The Trump-Muskrat plot to kill Social Security
The Trump-Muskrat plot to kill Social Security, Robert Reich
Sorry to intrude on your inbox for a second time today, but Elon Musk has revealed the truth about what he plans to do with his so-called Department of Government Efficiency (DOGE): Gut Social Security and Medicare.
Musk retweeted a series of posts by Utah’s Republican Senator Mike Lee, who dubbed Social Security “deceptive” and called for its dismantling. “Interesting thread,” Musk added.
On Thursday, Musk and his “DOGE” co-chair, Vivek Ramaswamy, went to Capitol Hill to discuss their plans. Republican lawmakers immediately announced that “everything is on the table,” including cutting Social Security and Medicare.
During the campaign, Musk said his goal was to cut $2 trillion — or about 30 percent — of the entire federal budget.
There’s no way to do this without cutting Social Security, Medicare, and Medicaid. Social Security alone accounts for almost a quarter of the total federal budget.
Ramaswamy has been even more explicit about their plan, saying in a CNBC interview that “there are hundreds of billions of dollars of savings to extract” from Social Security, Medicare, and Medicaid.
Elon Musk spent $277 million of his fortune to elect Trump. He bought the power to gut Social Security and give himself more tax cuts and tens of billions in government contracts.
Just to remind you: Neither Musk nor Ramaswamy was elected to his position. Which means they’re utterly unaccountable. (Musk and Ramaswamy will work in concert with budget-cutters in the Trump White House, with the support of a congressional DOGE caucus that’s now forming.)
They’re both multi-billionaires who couldn’t care less about Social Security. Meanwhile, you’ve probably been paying into Social Security your entire working life.
Republicans have been out to kill Social Security since its founding in 1935 because it’s one of the most popular and successful government programs ever created. It doesn’t only help retirees. It also keeps 26 million people out of poverty.
Republicans have used public concern about Social Security’s future solvency as a cynical excuse to demand cuts in benefits.
True, the trustees of Social Security — of which yours truly was once a member — say the program will be able to pay full benefits only until 2033. After that, Social Security will be able to dole out only about 77 percent of benefits.
But Social Security could easily pay everything it will owe to everyone for the next 75 years if the cap on income subject to Social Security taxes were eliminated.
That cap is set at $168,600 this year (it rises with inflation). That means that anyone who earns more than $168,600 this year pays nothing in Social Security taxes on the excess.
Elon Musk finished paying his 2024 Social Security taxes 14 seconds past midnight on January 1 of 2024.
Even a run-of-the-mill CEO earning $20 million per year pays Social Security taxes on less than 1 percent of their income.
Meanwhile, a typical American worker pays Social Security taxes on 100 percent of their income.
The Social Security trustees anticipated the current boom in boomer retirements. This is why Social Security was amended in 1983, to gradually increase the age for collecting full retirement benefits from 65 to 67. That change is helping finance the boomers’ retirement.
But the trustees failed to anticipate that most Americans’ wages would remain stagnant and how much of America’s total income would be going to the top.
Most of the American working population today is earning less than the Social Security trustees anticipated years ago — reducing revenue flowing into the program.
Had the pay of American workers kept up with the trend decades ago — as well as their growing productivity — their Social Security payments would have helped keep the program flush.
At the same time, a much larger chunk of the nation’s total income is now going to the top compared to decades ago.
But income subject to the Social Security payroll tax is capped. So as the rich have become far richer, more and more of the nation’s total income has escaped the Social Security payroll tax.
The rise in the amount of income above the cap due to inequality has cost the Social Security Trust Fund reserve an estimated $1.4 trillion since 1983.
The solution is obvious: Scrap the cap and make the rich pay more in Social Security taxes.
Bernie Sanders has come up with a plan that would eliminate the cap on earnings over $250,000 and also subject investment income to Social Security taxes. This would extend the solvency of Social Security for the next 75 years without raising taxes on 93 percent of American households.
But Donald Trump, Elon Musk, Vivek Ramaswamy, and the other billionaires who’ll be running the administration starting January 20 don’t want to pay their fair share to keep Social Security going. They’d rather kill Social Security.
Buckle your seatbelts. This is likely to be one of the biggest fights of the first year of the Trump administration. It’s also a glaring illustration of the difference between the American people and Trump’s rich and powerful lackeys.
If we want to ensure Social Security’s long-term future, and that working people can retire with dignity, we must make the wealthy — including the richest person in the world— pay their fair share.
“But Social Security could easily pay everything it will owe to everyone for the next 75 years if the cap on income subject to Social Security taxes were eliminated.”
Will the cap on benefits be lifted as well? Otherwise, Social Security just becomes another form of welfare.
I knew this was not true, but had to do some research. It IS true that Republicans were against Medicare from the beginning.
House Republicans on Social Security from Legislative History
1935: Yes 81 No 19
1939: Yes 143 No 2 Dependents
1956: Yes 169 No 23 Disability
1972: Yes 109 No 28 COLA formula
1983: Yes 80 No 48 “Balanced” benefit cuts and tax increases
In 1994 Title IV of the 1935 Act (Aid to Families with Dependent Children) was repealed with unanimous Republican support and Democrats 98 for and 97 against. I could make a case for that being against “welfare” rather than against Social Security, but it is probably where I would mark the turning point. Although Bush’s attempt in 2005 to kill SS never made it to legislation, it did show that Republican support was a thing of the past.
The rhetoric throughout this really fuels the idea that SS is truly a non-means tested transfer program and not insurance. If it were insurance, the concept of “mak(ing) the rich pay more in Social Security taxes” would make little sense. The seller (SSA) doesn’t have an insurance product that offers benefits linked to income over $168,600, so on what basis are those over the cap not paying enough? They are already at the lowest possible monthly benefit to contribution (tax) ratio the system offers. They are supporting the system more strongly than other participants. As the system actually exists, capped participants are doing their share, whether or not it takes mere days to reach their cap.
Agreed. I prefer to start with the understanding that SS is insurance against running out of money in retirement. Defining what it means to run out is complex enough to involve a lot of political compromise, but it has worked well enough for over 80 years. Keeping its basis of “for workers – by workers” is one thing that should not be compromised.
This one also needed research. In 2009 the National Academy of Social Insurance requested the analysis of a range of options (pdf). Footnote 4 shows the 75-year goal for solvency is 2 percent of annual payroll. Option 8b is eliminating the cap; it scores 1.65 – not enough. Option 8a is eliminating the cap and reducing benefits for those who were above the cap; it scores over 2 – room for compromise. The Northwest Plan is there (without its triggers) as option 7c; it scores 1.98 – a clear winner.
@Arne,
Based on logic and reason, the Northwest plan seems the best to me (albeit 15 years later, the increases in taxes would have to be higher). Based on politics, the Northwest plan has never had a realistic chance of being adopted. Sad.
Joel,
Sad, agreed.
But, the triggers in the NW Plan delay the increases until they are needed. The delay in starting means they are more compressed together, but the final tax increase at 75-years is not changed. (Asymptotic assumptions about life expectancy and fertility in the annual report necessarily produce an asymptote for the tax rate.)
In hindsight a bit surprised that when Democrats had Senate and House plus President Biden in 2012-2023 that moving a fix forward was not a priority. This program is one of the Crown Jewels of the Democratic brand. Anyone here knows that the issue was well understood many years prior to that even. It’s not as if the situation just cropped up after the House went Republican.
@Eric,
Would this be the Democratic Senate majority that included the fake Democrats Kristen Sinema and Joe Manchin?
The Byrd Rule, named for Senator Robert Byrd, was adopted in 1985 and amended in 1990.[13] The Byrd Rule defines a provision to be “extraneous”—and therefore ineligible for reconciliation—in six cases:[3]
…
if it recommends changes in Social Security.
@Arne,
And if the GOP Senate decides to ignore the Byrd rule? Who enforces the Byrd Rule and by what power?
The Senate rules on reconciliation do not allow changes to SS.