I don't know where anyone gets the idea that the income tax on Social Security income is returned to the Social Security Trust Fund. It is not. It is federal income tax and is put into the general revenue fund.
In general, retirement income which is funds set aside by a taxpayer from money that has already been taxed is exempt from income tax. Congress decided, however that since a) half of the contribution to a person's Social Security comes from the employer and b) since the average person lives long enough to receive much more than the amount he/she puts into the fund, even allowing for growth due to interest, that the government could tax 85% of the benefit without the risk of taxing that income twice. The argument is a little bit "iffy" but is not entirely spurious.
The new tax law would only endanger the Social Security Trust Fund, and the longevity of the program, if it reduced the payroll amount subject to payroll taxes, which it does not do. (Only the employer could do that, by paying the employee less money.) It does reduce federal income tax withholding, but that is a separate issue entirely from Social Security withhilding and the funding of the SS Trust Fund.
Two blatant misstatements in the original post.
"Congress has just approved a massive tax reform without even a word about how it will affect the long-term financial prospects of the nation’s social insurance programs."
That's because it has no effect whatever on the long-term financial prospects of the nation’s social insurance programs.
"Social Security draws revenue from the income taxes levied by the IRS on benefits. Medicare also collects money."
It does nothing of the sort; neither Social Security or Medicare "draw revenue" from the federal income tax levied on Social Security benefits. Medicare revenue is not derived from federal income tax and is not handled by the IRS. It is drawn from payroll taxes on income, and no payroll taxes are levied on Social Security income. Federal income tax levied on Social Security income is paid into the general revenue account to pay for all government operating expense.
This should not be taken to mean that I agree with or approve of the new tax program. There is a great deal that is wrong with it. But it having a deleterious effect on social insurance programs is nonsense.
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