Don’t Eat the Marshmallow!

 

Don’t Eat the Marshmallow!

Recently, Donald Trump proposed cutting the Social Security tax currently applied to 50% of benefits for individuals earning over $34,000 or couples earning over $44,000. This is a mistake. Social Security benefits are already scheduled to be reduced by $16,500 annually by 2033. Trump’s proposed tax cut could accelerate that reduction to 2032. Here’s why this is a bad idea:

1. Delayed Gratification and Long-Term Investment

For several years, I taught a leadership class at a high school in Pennsylvania. One of the favorite lessons was based on the book Don’t Eat the Marshmallow Yet! by Joachim de Posada. The book references an experiment in Colombia, where preschoolers were tested for their ability to delay gratification. The children who could wait for a larger reward later in life often went on to experience greater success as adults.

The core lesson is clear: instant gratification can often come at the cost of much greater long-term rewards. Social Security was designed as a long-term investment, benefiting from the power of compounding. However, over the years, politicians have “eaten the marshmallow” by borrowing from the Social Security fund to offset the budget deficit. This practice has weakened the fund, and we need leadership that prioritizes fiscal responsibility—leadership that will pass budgets allowing us to live within our means without jeopardizing our future.

2. Tariffs Aren’t the Solution

Trump claims that he would offset the $94 billion in lost revenue from the Social Security tax cut by raising tariffs on foreign imports. Economists agree that while tariffs might have short-term benefits, they lead to higher inflation in the long run, effectively functioning like a national sales tax. One of the reasons we’ve been experiencing higher inflation recently is precisely due to increased tariffs.

Like eating the marshmallow too soon, raising tariffs gives a short-term boost but leaves us with a long-term problem. Higher prices and inflation ultimately hurt consumers, especially those relying on fixed incomes such as Social Security.

3. The Social Security Fund Is a Trust—We Need to Protect It

Social Security is, at its core, a trust. The word "trust" implies that it is something we should be able to rely on. I've been paying into Social Security for 53 years. I still remember when I got my first paycheck and asked my boss, "Who is this FICA, and why are they taking my money?" Of course, that's how Social Security is labeled on your paycheck.

Franklin D. Roosevelt designed Social Security as a work-related, contributory system where workers provide for their own future economic security by paying taxes while employed. While there are demographic reasons for the fund's current jeopardy, much of the problem can be traced directly to our national deficit.

4. The Debt-to-GDP Ratio and Government Borrowing

During the recent debate between former President Trump and Vice President Kamala Harris, I was stunned that ABC’s moderators didn’t ask about the federal deficit. At the peak of the COVID-19 pandemic, the U.S. Debt-to-GDP ratio reached 130%. Though it has since decreased to 122%, this is still an unacceptably high level. While the Biden administration deserves credit for reducing the deficit, it remains far too large.

Since the 1980s, the federal government has been borrowing from Social Security’s surplus to cover the national deficit. This practice has become normalized, but it’s a dangerous precedent. Social Security is now under threat not only from demographic shifts but also from these "cooked books" and proposals like Trump’s Social Security tax cut.

Conclusion: A Broken Trust

The word "trust" carries a heavy responsibility. Our politicians have broken that trust by failing to protect the Social Security fund. If they were in the private sector, many of them would be fired—or even investigated by the Securities and Exchange Commission—for such financial mismanagement. We need leaders who will restore the trust in Social Security and ensure that future generations can benefit from the system they’ve paid into.