President Donald Trump reaches more critical lifeline


More than eight decades after President Franklin D. Roosevelt introduced Social Security to the United States, the country's principal retirement and disability assistance program is again facing an uncertain future.

Roosevelt's ambitious insurance initiative was never universally accepted. Driven by skyrocketing poverty rates among seniors on the contrails of the Great Depression, the law was lambasted by many -- including some in the president's own Democratic Party -- as a gateway to socialism.

Passed by Congress and ratified by FDR in August 1935, the Social Security Act not only withstood constant political turbulence, but it quickly took hold as one of the U.S. government's most critically serviceable programs of any kind.

Now, on Thursday's 80th anniversary of the first Social Security payment, the federal lifeline is reaching critical mass under President Donald Trump.

Previous administrations have looked into revolutionizing or supplanting the program under the expectation that Social Security will run out of money and soon. To date, no president has made even a dent in the problem.

As with a number of federally funded assistance programs, long the hallmarks of Democratic administrations, it remains to be seen how the new Republican president will address it.

Analysts expect Trump to survey a wide array of options. One idea under consideration is to reroute the money source.

Trump is said to be seriously mulling the death of the 12.5 percent Social Security payroll tax -- half paid by employers, half by employees -- which has funded the program since its inception. If he did that, he would need to find another revenue stream.

This path, though, would conflict at least somewhat with the commonsensical pose Trump held throughout his campaign, when he shot down any notion that he might target Social Security. As a candidate, Trump often used the issue against Democrat Hillary Clinton at rallies in traditional blue-collar (and blue voter) states, saying she who would take an ax to Social Security in the White House.

"I said I'm not touching Social Security," the president reiterated to Fox News in February.

Cutting out the payroll tax could be in step with Trump's aim to deregulate corporate America -- a plan that's already resulted in a series of policy decisions intended to spur American economic and innovative growth.

Because workers are on the hook for half of the payroll tax, cutting it out would put more money in American workers' pockets, at least for the near term. But its longer-term effects would be detrimental, some experts say.

"This is an absolutely terrible idea, partially because it smells like a back-door way of cutting Social Security benefits," Los Angeles Times business columnist Michael Hiltzik wrote earlier this month. "It needs to be nipped in the bud."

The system is in danger of buckling.

For years, the program has been gradually paying out more money than it takes in. At its current pace, the Social Security trust fund, which has a $2.8 trillion surplus, is expected to run out in about 15 years. To compensate for the widening gap, the trust fund is being supplemented by interest earnings from government-held bonds. Analysts believe that by 2020, however, the gap will become too large for that strategy to continue and the fund will be forced to start selling those bonds. By 2035, they say, the well will run dry. When that happens, recipients will begin to see a 20 percent reduction in payouts.

Republican presidents and lawmakers have been on the lookout for a replacement for as long as the law has been on the books. In 2005, President George W. Bush attempted to rewire Social Security to behave more like a 401(k) by tethering it to the stock market. The offbeat idea intrigued proponents and alarmed skeptics, who feared a number of potential catastrophic scenarios could sink the system. The Bush plan didn't get far, and the subprime mortgage market crashed three years later.

Although Barack Obama made progressive strides in a number of social arenas during his tenure, he largely ignored Social Security. Last summer, in the waning months of his presidency, he proposed expanding the system and increasing benefits through unspecified tax increases for middle- and upper-class Americans. Just three years earlier, he had argued for reducing Social Security payouts.

Between 2009 and 2016, the projected long-term funding shortfall for Social Security more than doubled -- from just over $5 trillion to $10.7 trillion -- making the idea of expansion even trickier. Some have proposed lifting the payroll tax cap so that wealthier Americans can pay a greater share, but any chance of that prospect died with Clinton's presidential hopes on Nov. 8.

With newfound power, Republicans are now lining up for another shot at reform. It's possible Trump could look to replace Social Security with an entirely new system -- similar to his "repeal and replace" move on Obama's Affordable Care Act.

House Speaker Paul Ryan has stated a desire to privatize the system.

If Trump replaces the payroll tax, experts speculate he could do it with a new tariff on imported goods -- a tactic some say could work if it doesn't destabilize the consumer market. Others fear the concept could merely hike consumer prices to unsustainable levels and bring about a number of unintended consequences that offset any gains. Another possibility could see a value-added tax replace the payroll tax.

Trump has hinted that he has a plan for a new funding source.

"I am going to save Social Security without any cuts," he said in a tweet nearly two years ago, before he launched his presidential bid. "I know where to get the money from. Nobody else does."

Any reconfiguration of Social Security is bound to face resistance.

"Having suffered defeat on their frontal attacks against Social Security, Trump and his Republican allies in Congress appear to be contemplating a stealth attack, instead," Nancy Altman, president of Social Security Works, a nonprofit group for protecting and expanding the program, wrote for The Huffington Post this month. "Not only would the Trump proposal starve Social Security of dedicated revenue, it would ultimately destroy it.

"Social Security is not a government handout. It is wage insurance that the American people earn, as part of their compensation, and, indeed, pay for with deductions from their pay."

Trump could just leave Social Security alone, as many presidents before him have done. However, that option, most experts believe, is Trump's least likely course of action.

The president is already having an impact on some Americans receiving Social Security benefits. This week, Newsweek reported that Trump's repeated trips to his $175 million Mar-a-Lago resort in Palm Beach, Fla., are running up a large tab that continues to go unpaid: $4 million so far.

Every time the president travels to what he's coined the "Southern White House," Palm Beach County is forced to pay for increased security. So far, the county has not been reimbursed by the federal government. If that continues, officials say the only way they'll be able to pay for the extra security is to raise taxes on its residents -- a good number of whom rely solely on Social Security.

"If someone was living on Social Security they would be affected," Palm Beach County Mayor Paulette Burdick said.

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