President Donald Trump has generated controversy on a number of policy fronts, from tariffs to immigration and beyond.
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One file in particular — how exactly to reform a financially strained Social Security system — has proven difficult to navigate, with the president finding both critics and supporters offering up a variety of potential solutions to the pressing issue of solvency facing Social Security.
Younger Americans may not be the first age cohort one thinks of when Social Security reform is spoken of, yet they remain important stakeholders. What are some of the most pressing reasons that Trump’s potential overhaul of Social Security could harm members of Generation Alpha (roughly defined as those born between 2010 and 2024)?
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Plan To End Taxation of Benefits Could Hasten Insolvency
While Trump took to Truth Social on July 31, 2024 to suggest that senior citizens should not pay tax on their Social Security benefits, some experts suggest doing so would not produce an appreciable upside for most recipients, but would also hasten insolvency — speeding up insolvency for the Medicare Hospital Insurance (HI) trust funds in the process.
According to the Committee for a Responsible Federal Budget (CRFB), eliminating the partial income taxation of Social Security benefits would push deficits up by $1.6 trillion to $1.8 trillion through 2035, increase Social Security’s 75-year shortfall by 25% (0.9% of payroll), triple Medicare HI’s 75-year shortfall (0.6% of payroll), and advance the insolvency date of Social Security’s trust fund by more than one year.
In essence, this means that an already embattled Social Security system which may be anemic or nonexistent by the time Generation Alpha reaches retirement age, could also be forced to rely upon higher payroll taxes throughout younger Americans’ working careers to fund it — a lose-lose proposition, should it come to pass.
One stalking horse persistently added to conversations surrounding Social Security’s solvency problem: A potential raising of the retirement age. With members of Gen Alpha being so young, with decades to go before most will claim Social Security benefits, at least one (if not two or more) hikes concerning the retirement age could be on the table unless drastic measures are taken.
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Staffing Cuts Could Harm Gen Alpha
Per the Center for American Progress (CAP), Trump’s DOGE team is working to cut 7,000 jobs at the Social Security Administration (SSA), with already undertaken reorganizations and reassignments having slowed claims processing and increased the rate of errors.
Survivor benefits, currently underutilized by children with a deceased parent in the first place, are also being negatively affected by staffing shortages. Field offices which typically help guide eligible claimants are understaffed, reducing the ability for minors to successfully navigate the benefits system to claim entitlements.
More broadly, with 6.2 million children (as of 2023) living in households receiving Social Security benefits, a slashing of SSA workforce could result in significant difficulties.
SSA Data Handed Over to DOGE Could Result in Privacy Breaches
CAP also profiled the recent, as of June 6, Supreme Court staying of a preliminary injunction that could have prevented DOGE officials from gaining access to personally identifiable information, including SSA-held data.
The staying of the injunction means, according to the public policy research and advocacy organization, that DOGE representatives are effectively authorized to have Americans’ private SSA data handed over immediately.
“In the wrong hands, Americans’ private SSA data — including children’s data — could be exposed to outside hackers, used to train artificial intelligence without consent, or mishandled in ways that interfere with providing benefits,” CAP detailed.
“For example, DOGE’s carelessness with sensitive information such as Social Security numbers raises the risk of identity theft, at a time when identity theft against minors is a growing problem,” it added.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 3 Reasons Trump’s Social Security Reform Could Harm Generation Alpha
