A new editorial from the Bangor Daily News lays out the facts about Donald Trump’s proposal to permanently eliminate the payroll tax, the primary funding source for Social Security.
Despite pledging to “always protect your Social Security,” Trump has repeatedly attacked it, including signing an Executive Order to defer the payroll tax and pledging to to permanently eliminate it if re-elected––which would entirely deplete the Social Security Trust Fund by 2023. As the oldest state in the nation, defunding Social Security would devastate Maine, as a disproportionate share of Maine people rely on Social Security for part or all of their income.
Earlier this month, when Trump issued his executive orders that threatened to “blow a hole in Social Security and Medicare’s finances,” Senator Susan Collins not only failed to meaningfully oppose him, she actually signaled support for his strategy and suggested that the executive orders could be “just what the negotiations” over a coronavirus relief package needed. Now, she’s refused to challenge Trump’s proposal to completely wipe out the Social Security Trust Fund in just a few years.
Bangor Daily News: Payroll taxes fund Social Security. That’s why eliminating them is a bad idea.
By: The Editorial Board
August 28, 2020
Key Points:
- Reducing payroll taxes to put more money into the pockets of working Americans may sound like a good idea, in theory.
- In reality, however, it is a horrible proposal because these taxes, split between employers and employees, fund Social Security and Medicare. And, economists have found, reducing or eliminating payroll taxes doesn’t offer much economic stimulus.
- Eliminating the taxes, which President Donald Trump has proposed, would deplete the fund that supports Social Security payments by 2023, the Social Security Administration’s chief actuary warned this week.
- If there is no more payroll collected and no alternative source of revenue beginning on Jan. 1, 2021, the Office of the Chief Actuary estimates that the Disability Insurance Trust Fund asset reserves “would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter,” Chief Actuary Stephen Gross wrote in an Aug. 24 letter responded to a query from four senators. The office estimates that the Old Age and Survivors Insurance Trust Fund reserves “would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter.”
- “Trump’s payroll tax cut plan not only fails to help Americans struggling to get by right now, it would also completely decimate Social Security for the millions of Americans who rely on it,” said Sen. Chris Van Hollen, a Democrat from Maryland and one of the senators who sent the questions to Gross.
- Such a proposal has little chance of making it through Congress, but it belies Trump’s promises to protect Social Security.
- Trump made such a pledge earlier this year. “We will always protect your Medicare and we will always protect your Social Security. Always,” he said during the State of the Union speech on Feb. 4.
- Less than a week later, he unveiled a budget proposal that included cuts to Medicare. The previous year’s budget plan, which was rejected by Congress, included cuts to both Medicare and Social Security and other safety net programs.
- Trump has pledged to make permanent cuts to payroll taxes if he is re-elected president.
- Beyond the conflicting presidential promises and the confusion his Aug. 8 memo has caused, cutting payroll taxes isn’t a big benefit in terms of jump starting the economy.
- It is also worth noting that the millions of Americans who are currently unemployed are not paying payroll taxes, so deferring these taxes does nothing to help them.
- The long-term financial stability of Social Security and Medicare certainly need to be addressed by Congress. But gutting Social Security by ending the payroll tax is a horrible idea, especially from a president who falsely pledges to protect the social safety net for seniors.
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