STEVE INSKEEP, HOST:
Next, we'll try to understand what President Trump's proposals mean for Social Security. Here's what he told Congress on Tuesday night.
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PRESIDENT DONALD TRUMP: I'm calling for no tax on tips, no tax on overtime and no tax on Social Security benefits for our great seniors.
INSKEEP: OK, getting rid of a lot of taxes, and he also said that he would not cut benefits. Senator Elissa Slotkin of Michigan cast doubt on that when she delivered Tuesday's Democratic response.
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ELISSA SLOTKIN: He could very well come after your retirement, the Social Security, Medicare and VA benefits you worked your whole life to earn. The president claims he won't, but Elon Musk just called Social Security the biggest Ponzi scheme of all time.
INSKEEP: Elon Musk did say that. So what do the facts show about these conflicting claims? Marc Goldwein is going to help us here. He's senior policy director at the Committee for a Responsible Federal Budget, which advocates for the thing that's in the group's name. Mr. Goldwein, good morning.
MARC GOLDWEIN: Good morning. Thanks so much for having me.
INSKEEP: OK, so the president said he wants no taxes on Social Security benefits. Does everybody who gets Social Security at some point gain from that?
GOLDWEIN: No. About half of people that get Social Security at some point pay income taxes on it. And it's mostly people in the upper half. But if you were to cut those taxes, not only does it increase their after-tax benefits, it also reduces money that's actually going into the Social Security and Medicare trust fund 'cause that money actually pays the benefits. And so doing that no tax would mean higher after-tax benefits for the upper half, but ultimately, it would mean a more insolvent program for everybody.
INSKEEP: Wait a minute. So you said the upper half. So people who make more money pay less taxes, but then there's less money to go around for everyone? Is that what you just told me?
GOLDWEIN: That's exactly right, and it means that instead of being insolvent in eight years, Social Security might be insolvent in six or seven years. And the size of the benefit cut when we can't afford those dollars would be larger.
INSKEEP: Whoa, whoa, whoa. Wait. You just said benefit cut, as if this is an assumed thing, but we've been told the president says he's not going to cut benefits. How would benefits come to be cut under this idea?
GOLDWEIN: Yeah, President Trump has not proposed any direct cuts to Social Security old-age benefits basically in his entire career. But here's the rules - Social Security can only pay in benefits what it's bringing in in revenue, plus what's in the trust fund. And right now, it is spending more than it is taking in. And so in only a few years, there will be an automatic benefit cut. Under current law, it would be 21%. Everybody in eight years gets a 21% cut. But if you start doing things like no taxes on benefits, that cut could be significantly higher, 25% or more.
INSKEEP: Are you telling me that that cut would come in several years for everybody that is currently on Social Security?
GOLDWEIN: If Congress doesn't make changes, this is an across-the-board cut for everybody, right? So today's 62-year-olds will be 70, maybe even younger.
INSKEEP: I suppose if you're a lawmaker or the president of the United States, there's a couple of ways you can deal with this. One is you can ignore it and figure you'll be out of office by then, and it'll be somebody else's problem. But another is you can try different ways to make the math actually work. Are lawmakers discussing different ways to make the math work a little better here?
GOLDWEIN: Look, a lot of lawmakers understand the types of policies that need to be made. Either you bring in more revenue, you know, maybe by raising that payroll tax or the amount of income that's subject to it, you change the benefit formula, you change the retirement age, or you change the cost-of-living adjustment. They understand the options. But to be honest, most of them want to wait till the last minute, hoping that somebody else will actually have to make those choices instead of them.
INSKEEP: Is it possible that we could grow our way out of this problem, just have such spectacular economic growth that we don't have to worry about it in six years?
GOLDWEIN: No, it would be impossible. We are so far from out of balance that no amount of growth could get there in time. And the other thing about growth is Social Security benefits actually rise faster when the economy grows faster 'cause they are indexed to wages.
INSKEEP: Ah, so the more we're earning, the more we're paying. OK. One other thing to ask about in the time we have left - the administration has zeroed in on what they say is waste, fraud and abuse. And Speaker Mike Johnson said intuitively, we just know there's a lot of waste, fraud and abuse in the opening weeks. DOGE, the Department of Government Efficiency, seems to have documented virtually none of that, although Elon Musk made this statement about a Ponzi scheme. Is there any evidence that there's billions and billions and billions of dollars of waste, fraud and abuse in Social Security?
GOLDWEIN: Social Security has a very small fraud rate because it's very easy to know how old people are. It doesn't mean that there's not any, and, of course, we should cut it out, but it is a very tiny share, less than 1% of the program's cost.
INSKEEP: And since you said how old people are, we should just note the thing about people being 150 years old or whatever, that's just a computer entering data issue?
GOLDWEIN: There's maybe hundreds of people collecting benefits that are older than they're supposed to be, not thousands or millions.
INSKEEP: OK, Marc Goldwein. Thanks so much. Transcript provided by NPR, Copyright NPR.
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