House budget 'senior bonus' replaces Trump Social Security tax cut


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Trump's Shifting Social Security Policy

Donald Trump's initial proposal to eliminate taxes on Social Security benefits, a promise made via a social media post, would have significantly weakened the program's financial stability. This plan was ultimately deemed too costly and unfeasible.

The 'Senior Bonus' Compromise

In response to the cost concerns, Trump and his Congressional allies shifted to a "senior bonus" approach. This plan offers a $4,000 reduction in taxable income for those aged 65 and older, phasing out for higher earners. While seemingly significant, the actual financial impact is less substantial than a direct tax credit.

Financial Implications and Timeline

The 'senior bonus' is estimated to cost $71 billion, considerably less than Trump's initial proposal. It's important to note that this bonus is temporary, set to expire in 2028.

Contrasting Approaches

The article highlights the difference between Trump's approach, characterized by initial grand promises with details worked out later, and the more measured approach seen in proposals by other candidates.

Conclusion

The article concludes by contrasting Trump's approach with more pragmatic alternatives, noting that the final 'senior bonus' policy, while less costly, falls short of his initial, far-reaching proposal.

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In a normal administration, a new policy begins with a group of wonks around a conference table, brainstorming ways to address a problem. The political strategists and the candidate select the idea they think is easiest to sell to voters and the speechwriters and social media managers then craft the messaging.

For President Donald Trump, the process is almost entirely backward, as shown by a proposed "senior bonus" in a Republican budget working its way through Congress.

Here's how the bonus would work: Americans ages 65 and older who don't itemize their taxes would get a $4,000 bonus on top of the standard deduction, under the current proposed budget. The deduction would phase out for older people earning more than $75,000 or older couples earning more than $150,000.

That $4,000 figure sounds larger than it actually is. Older adults are not going to get the equivalent of four grand, as they would if it were a tax credit, which directly reduces your bill. They would just get to reduce their taxable income by that amount. So older adults with the median household income of $50,290 would pay taxes as though they were making $46,290. That's nice, but not a huge difference.

Oh, and it would end in 2028.

He posted a proposal that he had somehow not thought to include in the Republican platform earlier that month.

The path to this idea began with a social media post last year. Just days after Kamala Harris announced her campaign in July and began catching up to Trump in the polls, he posted on Truth Social a proposal that he had somehow not thought to include in the Republican platform approved earlier that month, just one of several sweaty sales pitches he started throwing out on the campaign trail.

"SENIORS SHOULD NOT PAY TAX ON SOCIAL SECURITY!" Trump posted.

This is not a new idea. In fact, Social Security benefits weren't taxed at all until a bipartisan reform signed by President Ronald Reagan made a number of tweaks to shore up the trust fund ahead of a looming shortfall. Currently, the benefits are only taxed if an older adult's household income is higher than $32,000, and only taxed at the top rate if it's higher than $44,000.

When the taxes first went into effect, the plan was to target wealthier older adults and those who were still working, but the thresholds weren't indexed to inflation, so over time they've come to apply to more seniors.

Democrats first proposed the idea of scrapping the tax on Social Security benefits as part of broader reforms that would help shore up the program's trust fund by hiking the payroll tax on the wealthy and making other changes. But Trump's version of the idea would actually weaken Social Security, as it would reduce the money coming into the trust fund by an estimated $1.6 trillion to $1.8 trillion over the next decade without providing any new sources of revenue.

Still, Trump might have been able to muscle the idea through if he hadn't also proposed ending more taxes on tips or overtime, extending his 2017 tax cuts, repealing the cap on the state and local tax deduction, cutting taxes on car-loan interest, spending $1 trillion on the military, and sending every taxpaying household a $5,000 "DOGE Dividend" check, among other costly ideas.

At some point, the math doesn't math. And the idea only became more difficult because of a congressional rule that meant it would have to come in a separate bill from the Republican budget.

It's only then that Trump and his allies in Congress finally turned to the table full of wonks, who came up with the "senior bonus" as a sop to older voters that would cost a more reasonable $71 billion (in large part because, again, it would end in 2028). It's not a terrible idea, given inflation and other costs facing older adults right now, more in line with the kind of responsible, small-ball proposals put forward by the Harris campaign.

But Trump won by promising the moon and leaving the details to be sorted out later. And we're learning again that means a lot less.

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