxed.
Trump said throughout the campaign that he wanted to remove these taxes. Officials from the president’s administration have recently told CNBC that Trump plans to “double” on this proposal. However, this promise can be complicated. Trump has promised to reduce costs to try to take advantage of the growing fiscal deficit that exceeded $ 1.8 trillion in the fiscal 2024.
The budget model of the University of Pennsylvania University Waorton estimates that removing taxes on social security income can reduce US $ 1.5 trillion revenue a decade, while raising the country’s debt to 7% to 2054. This will leave a difficult solution for Trump, taking into account its hopes.
High inflation is not a friend of the president, as many voters focus on the economy when they head to the ballot box. High inflation has significantly harmed the approval of former President Joe Biden’s approval and probably influenced the outcome of the election. Inflation now slowed down drastically after an increase to 9% in 2022. Recent January data show that the inflation rate during the year was 3%.
This is better, but still over the preferred 2% target of the Federal Reserve and it has been sticky in recent months. Consumer prices have remained high due to increased inflation in recent years and even when inflation is slowing down, prices are still rising. President Trump has made it clear that he would like to reduce prices, but the task is easier to say than to be done, and in many cases beyond the president’s control.
Either way, if inflation drops at Trump’s request, it can lead to a lower cost of life costs (Cola) for benefits. The Social Security Administration distributes COLA every year to help the purchasing power of benefits keep up with inflation. The annual Cola is based on the third quarter inflation data each year, so if the prices rise at a lower rate from year to year, then the next Cola will also shrink.
Cola 2025 came at 2.5%, but it remains to see what inflation will look like the rest of this year (and specifically the third quarter). To further complicate the questions, many beneficiaries and groups also believe that cars are not up -to -date in the long run, so even growing cars may not be the victory that some think they are.
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President Trump’s potential changes for social security so far: 3 things you need to know are originally published by Motley Fool
