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Column: Trump pledges not to cut Social Security. Here are the ways he could breach that promise

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Column: Trump pledges not to cut Social Security. Here are the ways he could breach that promise

Despite all the talk about Donald Trump being a unique political figure in American history, there’s one way in which he has behaved like every other politician on the stump: He’s promised not to lay a hand on Social Security.

With more than 67 million Americans collecting stipends now and hundreds of millions more counting on benefits for their retirement, any threat to the system’s benefits sends a shudder through the nation’s workers. That’s why a promise not to cut benefits has become embedded into American politics for most of the program’s nine decades of existence.

But that hasn’t eliminated the threat of benefit cuts, chiefly from Republicans. Social Security’s internal workings are so recondite and poorly understood by average voters that numerous possible ways of imposing benefit cuts or otherwise harming the program are hiding in plain sight. Trump mentioned some during his recent presidential campaign and attempted others during his last term.

I’m not sure that this administration is going to be in the business of strengthening and protecting Social Security.

— Social Security Commissioner Martin O’Malley

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Trump’s fellow Republicans have alluded to yet others. In March, the House GOP caucus released a budget proposal that would eviscerate Social Security.

The caucus members groused about how Social Security has expanded since it was originally signed into law by Franklin Roosevelt in 1935, through “the addition of disability benefits, dependents and survivors benefits, and the incorporation of automatic cost-of-living adjustments.”

Predictably, they don’t mention who was responsible for these changes: Disability was added in 1956, under Dwight Eisenhower; cost-of-living adjustments were enacted in 1972, under Richard Nixon, and went into effect in 1975, under Gerald Ford. All three presidents were Republicans.

The committee called for “modest adjustments to the retirement age for future retirees to account for increases in life expectancy,” raising the retirement age to 69 from the current standard of 67 for new retirees. That’s a benefit cut, and one that would hit low-income and Black Americans harder than others.

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Here’s the bottom line: It would be folly to be complacent about what the current political majority might do to Social Security.

“There’s a very serious worry on the horizon,” Social Security Commissioner Martin O’Malley told Al Sharpton on MSNBC last weekend, “because Donald Trump’s policies would seriously reduce the fiscal health of Social Security…. There’s a lot of talk among people around him about all sorts of gimmicks.” (O’Malley is leaving the commissioner’s post to run for the chairmanship of the Democratic National Committee.)

O’Malley is backed up by the Committee for a Responsible Federal Budget, a hive of conservative budget hawks.

Trump’s campaign proposals, the CRFB calculated in October, could cost Social Security’s cash reserves $1.3 trillion to $2.75 trillion over 10 years, hastening the exhaustion of its trust funds by three years, to 2031.

That would provoke a cut in benefits of as much as 33% if Congress fails to act in the interim, the committee reckoned — pointing to Trump’s proposals to eliminate taxes on Social Security benefits, imposing across-the-board tariffs on imported goods and deporting millions of immigrants.

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Let’s take a look at the proposal Trump aired during the campaign to eliminate the federal income tax on Social Security benefits.

That’s a crowd-pleaser — after all, who doesn’t love lower taxes? It certainly would mean more take-home pay for those paying tax on their benefits, which is almost everyone except the lowest-income Americans. But it would erode the system’s fiscal stability at a crucial time. Trump couldn’t cut these taxes without congressional consent.

Social Security benefits are taxed on a progressive scale. Typically, , couples with “combined income” of $25,000 to $34,000 are taxed on 50% of their benefits; those with more than $44,000 pay tax on up to 85% of their benefits. (For individuals, the first threshold is $25,000 to $34,000.)

“Combined income” is defined as taxpayers’ adjusted gross income, plus their nontaxable interest earnings and half of their Social Security benefits.

Eliminating the tax on benefits, therefore, could put as much as $4,200 a year back in the pockets of an average benefit-collecting household. Those taxes, however, are paid back to the Social Security and Medicare systems.

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For Social Security, which receives the tax on the first 50% of benefits, they’re vital to the program’s revenue stream —$50.7 billion, or 3.75% of all revenues, in 2023. Benefit taxation is projected to yield about $133 billion annually by 2033, accounting for more than 6.5% of the program’s income.

There are only two ways to keep Social Security whole — reduce benefits or increase the payroll tax that provides the largest chunk of income. Taxpayers would have to pay one way or another. And the joy of having more take-home pay now would evaporate when the bills start coming due.

During his first term, Trump and his acolytes took aim at Social Security’s disability insurance program, a favorite target of conservative Republicans. During an appearance on the CBS program “Face the Nation” in 2017, Trump’s budget director, Mick Mulvaney, led the charge.

“Do you really think that Social Security disability insurance is part of what people think of when they think of Social Security?” Mulvaney asked the moderator, John Dickerson. “I don’t think so. It’s the fastest-growing program. It grew tremendously under President Obama. It’s a very wasteful program, and we want to try and fix that.”

Dickerson did not push back. President Dwight Eisenhower, a Republican, had added disability coverage to Social Security in 1956, six decades earlier. Not only was disability not the “fastest-growing program,” it had been shrinking — falling from a peak of 11 million beneficiaries, including disabled workers and their dependents, in 2013, to 10.4 million when Mulvaney was speaking; the rolls would continue to decline, falling to about 8.5 million in 2023.

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As for the assertion that disability was “wasteful,” the truth was that the disability error rate, which counts both overpayments and underpayments to beneficiaries, was well below 1% of all benefits, then-Acting Social Security Commissioner Carolyn Colvin advised Congress in 2012.

Trump advanced the attack on disability through his 2020 budget, which aimed to cut disability benefits by $70 billion over a decade. Mulvaney even bragged about hoodwinking Trump into violating his promise not to cut Social Security by telling him the cuts would be in “disability insurance” without revealing that disability insurance is part of Social Security.

Republicans consistently slander disability recipients as malingerers and layabouts. That’s based on the groundless notion that disability is easy to apply for and receive.

The disability certification process is long and difficult. Applicants must show that they have a physical or mental condition that prevents them from earning even $1,550 a month, or $18,600 a year, on their own. The approval process can take months, and even after appeals, only about 40% of applicants end up with benefits.

What’s important about the attacks on disability in Trump’s first term is that claims tend to rise along with the unemployment rate. The reason is that as job opportunities decline in general, the jobs available to the disabled become especially scarce. When desk jobs disappear and all that’s left are laborers’ positions, the opportunities for the physically and mentally challenged become only more limited.

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That could be a factor if Trump’s economic policies, such as his intention to jack up tariffs on all imported goods, produce a recession. If that happens, keep your eye on the palaver about disability; it’s almost certain to experience a resurgence.

One tried-and-true method of undermining Social Security is starving the program of administrative resources, a GOP hobby horse for years. “Social Security, today, is serving more customers than ever before with staffing levels Congress has reduced to 50-year lows,” O’Malley told the House Appropriations Committee earlier this month.

The consequences have included wait times on the program’s 800 number that ballooned to nearly an hour, O’Malley said. Of the average 7 million clients who called the number every month for advice or assistance, 4 million “hung up in frustration after waiting far too long.”

The backlog of initial disability determinations reached a near-record of 1.2 million applicants awaiting a decision, some for more than a year. The program estimated that about 30,000 applicants died in 2023 while awaiting decisions.

The crisis in customer service matters because it erodes public confidence that the program will be there for them when their turn comes to claim benefits.

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Then there’s Trump’s threat to deport as many as 11 million undocumented immigrants. An estimated 8.3 million unauthorized residents are actually part of the U.S. labor force. Social Security’s dirty little secret is that those who are working are actually improving the program’s fiscal health. That’s because they often submit falsified Social Security numbers to employers, so payroll taxes are withheld from their earnings — but because they don’t have legal Social Security numbers they can never collect benefits.

Furthermore, the mass deportations Trump has promised is likely to debilitate local and state economies. With the laborers needed to pick crops and build houses disappearing, those industries could stagnate, throwing native-born jobholders out of work. Less money will be coming into Social Security’s coffers. The overall loss to the program could be $300 billion to $1 trillion over a decade, the CRFB estimated.

The most dire prospect for Social Security in the coming term may be indifference to its future. Under a Democratic administration and with Democratic majorities in Congress, the prospects were good for the advancement of proposals to broaden and expand Social Security benefits.

Will anything like that happen in Trump’s next term? O’Malley tried to be judicious during his MSNBC appearance, but his opinion was clear: “I’m not sure,” he said, “that this administration is going to be in the business of strengthening and protecting Social Security.”

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Startup Varda Space Industries snags former Mattel plant in El Segundo

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Startup Varda Space Industries snags former Mattel plant in El Segundo

In an expansion of its business of processing pharmaceuticals in Earth’s orbit, Varda Space Industries is renting a large El Segundo plant where toy manufacturer Mattel used to design Hot Wheels and Barbie dolls.

The plant in El Segundo’s aerospace corridor will be an extension of Varda Space Industries’ headquarters in a much smaller building on nearby Aviation Boulevard.

Varda will occupy a 205,443-square-foot industrial and office campus at 2031 E. Mariposa Ave., which will give it additional capacity to manufacture spacecraft at scale, the company said.

Originally built in the 1940s as an aircraft facility, the complex has a history as part of aerospace and defense industries that have long shaped the South Bay and is near a host of major defense and space contractors. It is also close to Los Angeles Air Force Base, headquarters to the Space Systems Command.

Workers test AstroForge’s Odin asteroid probe, which was lost in space after launch this year.

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(Varda Space Industries)

Varda is one of a new generation of aerospace startups that have flourished in Southern California and the South Bay over the last several years, particularly in El Segundo, often with ties to SpaceX.

Elon Musk’s company, founded in 2002 in El Segundo, has revolutionized the industry with reusable rockets that have radically lowered the cost of lifting payloads into space. Though it has moved its headquarters to Texas, SpaceX retains large-scale operations in Hawthorne.

Varda co-founder and Chief Executive Will Bruey is a former SpaceX avionics engineer, and the company’s spacecraft are launched on SpaceX’s workhorse Falcon 9 rockets from Vandenberg Space Force Base in Santa Barbara County.

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Varda makes automated labs that look like cylindrical desktop speakers, which it sends into orbit in capsules and satellite platforms it also builds. There, in microgravity, the miniature labs grow molecular crystals that are purer than those produced in Earth’s gravity for use in pharmaceuticals.

It has contracts with drug companies and also the military, which tests technology at hypersonic speeds as the capsules return to Earth.

Its fifth capsule was launched in November and returned to Earth in late January; its next mission is set in the coming weeks. Varda has more than 10 missions scheduled on Falcon 9s through 2028.

For the last several decades, the Mariposa Avenue property served as the research and development center for Mattel Toys. El Segundo has also long been a center for the toy industry as companies like to set up shop in the shadow of Mattel.

The Mattel facility “has always been an exceptional property with a legacy tied to aerospace innovation, and leasing to Varda Space Industries feels like a natural continuation of that story,” said Michael Woods, a partner at GPI Cos., which owns the property.

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“We are proud to support a company that is genuinely pushing the boundaries of what’s possible, and are excited to watch Varda grow and thrive here in El Segundo,” Woods said.

As one of the country’s most active hubs of aerospace and defense innovation, El Segundo has seen its industrial property vacancy fall to 3.4% on demand from space companies, government contractors and technology startups, real estate brokerage CBRE said.

Successful startups often have to leave the neighborhood when they want to expand, real estate broker Bob Haley of CBRE said. The 9-acre Mattel facility was big enough to keep Varda in the city.

Last year, Varda subleased about 55,000 square feet of lab space from alternative protein company Beyond Meat at 888 Douglas St. in El Segundo, which it started moving into in June.

Varda will get the keys to its new building in December and spend four to eight months building production and assembly facilities as it ramps up operations. By the end of next year, it expects to have constructed 10 more spacecraft.

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In the future, Varda could consolidate offices there, given its size. Currently, though, the plan is to retain all properties, creating a campus of three buildings within a mile of one another that are served by the company’s transportation services, Chief Operating Officer Jonathan Barr said.

“We already have Varda-branded shuttles running up and down Aviation Boulevard,” he said.

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How Iran War Is Threatening Global Oil and Gas Supplies

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How Iran War Is Threatening Global Oil and Gas Supplies

Ships near the Strait of Hormuz before and after attacks began

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Note: Times shown are in Iran Standard Time. Some ships in the region transmit false positions and others sometimes stop broadcasting their locations, and may not be reflected in the animation. Ships with sparse location data are shown in a lighter shade. Source: Kpler and Spire.

Every day, around 80 oil and gas tankers typically pass through the Strait of Hormuz, the narrow waterway off Iran’s southern coast that carries a fifth of the world’s oil and a significant amount of natural gas.

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On Monday, just two oil and gas tankers appear to have crossed the strait, according to a New York Times analysis of shipping activity from Kpler, an industry data firm. Since then, one tanker passed through.

“It’s a de facto closure,” said Dan Pickering, chief investment officer of Pickering Energy Partners, a Houston financial services firm. “You’ve got a significant number of vessels on either side of the strait but no one is willing to go through.”

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Tankers have been staying away from Hormuz since the U.S.-Israeli attacks on Iran that began on Saturday. A prolonged conflict could ripple broadly across the global economy, threatening the energy supplies of countries halfway around the world and stoking inflation.

International oil prices have climbed 12 percent since the fighting began, trading Tuesday around $81 a barrel, and natural gas prices have surged in Europe and in Asia.

A senior Iranian military official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz. Vessels in the region have already come under attack. Several oil and gas facilities have also been struck or affected by nearby shelling, though the damage did not initially appear to be catastrophic.

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Where ships and energy facilities have been damaged

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Note: Damage as of 2 p.m. Eastern time Tuesday. Source: Kpler, Kuwait National Petroleum Company, Saudi Arabian Ministry of Energy, Planet Labs, QatarEnergy, United Kingdom Maritime Trade Operations and Vanguard Tech.

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A fire broke out Tuesday at a major energy hub in Fujairah, United Arab Emirates, from the falling debris of a downed drone, the authorities said. On Monday, Qatar halted production of liquefied natural gas, or fuel that has been cooled so that it can be transported on ships, after attacks on its facilities.

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Facilities at Ras Tanura oil refinery in Saudi Arabia were on fire on Monday after two Iranian drones were intercepted, according to Saudi Arabia’s Ministry of Energy, causing fragments to fall. Vantor

The sharp reduction in tanker traffic is reducing the supply of oil and gas to world markets, pushing up prices for both commodities. And the longer that ships stay away from the Strait of Hormuz, the less oil and gas get out to the world, which could raise prices even more.

Shipping companies have paused their tankers to protect their crew and cargo, and because insurance companies are charging significantly more to cover vessels in the conflict area.

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On Tuesday, President Trump said that “if necessary,” the U.S. Navy would begin escorting tankers through the strait. He also said a U.S. government agency would begin offering “political risk insurance” to shipping lines in the area.

In addition to tankers, other large vessels regularly go through the strait, including car carriers and container ships. In normal conditions, nearly 160 make the trip each day.

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Some ships in the region turn off the devices that broadcast their positions, while others transmit false locations — making it hard to give a full picture of the traffic in the strait.

The Shiva is a small oil tanker that has repeatedly faked its location, according to TankerTrackers.com, which tracks global oil shipments. It is suspected of carrying sanctioned Iranian oil, according to Kpler. The Shiva was one of the two tankers that crossed the strait on Monday.

The oil and gas that typically move through the strait come from big producing countries like Saudi Arabia, Iraq, Iran and United Arab Emirates, and are exported around the world.

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Where tankers moving through the Strait have traveled

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Note: Tanker paths are since Jan. 1 and include all tankers and gas carriers. Source: Kpler and Spire.

In 2024, more than 80 percent of the oil and gas transported through the Strait of Hormuz went to Asia. China, India, Japan and South Korea were the top importers, according to the U.S. Energy Information Administration.

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Countries have energy stockpiles that could last them into the coming months, but a continued shutdown of the strait could damage their economies.

Several big disruptions have roiled supply chains in recent years, but the tanker standstill in the Strait of Hormuz could have an outsize impact.

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Paramount credit downgraded to ‘junk’ status over debt worries

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Paramount credit downgraded to ‘junk’ status over debt worries

Paramount Skydance’s jubilation over its come-from-behind victory to claim Warner Bros. Discovery has entered a new phase:

Call it the deal-debt hangover.

Two major ratings agencies have raised concerns about Paramount’s credit because of the enormous debt the David Ellison-led company will have to shoulder — at least $79 billion — once it absorbs the larger Warner Bros. Discovery, bringing CNN, HBO, TBS and Cartoon Network into the Paramount fold.

Fitch Ratings said Monday that it placed Paramount on its “negative” ratings watch, and downgraded its credit to BB+ from BBB-, which puts the company’s credit into “junk” territory. Fitch said it took action due to “uncertainty” surrounding Paramount’s $110-billion deal for Warner Bros. Discovery, which the boards of both companies approved on Friday.

S&P Global Ratings took similar action.

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To finance the Warner takeover, Ellison’s billionaire father, Larry Ellison, has agreed to guarantee the $45.7 billion in equity needed. Bank of America, Citibank and Apollo Global have agreed to provide Paramount with more than $54 billion in debt financing.

“Potential credit risks include the prospective debt-funded structure, Fitch’s expectation of materially elevated leverage and limited visibility on post-transaction financial policy and capital structure,” Fitch said.

Late last week, Paramount sent $2.8 billion to Netflix as a “termination fee” to officially end the streaming giant’s pursuit of Warner Bros. That payment paved the way for Warner and Paramount’s board to enter into the new merger agreement.

Paramount hopes the merger will be wrapped up by the end of September. It needs the approval of Warner Bros. Discovery shareholders and regulators, including the European Union.

Paramount executives acknowledged this week the new company would emerge with $79 billion in debt — a considerably higher total than what Warner Bros. Discovery had following its spinoff from AT&T. That 2022 transaction left Warner Bros. Discovery with nearly $55 billion of debt, a burden that led to endless waves of cost-cutting, including thousands of layoffs and dozens of canceled projects.

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Warner still has $33.5 billion in debt, a lingering legacy that will be passed on to Paramount.

Paramount plans to restructure about $15 billion in Warner Bros. Discovery’s existing debt.

Paramount CEO David Ellison at a 2024 movie premiere for a Netflix show.

(Evan Agostini / Invision / AP)

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Paramount told Wall Street it would find more than $6 billion in cost cuts or “synergies” within three years — a number that has weighed heavily on entertainment industry workers, particularly in Los Angeles.

Hollywood already is reeling from previous mergers in addition to a sharp pullback in film and television production locally as filmmakers chase tax credits offered overseas and in other states, including New York and New Jersey.

Some entertainment executives, including Netflix Co-Chief Executive Ted Sarandos, have speculated that Paramount will need to find more than $10 billion in cost cuts to make the math work. More recently, Sarandos went higher, telling Bloomberg News that Paramount may need $16 billion in cuts.

Cognizant of widespread fears about additional layoffs, Paramount Chief Operating Officer Andrew Gordon took steps this week to try to tamp down such concerns.

Gordon is a former Goldman Sachs banker and a former executive with RedBird Capital Partners, an investor in Paramount and the proposed Warner Bros. deal. He joined Paramount last August as part of the Ellison takeover.

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During a conference call Monday with analysts, Gordon said Paramount would look beyond the workforce for cuts because the company wants to maintain its film and TV production levels.

Paramount plans to look for cost savings by consolidating the “technology stacks and cloud providers” for its streaming services, including Paramount+ and HBO Max, Gordon said. The company also would search for reductions in corporate overhead, marketing expenses, procurement, business services and “optimizing the combined real estate footprint.”

It’s unclear whether Paramount would sell the historic Melrose Avenue lot or simply centralize the sprawling operations onto the Warner Bros. and Paramount lots in Burbank and Hollywood.

Workers are scattered throughout the region.

HBO, owned by Warner Bros. Discovery, maintains its West Coast headquarters in Culver City; CBS television stations operate from CBS’ former lot off Radford Avenue in Studio City; and CBS Entertainment and Paramount cable channels executive teams are located in a high-rise off Gower Street and Sunset Boulevard, blocks from the Paramount movie studio lot.

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“The combination of PSKY and WBD could create a materially stronger business than either individual entity,” Standard & Poor’s said in its note to investors. “However, this transaction presents unique challenges because it would involve the combination of three companies, with the smallest, Skydance, being the controlling entity.”

David Ellison’s production firm, Skydance Media, was the entity that bought Paramount, creating Paramount Skydance.

Ellison has not announced what the combined company will be called.

Paramount shares closed down more than 6% Tuesday to $12.45.

Warner Bros. Discovery fell 1% to $28.20. Netflix added less than 1% to close at $97.70.

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