The history of — and present threats to — Social Security

Summary

Marketplace Morning Report Summary

Episode: The history of — and present threats to — Social Security
Release Date: August 13, 2025
Host: David Brancaccio
Duration: Approximately 7 minutes

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1. Tariffs as a Revenue Source and Economic Impact

Overview:
The episode begins with David Brancaccio discussing the role of tariffs implemented during the Trump administration in generating significant revenue for the U.S. government. These tariffs have contributed to the overall inflation rate and are explored as both a fiscal tool and an economic variable with uncertain outcomes.

Key Points:

• Inflation Influence: Gasoline prices have been stabilizing overall inflation, but excluding food and fuel, the core inflation rate saw a 0.3% increase from June to July—the largest jump in five months. This rise is partly attributed to higher import taxes and tariffs from the Trump era.

• Revenue Generation:

  • Mark Goldwine from the Committee for a Responsible Federal Budget highlights the financial benefits of tariffs:

    "These tariffs are becoming big revenue generators." [00:52]

  • Revenue Growth: Originally bringing in about $7 billion monthly before Trump's second term, tariffs could potentially generate $40 to $50 billion over the next decade if rates and revenues remain stable. Goldwine notes this could reduce federal deficits by $2.8 trillion. However, he also cautions:

    "Not enough to pay for the one big beautiful bill, not enough to move our budget towards balance." [01:14]

• Uncertainties and Challenges:

  • Variable Factors: Goldwine points out that the revenue effects are highly uncertain:

    "The revenue effects. They are the least certain aspect of the whole tariff debate." [01:26]

  • Potential Declines: Bill Gale from the Urban Brookings Tax Policy Center suggests that tariff revenues might decline due to new trade agreements and shifts by importers to countries with lower tariffs. Additionally, it's unclear how the administration intends to utilize the new revenue, with possibilities including rebating funds to individuals, which would negate deficit reduction benefits.

• Economic Predictions:
  Economists largely agree that tariffs may lead to slower economic growth and reduced incomes for individuals and businesses, which could offset the benefits from increased tariff revenue.

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2. Social Security: History, Popularity, and Sustainability

Overview:
Shifting focus, the report delves into the centennial celebration of Social Security, examining its origins, current popularity, and looming financial challenges that threaten its sustainability.

Key Points:

• Historical Context:

  • Nova Safo narrates the inception of Social Security as a response to the dire conditions of the Great Depression:

    "Before Social Security, America had literal poor houses... President Franklin D. Roosevelt signed the Social Security Act into law." [02:36]

  • Purpose: Designed to provide a safety net for retirees, Social Security has been a cornerstone of American retirement security since 1935.

• Current Landscape:

  • Beneficiary Statistics: Today, 74 million Americans receive Social Security benefits.
  • Public Support:
    • Mark Goldwine emphasizes the program's popularity:

      "Social Security is incredibly popular." [03:10]

    • Bill Sweeney from AARP cites a 96% approval rating, with reliance on benefits increasing from 58% to 65% over a decade.

• Financial Challenges and Future Projections:

  • Deficit Issues: The system is currently unable to generate sufficient tax revenue to cover full benefits, leading to the depletion of its trust fund.

    • Andrew Eschtruth from Boston College projects the trust fund will be exhausted by 2033, potentially resulting in a 20% reduction in benefits for retirees.

    "The trust fund reserve is expected to be depleted for the retirement part of Social Security in 2033." [04:08]

  • Comparative Historical Measures: Reflecting on the early 1980s crisis, Nova Safo recalls how reforms were enacted under President Reagan to avert imminent benefit cuts by adjusting to increased lifespans and productivity.

    "We're entering an age when average Americans will live longer... these amendments adjust to that progress." [04:31]

  • Possible Solutions and Public Sentiment:

    • Kathlyn Romig from the Center on Budget and Policy Priorities indicates that while reforms are necessary, they may involve unpopular measures like increased payroll taxes or benefit cuts.

      "People would rather pay more than take cuts." [05:01]

    • Public Preference: Polling consistently shows a preference for higher contributions over reduced benefits, suggesting potential pathways for reform despite challenges.

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3. Market Updates and Global Economic Indicators

Overview:
Towards the end of the episode, Brancaccio provides updates on market performance, interest rates, and international economic developments, particularly focusing on responses to U.S. tariffs.

Key Points:

• U.S. Market Performance:
  Following an inflation report that suggested the Federal Reserve might cut interest rates, U.S. stock markets reached new highs:

  • S&P 500 increased by 1.1% to a record high.
  • NASDAQ rose by 1.4%, marking its highest close.
  • Dow, S&P, and NASDAQ futures are slightly up in pre-market trading.
    Lower interest rates are making borrowing cheaper for companies and more attractive for investors compared to bonds.

• Brazilian Economic Measures:

  • Katie Silver from the BBC reports on President Luiz Inácio Lula da Silva’s $5 billion aid package aimed at supporting smaller Brazilian companies affected by U.S. tariffs.

    "They have pledged to match that 50% tariff rate that Washington has put on... potentially use some of that revenue towards this funding." [06:22]

  • Funding Uncertainties: The source of funding for this package remains unclear, with possibilities including reallocating funds from the State Development Bank to support local firms impacted by tariffs. A comprehensive plan is anticipated from the government.

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Conclusion

The episode of Marketplace Morning Report intricately weaves together discussions on U.S. tariff policies and their fiscal implications with a deep dive into the history and future challenges of Social Security. While tariffs present a temporary revenue boost, their long-term economic impact remains uncertain. Concurrently, Social Security stands as a beloved yet financially strained pillar of American retirement security, facing critical decisions to ensure its longevity. The report concludes with a snapshot of market dynamics influenced by these policies and international responses, painting a comprehensive picture of the current economic landscape.

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Notable Quotes:

• Mark Goldwine:

  "Not enough to pay for the one big beautiful bill, not enough to move our budget towards balance." [01:14]

• Kathlyn Romig:

  "People would rather pay more than take cuts." [05:01]

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For more insights and updates, visit Marketplace Morning Report.

Transcript

[David Brancaccio]

How to use tariffs to help pay for tax cuts and government spending. I'm David Brancaccio in Los Angeles. Gasoline prices are keeping overall inflation steady, we learned yesterday. But setting aside volatile food and fuel, the core rate of inflation went up 3/10 of a percent from June to July, the biggest jump in five months. The higher import taxes. Tariffs supplied by the Trump administration are part of that, economists tell us. At the same time, the tariffs are a moneymaker for the US Government. The nonpartisan committee Committee for a Responsible Federal Budget finds import taxes are bringing in billions of dollars in new revenue every month. Marketplace's Mitchell Hartman reports.

[Mitchell Hartman]

President Trump crowed earlier this week that it's so beautiful to see all the new revenue coming in from his tariffs. Mark Goldwine is at the Committee for a Responsible Federal Budget.

[Mark Goldwine]

These tariffs are becoming big revenue generators.

[Mitchell Hartman]

Before Trump's second term, tariffs brought in about 7 billion a month. That could soon hit 40 to 50 billion over the next 10 years. If tariff rates and revenues hold steady, which is by no means certain, Goldwine predicts federal deficits will be $2.8 trillion lower.

[Mark Goldwine]

Not enough to pay for the one big beautiful bill, not enough to move our budget towards balance. But tariffs may start raising more than the corporate income tax.

[Mitchell Hartman]

Still, there are a lot of variables at play.

[Mark Goldwine]

The revenue effects. They are the least certain aspect of the whole tariff debate.

[Mitchell Hartman]

Bill Gale at the Urban Brookings Tax Policy center says tariff collections could decline as the administration negotiates new trade deals and importers shift to lower tariff countries. Also, it's not clear what the administration plans to do with the new money.

[Mark Goldwine]

There's discussion that they want to rebate the revenue to individuals. If they rebate it, then it's not cutting the deficit.

[Mitchell Hartman]

Most economists predict the tariffs will lead to slower growth and lower incomes for individuals and businesses, cutting into government tax revenues from other sources. I'm Mitchell Hartman for Marketplace.

[David Brancaccio]

And even with that tariff revenue up, the federal budget Deficit is up 20% year over year, according to new Treasury Department data. Tomorrow, Social Security becomes a nonagenarian. It's the 90th anniversary of the Social Security act, which ushered in more universal retirement security in America. Without changes, the program will no longer be able to pay full benefits. There's a turning point projected for eight years from now. Marketplaces NovaSafo has more.

[Nova Safo]

Before Social Security, America had literal poor houses, places where people who could no longer work could find shelter and food. Then, at the height of the Great Depression in 1935, President Franklin D. Roosevelt signed the Social Security act. Into law.

[David Brancaccio]

We can never insure 100% of the population against 100% of the hazards and vicissitudes of life. But we have tried to frame a law which will give some measure of protection.

[Nova Safo]

Today, 74 million people are getting Social Security benefits.

[Mark Goldwine]

Social Security is incredibly popular.

[Nova Safo]

Bill Sweeney of AARP says 96% of Americans approve of the program. In a new survey, AARP found that the number of people who said they significantly rely on Social Security payments went up to 65% compared to 58% a decade ago.

[Mark Goldwine]

We have a crisis around saving for retirement. Many people get to retirement age, they just don't have enough money saved. They don't have. A lot of people don't have any money saved.

[Nova Safo]

In fact, about 40% of Americans have no retirement savings at all, according to a recent Gallup poll. The problem for them and everyone else is that Social Security is facing the real threat of having to cut benefits.

[Mark Goldwine]

Right now, the system is taking in less money in tax revenue each year than it needs to pay full benefits.

[Nova Safo]

Andrew Eschtruth is the director of the center for Retirement Research at Boston College. To pay out more than it takes in, Social Security has been dipping into its savings, known as the trust fund.

[Mark Goldwine]

That trust fund reserve is expected to be depleted for the retirement part of Social Security in 2033, and when that.

[Nova Safo]

Happens, retirees could see their benefits cut by about 20%. This problem has come up before the in the early 1980s, Social Security was just months away from having to cut benefits when President Ronald Reagan signed into law a bunch of reforms.

[David Brancaccio]

We're entering an age when average Americans.

[Nova Safo]

Will live longer and live more productive lives, and these amendments adjust to that progress.

[Katie Silver]

It's not something where you can't imagine a fix.

[Nova Safo]

Kathlyn Romig is director of Social Security and disability policy at the center on Budget and Policy Priorities.

[Katie Silver]

Because it's just something where people are going to have to do something that maybe they wouldn't prefer to do. So contribute more to the system through their payroll tax contributions or get a benefit cut.

[Nova Safo]

Romig says polling consistently shows that people would rather pay more than take cuts. I'm Nova Safo for Marketplace.

[David Brancaccio]

On the bet that yesterday's inflation report was tame enough to still allow the Federal Reserve to cut interest rates in September, stock indicators hit new all time highs. The S and p went up 1.1% to a record. Also, it's the highest close for the Nasdaq on a jump of 1.4%. Lower interest rates decrease the cost of borrowing for companies and can boost consumer activity as well as making stocks look more attractive than bonds. This morning, Dow S&P and NASDAQ futures are all up in the two to three tenths of a percent range. The benchmark ten year interest rate is down 4.25% to counteract especially high US tariffs. Brazilians. Brazil's President Luis Inacio Lula da Silva has announced a $5 billion package of help for especially smaller companies there. The BBC's Katie Silver reports now exactly.

[Katie Silver]

How they'll fund this is unclear, but they have pledged to match that 50% tariff rate that Washington has put on. So that will generate some revenue. Potentially they might use some of that revenue towards this funding. There has also been a report in recent weeks that the government was thinking about shifting some of the money that is managed State Development bank into supporting local firms that will be hit by the tariffs. There's a big plan that we're expecting to be announced by Brasilia later today.

[David Brancaccio]

Katie Silver is with our newsroom partners, the BBC in Los Angeles. I'm David Brancaccio. This is the Marketplace Morning report.

[Mark Goldwine]

From.

[David Brancaccio]

APM American Public Media.