Latest news with #fundingshortfall
Yahoo
24-05-2025
- Business
- Yahoo
President Donald Trump Wants to Give Half of All Social Security Retirees a Raise -- but It Can Backfire
America's leading retirement program is facing a $23.2 trillion long-term funding shortfall, as well as the possibility of sweeping benefit cuts by 2033. Trump has a popular plan to put more money into the pockets of half of all Social Security retirees. Though the president's plan would yield near-term rewards for select retired-worker beneficiaries, it would come at a steep cost. The $23,760 Social Security bonus most retirees completely overlook › For an overwhelming majority of retirees, Social Security represents more than just a monthly check. It's a financial lifeline that they'd struggle to make do without. According to the Center on Budget and Policy Priorities, Social Security pulled 22 million people above the federal poverty line in 2023, more than 16.3 million of which were aged 65 and over. Meanwhile, 23 years of annual surveys by Gallup have found that 80% to 90% of retirees rely on their Social Security income, in some capacity, to cover their expenses. Nothing is more important to America's aging workforce than preserving the financial health of Social Security -- and strengthening the program begins at the top, with President Donald Trump. Though Trump has primarily maintained a hands-off approach with Social Security and focused on efficiency-based cost-cutting initiatives, he has one mammoth change in mind that would, ultimately, give half of all retired-worker beneficiaries a raise. Unfortunately, it's also a proposal that's ripe to backfire. In January 1940, the very first Social Security retired-worker benefit check was mailed. Every year since then, the Social Security Board of Trustees has published a report that intricately details the inner workings of the program. These annual reports allow the public to peruse how every dollar in income is collected, as well as trace where those dollars end up. But what tends to be even more insightful with these annual reports are the forward-looking projections. These forecasts take into account ongoing demographic shifts, along with changes to fiscal and monetary policy, to determine how financially sound Social Security will be 75 years following the release of a report (i.e., the Trustees' definition of the "long term"). In each of the last 40 years, the Trustees have pointed to a long-term funding obligation shortfall. Put plainly, projected income collected in the 75 years following a report isn't expected to be sufficient to cover outlays, which primarily includes benefits but also accounts for the administrative expenses to oversee the program. As of the 2024 Trustees Report, this 75-year funding shortfall stood at $23.2 trillion -- and this figure has been growing with consistency over time. The more pressing concern is the asset reserves of the Old-Age and Survivors Insurance Trust Fund (OASI), which are estimated to be depleted by 2033. The OASI's asset reserves represent the excess cash built up since inception that hasn't been paid out as benefits or used to cover administrative expenses. This excess income is currently invested in special-issue, interest-bearing government bonds, as required by law. If lawmakers fail to act and the OASI's asset reserves run out, retired workers and survivors of deceased workers would be facing an up to 21% reduction in their monthly benefit eight years from now. Donald Trump oversaw a number of Social Security changes during the first 100 days in office of his second nonconsecutive term. However, these efficiency-driven measures aren't going to put a dent in either the $23.2 trillion long-term funding shortfall, or meaningfully address the expected exhaustion of the OASI's asset reserves in 2033. But the president does have a proposal to get more money into the pockets of seniors. In a July 31 social media post on Truth Social, then-candidate Trump proclaimed in all capital letters, "Seniors should not pay tax on Social Security." In recent weeks, he's doubled down on his sentiment that retirees shouldn't be taxed on the Social Security benefits they receive. While speaking at a town hall event, the president said, In the coming weeks and months, we will pass the largest tax cuts in American history -- and that will include no tax on tips, no tax on Social Security, and no tax on overtime. It's called "The One, Big, Beautiful Bill." In 1983, with Social Security's asset reserves virtually exhausted, a bipartisan Congress passed, and then-President Ronald Reagan signed, the Social Security Amendments of 1983 into law. This amendment gradually increased the full retirement age and payroll taxation on working Americans, as well as introduced the utterly despised tax on benefits. When the taxation of benefits went into effect in 1984, up to 50% of benefits could be subjected to the federal tax rate when provisional income (adjusted gross income + tax-free interest + one-half of benefits) surpassed $25,000 for single filers and $32,000 for jointly filing couples. A decade later, a second tier was added allowing up to 85% of benefits to be subject to federal taxation if provisional income for single filers and couples filing jointly topped $34,000 and $44,000, respectively. When this tax went into effect in 1984, it was expected to affect approximately 10% of all senior households. But because these income thresholds haven't been adjusted for inflation since their respective inceptions decades ago, around half of all senior households now pay some level of tax on the benefits they receive. If President Trump is successful in eliminating this hated tax, he would be giving roughly half of all retirees a raise (in the sense that they would no longer have to pay tax on some portion of their benefits). On the surface, there would be plenty of support from current and future retirees to end the taxation of benefits. An overwhelming majority of retirees in an informal poll conducted by The Senior Citizens League believe Social Security benefits shouldn't be taxed. Unfortunately, this well-intentioned plan to put more money into the pockets of around half of all current Social Security retirees would be a short-term relief that leads to an even bigger long-term issue. To combat the OASI's declining asset reserves, America's leading retirement program needs every cent in income it can collect. At the moment, Social Security generates its income three ways: More than 91% of the $1.35 trillion collected in 2023 came from the 12.4% payroll tax on earned income, which includes wages and salary but not investment income. In 2025, all earned income up to $176,100 is subject to the payroll tax. Approximately 5% derives from the interest income earned on the OASI's and Disability Insurance Trust Fund's (DI's) asset reserves, which as previously noted are invested in interest-bearing government bonds. The remainder of Social Security's income comes from taxing Social Security benefits. The good news is that the lion's share of Social Security's income will continue to be sourced from the payroll tax. As long as Americans keep working and paying their taxes, there will always be funds for the Social Security Administration to distribute to eligible beneficiaries. On the other hand, the program's interest income will dwindle as the OASI's asset reserves are steadily exhausted. The interest income generated from the DI's asset reserves represents a very small piece of the pie. Removing the tax on benefits, with Social Security's interest income expected to diminish over time, would financially cripple the program. Based on estimates from the 2024 Trustees Report, the income generated from taxing benefits is expected to jump from $50.7 billion in 2023 to $132.8 billion in 2033. While half of all retirees -- the half with the highest provisional income -- would enjoy a brief raise, the OASI's asset reserves would be drained even faster without income from the taxation of benefits. In plain English, Trump's plan would speed up the benefit-cut timeline and potentially increase the percentage benefits would need to be reduced by (i.e., more than the current estimate of a 21% cut) to sustain the program for 75 years. It goes to show that what's popular isn't always the best solution. 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CBC
21-05-2025
- Business
- CBC
Toronto in funding dispute with Ontario over 2026 FIFA World Cup
Toronto is set to host 2026 FIFA World Cup matches in just over a year but Mayor Olivia Chow says the city is facing a nearly $40 million shortfall in funding. CBC's Lane Harrison breaks down the funding issues between the city of Toronto and the province.
Malay Mail
18-05-2025
- Health
- Malay Mail
WHO weighs priorities in new global health order after Trump unplugs funding
WHO faces US$600 million shortfall this year as US leaves Annual assembly will prioritise high-impact work 'We've got to make do,' says one Western diplomat LONDON/GENEVA, May 18 — Hundreds of officials from the World Health Organization will join donors and diplomats in Geneva from Monday with one question dominating their thoughts – how to cope with crises from mpox to cholera without their main funder, the United States. The annual assembly, with its week of sessions, votes and policy decisions, usually showcases the scale of the U.N. agency set up to tackle disease outbreaks, approve vaccines and support health systems worldwide. This year – since US President Donald Trump started the year-long process to leave the WHO with an executive order on his first day in office in January – the main theme is scaling down. 'Our goal is to focus on the high-value stuff,' Daniel Thornton, the WHO's director of coordinated resource mobilisation, told Reuters. Just what that 'high-value stuff' will be is up for discussion. Health officials have said the WHO's work in providing guidelines for countries on new vaccines and treatments for conditions from obesity to HIV will remain a priority. One WHO slideshow for the event, shared with donors and seen by Reuters, suggested work on approving new medicines and responding to outbreaks would be protected, while training programmes and offices in wealthier countries could be closed. The United States had provided around 18 per cent of the WHO's funding. 'We've got to make do with what we have,' said one Western diplomat who asked not to be named. Staff have been getting ready – cutting managers and budgets – ever since Trump's January announcement in a rush of directives and aid cuts that have disrupted a string of multilateral pacts and initiatives. The year-long delay, mandated under US law, means the US is still a WHO member – its flag still flies outside the Geneva HQ – until its official departure date on January 21, 2026. Trump – who accused the WHO of mishandling Covid, which it denies – muddied the waters days after his statement by saying he might consider rejoining the agency if its staff 'clean it up'. But global health envoys say there has since been little sign of a change of heart. So the WHO is planning for life with a US$600 million hole in the budget for this year and cuts of 21 per cent over the next two-year period. China takes lead As the United States prepares to exit, China is set to become the biggest provider of state fees - one of the WHO's main streams of funding alongside donations. China's contribution will rise from just over 15 per cent to 20 per cent of the total state fee pot under an overhaul of the funding system agreed in 2022. 'We have to adapt ourselves to multilateral organisations without the Americans. Life goes on,' Chen Xu, China's ambassador to Geneva, told reporters last month. Others have suggested this might be a time for an even broader overhaul, rather than continuity under a reshuffled hierarchy of backers. 'Does WHO need all its committees? Does it need to be publishing thousands of publications each year?' said Anil Soni, chief executive of the WHO Foundation, an independent fund-raising body for the agency. He said the changes had prompted a re-examination of the agency's operations, including whether it should be focussed on details like purchasing petrol during emergencies. There was also the urgent need to make sure key projects do not collapse during the immediate cash crisis. That meant going to donors with particular interests in those areas, including pharmaceutical companies and philanthropic groups, Soni said. The ELMA Foundation, which focuses on children's health in Africa with offices in the US, South Africa and Uganda, has already recently stepped in with US$2 million for the Global Measles and Rubella Laboratory Network known as Gremlin – more than 700 labs which track infectious disease threats, he added. Other business at the assembly includes the rubber-stamping a historic agreement on how to handle future pandemics and drumming up more cash from donors at an investment round. But the focus will remain on funding under the new world order. In the run up to the event, a WHO manager sent an email to staff asking them to volunteer, without extra pay, as ushers. — Reuters
