Nobel laureate economist sounds alarm: Trump's actions could 'bankrupt' Social Security
Matthew Chapman
October 24, 2024
Nobel Prize-winning economist turned political analyst Paul Krugman issued a dire warning in a New York Times op-ed: the policies former President Donald Trump is running on would decimate the solvency of Social Security and perhaps even "bankrupt" the program altogether.
This comes as many other experts fire off similar alarm bells, with one study saying the federal retirement program's trust fund could be depleted in just six years if all of Trump's policies are adopted.
Social Security, noted Krugman, operates on its own separate budget.
"This system, in which contributions from working-age Americans pay for benefits to seniors, has been placed under pressure from an aging population, which has increased the ratio of beneficiaries to workers. But everyone knew long ago that baby boomers would eventually stop paying in and start taking money out, so way back in the 1980s steps were taken to shore up Social Security’s long-term finances. These steps included increasing the payroll tax rate, making benefits subject to income tax and gradually raising the age of eligibility for full benefits from 65 to 67."
Krugman long expected that further steps would be taken to shore up the system because older adults are the most reliable voters and don't want to see their funds run out. However, he said, Trump is now threatening to blow everything up for short-term gain.
"Trump has made multiple proposals that would undermine Social Security’s finances," wrote Krugman. "These include exempting Social Security benefits, tips and overtime pay from taxes. Less obviously, perhaps, Trump’s tariffs would be inflationary, increasing Social Security’s cost of living adjustments. And deporting undocumented immigrants — many of whom pay payroll taxes — would further worsen the situation."
Worse still, because Trump's plans "would make the hole in Social Security’s finances much bigger while also weakening the economy and adding trillions to [the] national debt," Congress would have limited options to solve the issue.
Ultimately, he concluded, America will be a much less stable place to retire should Trump get another term and enact his agenda.
"The fate of Social Security isn’t my top concern if Trump wins — I’m more concerned about his threat to democracy — but it’s definitely on the list," he wrote.
October 24, 2024
Nobel Prize-winning economist turned political analyst Paul Krugman issued a dire warning in a New York Times op-ed: the policies former President Donald Trump is running on would decimate the solvency of Social Security and perhaps even "bankrupt" the program altogether.
This comes as many other experts fire off similar alarm bells, with one study saying the federal retirement program's trust fund could be depleted in just six years if all of Trump's policies are adopted.
Social Security, noted Krugman, operates on its own separate budget.
"This system, in which contributions from working-age Americans pay for benefits to seniors, has been placed under pressure from an aging population, which has increased the ratio of beneficiaries to workers. But everyone knew long ago that baby boomers would eventually stop paying in and start taking money out, so way back in the 1980s steps were taken to shore up Social Security’s long-term finances. These steps included increasing the payroll tax rate, making benefits subject to income tax and gradually raising the age of eligibility for full benefits from 65 to 67."
Krugman long expected that further steps would be taken to shore up the system because older adults are the most reliable voters and don't want to see their funds run out. However, he said, Trump is now threatening to blow everything up for short-term gain.
"Trump has made multiple proposals that would undermine Social Security’s finances," wrote Krugman. "These include exempting Social Security benefits, tips and overtime pay from taxes. Less obviously, perhaps, Trump’s tariffs would be inflationary, increasing Social Security’s cost of living adjustments. And deporting undocumented immigrants — many of whom pay payroll taxes — would further worsen the situation."
Worse still, because Trump's plans "would make the hole in Social Security’s finances much bigger while also weakening the economy and adding trillions to [the] national debt," Congress would have limited options to solve the issue.
Ultimately, he concluded, America will be a much less stable place to retire should Trump get another term and enact his agenda.
"The fate of Social Security isn’t my top concern if Trump wins — I’m more concerned about his threat to democracy — but it’s definitely on the list," he wrote.
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