"When Trump Wins, US Pension Faces 3,000 Trillion Deficit... Fund Depletion Accelerated by 3 Years"

'Committee for Responsible Federal Budget' (CRFB) Report
Tax Revenue Decline Due to Various Tax Cuts, Bomb Tariffs, and Immigration Restrictions

There is a forecast that if the fiscal pledges of former President Donald Trump, the Republican presidential candidate in the United States, are realized, the U.S. Social Security system will face trillions of dollars in fiscal deficits, accelerating the depletion of its funds.

According to a report released on the 21st (local time) by the bipartisan U.S. think tank, the Committee for a Responsible Federal Budget (CRFB), if the tax cuts, tariffs, and immigration restriction policies proposed by former President Trump are implemented, the Old-Age, Survivors, and Disability Insurance (OASDI) program will incur a fiscal deficit of $2.3 trillion (approximately 3,000 trillion won) by the 2035 fiscal year. During the same period, pension benefits are also estimated to be cut by 33%.

[Image source=Reuters Yonhap News]

The United States finances Social Security income through payroll taxes from the working generation, which is then used to pay pension benefits to the retired generation. Any surplus is saved in the Social Security Trust Fund (SSTF) to prepare for increased pension payments to future retired generations. The Congressional Budget Office (CBO) estimates the depletion of this fund to occur in 2034; however, CRFB explains that if former President Trump is elected, the depletion will be accelerated by three years, reaching exhaustion in 2031.

Among the fiscal pledges of former President Trump, which are expected to cause such massive deficits, the largest share is attributed to tax cuts. CRFB projects that the tax exemptions on Social Security pension benefits and exemptions on overtime and tip income proposed by Trump will cause fiscal deficits of $950 billion and $900 billion respectively to the Social Security fund over the next decade. The cash shortfall caused by punitive tariffs and immigration restrictions is also estimated at $400 billion. Since tariffs raise import prices, Social Security expenditures linked to inflation will also increase, adding to the fiscal burden.

Mark Goldwein, Chief Policy Officer of CRFB, stated, "Most undocumented immigrants are of working age, and many pay taxes into the Social Security program," arguing that undocumented immigrants significantly contribute to the Social Security system’s finances. He added, "There are nine years left until the U.S. Social Security system becomes insolvent, but no presidential campaign has proposed solutions," and pointed out, "Especially Trump’s plan will worsen the situation much faster."

With the November election approaching, concerns about the U.S. federal fiscal deficit are growing as both former President Trump and Vice President Kamala Harris propose various tax cut plans. Notably, both candidates are focusing on child tax credits to win middle-class votes, and tip tax exemptions are a common pledge between them. However, Trump is pushing for tariff increases and reductions in income and corporate taxes, while Harris is advocating for increases in corporate and wealth taxes, marking a key difference.

Mark Goldwein, CRFB’s Chief Officer, pointed out, "Clearly, neither side’s pledges stabilize the debt," and noted that the U.S. fiscal deficit is expected to increase by about $22 trillion over the next decade even without these pledges. Currently, the U.S. fiscal deficit stands at approximately $28.3 trillion, about 99% of the Gross Domestic Product (GDP).