Is Social Security On The Ballot?

One of the political hot topics in this year’s Presidential election is Social Security. More and more Americans are reaching retirement age, while the program runs out of money. Trump and Harris have VERY different plans for how to solve this problem…

Key Takeaways

• Social Security is quickly running out of money
• Harris promises a reduction in long-term economic growth
• Trump’s policies would result in short-term higher prices and longer-term prosperity
• Either way, we’re in for a rough few years

One of the political hot topics in this year’s Presidential election is Social Security. More and more Americans are reaching retirement age, and, at the same time, Social Security’s future is in question. The program is running out of money, and everyone knows it.

So, of course, both major party candidates are addressing the Social Security issue… at least to some extent.

How will each candidate’s proposals affect you, and what can you do to create the best situation for your retirement if one candidate or the other takes the White House?

That’s what we’re talking about today, but first, if you aren’t already familiar with the problem, let’s talk about…

What’s going on with Social Security?

If you grew up in the U.S., then, you likely grew up having the idea that Social Security would be there to provide for you in your senior years.

Unfortunately for many people, they haven’t taken the time to even take a moment to think about that belief, to consider if it is even true. They’ve just lived their life under that assumption, and failed to make any other plans for income in their retirement years

They’re completely dependent on the government to pay for food, shelter, and utilities after they stop working.

And considering how awful governments are at planning, being completely dependent on the government, if you have any way to prevent that, is a terrible idea.

Which leads directly to the elephant in the room:

The Federal government’s terrible planning for Social Security is so bad that even blatantly partisan hacks are admitting that the next President really has to do something to prevent Social Security from running out of money before most Generation X Americans can even retire. James Downie, writing for MSNBC, says,

The Congressional Budget Office [CBO] projects that the trust fund will run out before 2035.

That’s not a typo. They’re saying that, based on current trends, it will be out of money in about ten years from the time of this writing. Why? Simple: There’s more money going out than coming in – and, if you squint at the CBO chart, you’ll see that’s been the case for the last 15 years or so:

So, of course, both candidates are talking about it because huge numbers of voters are concerned about it.

So, let’s talk about what each candidate wants to do to save Social Security.

Here’s what we know about Harris’s plans for Social Security.

Like most of Harris’s economic policies, what we know about her Social Security plans can be summed up in two words: Not much.

Sure, Harris, as you would expect, is saying that she wants to save Social Security so that people reaching retirement can receive it.

What she’s not saying much about, though, is how she’ll do that. other than saying that she wants to increase the COLA (Cost of Living Adjustment) and tax the rich to pay for it. At USA Today, Ben Adler writes,

Harris’s campaign website says that “She will strengthen Social Security and Medicare for the long haul by making millionaires and billionaires pay their fair share in taxes.”

Of course, “Tax The Rich!” is a standard talking point from the left. Those who have money should cover the check for those who don’t.

What they don’t tell their supporters is that taxing the rich incentivizes the rich to not invest in businesses. Not to create more jobs and more wealth and increased income for themselves and others. That’s self-defeating, because increased economic growth is where tax revenue comes from! Successful small businesses and hard-working entrepreneurs create new jobs and increase productivity. Those new jobs mean more people working, and making money, and paying taxes.

Increasing taxes on the rich also causes many of the wealthy to simply leave the country. And that means not only does the government not get paid more in taxes, it means that the government loses out on all of the tax revenue from that wealthy person.

Although a lot of economists have studied this phenomenon, it’s probably best known from the work of Arthur Laffer, who said:

“At some point, increasing tax rates reduce total tax revenue by discouraging the taxed activity.”

So, Harris’s plan would increase government spending and would do that in a way that will be funded by increased deficits, not by higher tax revenues. (It’s just a continuation of the Biden presidency and Bidennomics, and we all know how “great” that has been for retirees and other everyday Americans.)

To put it plainly, Harris’s plan would make the problem that they say that they want to solve even worse. She wants to strangle the goose that lays the golden eggs.

This is how socialism works. You punish economic success with higher taxes, and you reward economic failure with increased spending on social programs. And what happens? You get less economic success and more economic failure. It’s pretty obvious to me! But then again, Kamala Harris’s economic advisors haven’t exactly been interested in my perspective.

So what’s the alternative?

What is Trump’s plan for Social Security?

Trump’s stated plans to save Social Security take a very different approach to the problem.

For example, Trump has proposed easing taxation for many Social Security recipients. For Forbes, Taylor Tepper writes,

Trump’s plan [to eliminate taxation of Social Security benefits] will undoubtedly be popular among the 40% of Social Security recipients who pay taxes on their benefits, representing 4% of Social Security’s revenue in 2022.

Of course, this idea has certain people frothing at the mouth with panic because they imagine that will mean decreased tax income for the government. Of course, it’s the people who don’t know how to grow an economy but want to tax people to death so that they can spend money on a Keynesian fantasy of stimulating an economy through government spending who are worried about this.

Trump’s campaign has stated how they’ll not only make up for the perceived tax revenue shortfall and also make sure that the government has revenue to save Social Security. Aris Folley, for The Hill, writes:

Trump campaign’s press secretary, Karoline Leavitt said a second Trump administration would shore up Social Security funding by “unleashing a new economic boom.”

And an advisor to the Trump campaign, Stephen Moore, who is also “a senior visiting fellow in economics at the Heritage Foundation” says:

“What I always tell the (former) president is if we can just get to a sustained level of 3% growth, then the problem is solved. You’ll have plenty of revenue.”

What isn’t being said, though, is that economic growth can take time and that it may not immediately provide the revenue needed to completely avoid the coming insolvency of the Social Security trust fund (though, it could over time).

And that means that there is likely to be additional deficit spending to keep the program going until Trump’s current and future economic policies get the economy firing on all cylinders again.

The problem with that, of course, is that deficit spending leads to inflation.

So, while Trump’s plans for saving Social Security are much better in the long-term, we’re still facing a short-term funding challenge. There are likely to be some “growing pains” as the program digs itself out of the hole.

Social Security’s future is uncertain, but your retirement doesn’t have to be

Now, I’m not downplaying how higher prices from either candidate’s policies will affect us in the short term (or, in Harris’s case, in the long term as well). Higher prices, whether from inflationary deficit spending or tariffs on imported products, will make tough times for many everyday Americans.

After all, I’ve lived through the last four years, too. The massive cost-of-living surge hasn’t been fun! It has, however, been a great time to own physical gold and silver.

Since January 1, 2021, the price of gold has risen 44%. Demand for gold as a safe haven has rarely been higher! When we’re facing an uncertain economic future, it makes sense to diversify your long-term savings with inflation-resistant investments like physical precious metals.

For people with the foresight to pay attention to the trends we see today, and to plan ahead, it’s possible to take control of your financial future. You can take steps now to minimize (and even avoid) greater pain down the road.

When you’re ready to take the first step, Birch Gold is here to help you from the first step to the last.