A Budget Bill That Will Harm Social Security’s Finances
Just so you know:
Democrats, health advocates, and even some Republicans have spoken out against the Social Security bill firmly. They are calling it a Trojan horse cutting the safety net for millions of Americans while making up for tax breaks for the wealthiest. Mostly and if living in a house with a mortgage as well as other tax deductions, one could avoid much of the income taxes.
A question is, “what happens with those taxes collected from Social Security Recipients?” The short answer is the taxes are plowed right back into Social Security. In 2023, those taxes returning to Social Security were an ~$83 billion. Read on . . .
Presently? Just how Important Is Benefit Taxation to the Trust Funds?
The income taxes paid on the first 50% of Social Security benefits are credited to the Social Security trust funds. In 2023, this was $50.7 billion, or 3.8% of the Social Security trust funds’ total income. Under their intermediate assumptions, the Social Security trustees project that income taxes as a share of total revenue will grow to 6.6% in 2033.
The income taxes paid on the next 35% of taxable Social Security benefits (from 50% to 85%) are credited to the HI trust fund. In 2023, this was $35.0 billion, or 8.4% of total HI trust fund income. Under their intermediate assumptions, the Medicare trustees project that income taxes as a share of total revenue will increase to 13.6% in 2033.
Also on deck is a Common Dreams article critical of the Social Security Commissioner Frank Bisignano.
~~~~~~~
“Trump Social Security Chief Applauds Budget Bill That Will Harm Social Security’s Finances,” Common Dreams
U.S. President Donald Trump’s handpicked Social Security chief issued a statement Thursday applauding the passage of a Republican reconciliation bill that analysts say would negatively impact the New Deal program’s finances.
Social Security Commissioner Frank Bisignano called the Republican legislation, which Trump is expected to sign on Friday, a “historic step forward for America’s seniors” and a reaffirmation of the president’s “promise to protect Social Security.”
But experts warned in the lead-up to the bill’s passage that its massive tax cuts would bring forward the date at which Social Security will no longer be able to pay out full benefits in the absence of legislative solutions.
Raising Standard Deductions
“By raising the standard deduction for all filers, and raising it even higher for some seniors, fewer Social Security beneficiaries will pay taxes on their benefits, and those who do will pay lower rates,” said Kathleen Romig and Gbenga Ajilore of the Center on Budget and Policy Priorities. “Raising the standard deduction would deliver little to no benefit to lower- and moderate-income families while reducing income into Social Security’s trust funds.”
The Social Security Administration put out a statement celebrating a bill that would lead to faster insolvency of the Social Security Trust Fund pic.twitter.com/aRhLfcRiIv, Bobby Kogan (@BBKogan) July 4, 2025
According to the latest Social Security Board of Trustees report (released ahead of the reconciliation bill’s passage), the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay out 100% of benefits until 2033. Thereafter and if lawmakers do not act, the fund will be able to pay out 77% of total scheduled benefits.
The Committee for a Responsible Federal Budget (CRFB), a conservative think tank, estimated in an analysis released last month that the Republican reconciliation package would accelerate the depletion of Social Security and Medicare’s trust funds by a year. Compared to current law, the GOP measure would also result in “even deeper” cuts to Social Security benefits after the trust fund depletion date, the analysis projected.
Rep. John Larson (D-Conn.), a leading champion of Social Security Expansion in Congress, highlighted CRFB’s findings in a video posted to social media a day before House Republicans secured final passage of the reconciliation bill.
Larson states: “We have to act now, not just to protect Social Security but to expand the benefits. It needs to be protected. It needs to be enhanced, not cut and diminished.”
I was deeply offended when I got that misleading and blatantly partisan message from Social Security. My wife and I get a nice income from Social Security–we made decent money during our working years and waited until age 70 to claim. We pay taxes on that income and I do not for a moment begrudge paying those taxes. We will be able to support ourselves until we die–have private long term care insurance–and will be able to leave a little bit of money to our daughters and their families. We regularly contribute to funds for our grandchildren and although we are not wealthy by any means, with the aid of Social Security, we are quite comfortable. I am guessing that most people in our position feel the same and do not begrudge the taxes they pay on Social Security income. The people who are pissed off about paying taxes on Social Security are the same people who do not pay taxes now on Social Security. The MAGA cultists are basically the losers of 20th century American prosperity and they are determined to destroy people like me who did okay. I would not mind that if they would go after the oligarchs with the same venom.
Terrance:
Do you think they care Terry?
Jan and I worked till we were seventy to max out like I think you did too. We have funds on the side from 401Ks that were reinvested. We are comfortable, not rich, but we are secure. I am cautious with what we do. Did the same with LTC. Have Plan N and the VA. Was at Camp Lejeune for over 2 years and they poisoned me. I have a claim in for such. The Hematologist said he would support this and write the letter to the VA. I think we may be ok. Neve sure.
The taxs are not that great after deductions for mortgage, etc. I know there are others who are struggling. We help when we can. I stay away from the trumpists.
I’m okay with bringing the trust funds’ depletion date forward a year if that is the impact. I’m okay with “even deeper cuts” eventually. Clearly the system needs a funding and benefits rethink that goes well beyond the impact of this pretty small change here, so if finally working on it happens a year earlier than it otherwise would have, fine. Funding will be reformed again in the relatively near future and a new “taxing of benefits” plan can be included. In the meantime if, for example, 2033 feels a bit more urgent than 2034, that isn’t actually a bad thing.
Obviously, you have not been paying attention (or are suffering from a reading comprehension disorder).
Social Security funding is there until 2033. There was also no need to cut taxes for those in higher income brackets. People will pay taxes on amounts greater than what the maximum cut off is. Initially 50% is taxable after one cut off and 85% is taxable after the second cut off. After such, you will have other deductions if you use the long form. Short form is for people with no deductions.
Causing a problem one year earlier because they wish to garner political favoritism is an issue. A dangerous one at that. The fix is still in the tenths of 1 percent if Republicans and the current administration will do it.
I resent your remarks as it is hogwash and inaccurate and meant to create a foundation using erroneous and hypothetical BS.
STOP!
Analogies are usually terrible, but sometimes they are fun anyway. Not worrying about the hole someone put in your gas tank because you were going to have to gas up somewhere along the way seems a little unreasonable.
Arne:
People appear to wait till the catastrophe is upon them before they react. The cure then is far greater than if they did something earlier.