Trump Payroll Plan Would Deplete Social Security By 202: Administrator
Donald TrumpUkraine’s president compares UN to ‘a retired superhero’Collins to endorse LePage in Maine governor comeback bidHeller won’t say if Biden won electionMORE‘s proposal to eliminate payroll taxes would deplete the Social Security retirement trust fund by 2023, and its disability insurance fund by the middle of next year, according to the Social Security Administration.
Absent other sources of revenue, the programs would stop paying out benefits when the funds were depleted.
In early August, President Trump signed an executive order permitting companies to stop withholding payroll taxes from their employee paychecks, a gambit to increase take-home pay.
But Trump also went a step further, promising that he would cancel the tax altogether if he were to be reelected in November, a move that has little support from either party on Capitol Hill and is unlikely to advance. Federal payroll taxes fund Social Security.
If Im victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax, he said upon signing the order.
In other words, Ill extend beyond the end of the year and terminate the tax, he added, though he did not specify whether he would seek to pay out benefits using general tax funds or other revenue sources.
Trump has also promised to not touch Social Security benefits, but his budget proposals have included policies that would scale back disability insurance.
Our Rating: Partly False
Based on our research, the claim that Trump said he will “terminate” Social Security if he is reelected is PARTLY FALSE. Trump recently signed an order offering temporary relief from the payroll tax that funds Social Security, and he has repeatedly said he’d terminate the tax entirely if he’s reelected.
But ending the tax that pays for Social Security and ending the Social Security program itself are not the same. When asked, Trump said he the measures would have “zero impact” on Social Security, and he said he’d “protect” the program. And it’s true that he could advocate an alternate source of funding, like the general fund although it would have to go through Congress first.
Trump Opens Door To Cuts To Medicare And Other Entitlement Programs
The president signaled a willingness to scale back Medicare, a shift from his 2016 platform of protecting entitlement programs.
WASHINGTON President Trump suggested on Wednesday that he would be willing to consider cuts to social safety-net programs like Medicare to reduce the federal deficit if he wins a second term, an apparent shift from his 2016 campaign promise to protect funding for such entitlements.
The president made the comments on the sidelines of the World Economic Forum in Davos, Switzerland. Despite promises to reduce the federal budget deficit, it has ballooned under Mr. Trumps watch as a result of sweeping tax cuts and additional government spending.
Asked in an interview with CNBC if cuts to entitlements would ever be on his plate, Mr. Trump answered yes.
At some point they will be, Mr. Trump said, before pointing to United States economic growth. At the right time, we will take a look at that.
Mr. Trump suggested that curbing spending on Medicare, the government health care program for the elderly, was a possibility.
Were going to look, he said.
Spending on Social Security, Medicare and Medicaid is expected to cost the federal government more than $30 trillion through 2029, according to the Congressional Budget Office.
In a tweet in May 2015, a month before he formally began his campaign, Mr. Trump discussed another Republicans promises to keep entitlements intact, former Gov. Mike Huckabee of Arkansas.
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Trump’s Latest Plan To Undermine Social Security
Donald TrumpTrump goes after Cassidy after saying he wouldn’t support him for president in 2024Hillicon Valley Presented by Xerox Agencies sound alarm over ransomware targeting agriculture groupsMORErecently floated cutting the Social Security contribution rate. Voters should not be fooled by this Trojan horse. It looks like a gift to working Americans. In reality, it is part of a longstanding effort to end Social Security.
The proposed cut is supposedly about stimulating the economy. But there are many better ways to achieve that goal. Indeed, cutting the Social Security contribution rate is a particularly poor way. The largest breaks would go to those with higher incomes who are more likely to simply save the cut and less likely to spend it. Moreover, about one-fourth of those who work for state and local governments dont participate in Social Security. Therefore, they would get nothing.
If Trump truly wanted to stimulate the economy through tax breaks, there are much more targeted, efficient ways to do that. He could reinstate the Making Work Pay Tax Credit, which President Obama and the Democrats in Congress employed in 2009 and 2010. Unlike cutting the Social Security contribution rate, that tax cut was targeted to those who were least likely to simply save it and most likely to spend it in their local economies immediately.
Because they are premiums, not mere taxes, those funds are held in trust and can be used only for Social Security.
Future Of Medicare Funding Uncertain Under Trump Presidency
President Donald Trump’s vow to save Medicare from budget cuts is facing a snag as the 2018 budget makes its way through Congress.
The promise, along with maintaining current funding levels for other entitlement programs, was one of Trump’s earliest campaign pledges. “Save Medicare, Medicaid and Social Security without cuts. Have to do it,” he said in his presidential announcement speech.
The 2018 White House budget proposal released in May left Medicare benefits largely untouched compared with Medicaid, which would see a more than $600 billion decrease over 10 years compared to current spending levels. Still, Medicare spending would decrease by more than $50 billion in the next decade compared with current levels.
Though the proposed budget doesn’t spell out large direct cuts to Medicare, cuts to other programs would indirectly affect the senior health insurance program. For instance, the budget included eliminating the State Health Insurance Assistance Program, which provides Medicare beneficiaries with counseling and assistance to navigate the health care system.
However, those cuts won’t necessarily happen because the White House budget proposal is more of a wish list that the president gives to Congress, where both the House of Representatives and the Senate must create and agree on a final budget to be signed by the president.
Lipschutz said the upcoming deadline could pressure Republicans to hastily pass legislation on health care.
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Trump: ‘we Will Be Terminating The Payroll Tax After I Hopefully Get Elected
If that were to happen in January of next year, the Social Security Administration 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, Goss said.
For the main Social Security Old Age and Survivors Insurance Trust Fund for retired workers, Goss said that they predict reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter.
In a statement reacting to the estimate, Senate Minority Leader Chuck Schumer, D-N.Y., said President Trumps plan to eliminate Social Securitys dedicated funding would endanger seniors’ Social Security and could mean the end of Social Security as we know it by 2023.
House Speaker Nancy Pelosi, D-Calif., said that the analysis shows the swift potential devastation of President Trumps reckless call to terminate the payroll tax: shattering the sacred promise of Social Security.
The letter from Goss came in response to a request from Schumer and Sens. Bernie Sanders, I-Vt., and Ron Wyden, D-Ore., after Trump said he would permanently terminate the payroll tax cut if hes re-elected in November.
Earlier this month, he said at a press conference in Bedminster, N.J., If Im victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll taxIm going to make them all permanent.
President Trump Wont Destroy Social Securitybut Hes Not Going To Save It
Former Vice President Joe Biden is running campaign ads that claim President Trump signed an executive action directing funding cuts for Social Security and proposed slashing hundreds of billions of dollars from the Social Security Trust Fund every year.
The problem is, however, that this just isnt so.
A Biden campaign TV ad falsely claims that a government analysis of President Donald Trumps planned cuts to Social Security shows that if Trump gets his way, Social Security benefits will run out in just three years from now, says FactCheck.org.
The cliche politics aint beanbag exists for a reason: Campaigns use overhyped rhetoric to distort their opponents positions and make them appear less electable. Seniors should rest easy and understand that their Social Security benefits arent going anywhere.
But this dynamic of misleading charges belies a more fundamental problem: Something will eventually need to be done to buttress Social Securitys finances. Episodes like this dont bode well for future attempts to reform Social Security.
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A Call For Means Testing
Another pathway to Social Security benefit cuts, loosely proposed by President Trump while on the campaign trail four years ago, is means testing, which would partially or fully phase-out benefits for individuals who earn more than preset income thresholds. In other words, it would keep well-to-do seniors from receiving a full benefit or perhaps any benefit at all, if they aren’t reliant on their Social Security income to make ends meet.
Trump has previously suggested that he wouldn’t take a Social Security benefit and that other wealthy individuals should follow suit. However, without seeing Trump’s tax returns, it’s unknown whether or not the president is currently receiving a monthly payout from the program.
Additionally, it’s worth pointing out that President Trump has never made means testing for Social Security benefits an official proposal. It was merely a discussion point tossed out by Trump prior to his 2016 election as a way to reduce Social Security’s long-term outlays.
These Direct And Indirect Proposals Would Reduce Social Security’s Spending
Social Security, our nation’s most prized social program, is responsible for providing benefits to over 46 million retired workers each month and is singlehandedly pulling more than 15 million of those retirees out of poverty. It’s also a program that’s in some pretty big trouble.
Since 1985, the annually released Social Security Board of Trustees report has cautioned that the program’s long-term outlays wouldn’t cover projected revenue collection. As of 2020, Social Security’s unfunded obligations through 2094 had ballooned to a whopping $16.8 trillion. Without intervention from Capitol Hill, retired workers could face sweeping benefit cuts of up to 24%, beginning in 2035.
There’s no question Social Security needs some help, and that’s expected to start at the top, with President Trump. For the most part, Trump has maintained a hands-off approach with Social Security, choosing instead to indirectly influence the program by attempting to boost payroll tax collection via lower corporate and individual tax rates. But make no mistake about it — even though Trump has largely avoided calling for direct policy changes to Social Security, he’s previously suggested cutting benefits three separate ways.
President Trump speaking with White House reporters. Image source: Official White House Photo by Shealah Craighead.
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Trump Administration Considering ‘back
President Donald Trump, who campaigned on a promise not to cut Social Security, is reportedly considering a plan to eliminate much of the payroll tax that funds the critical safety net program.
According to the Associated Press on Monday, the proposal is being floated as the Trump administration goes “back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system.”
The AP reported that one option “circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.”
And that, Zaid Jilani wrote at The Intercept, “would require counting on Trump’s economic team to shepherd a solution through Congressand for Congress to treat Social Security unlike other ‘discretionary’ general-fund programs whose budgets rise and fall with political currents.”
The AP continued:
“Furthermore,” Jilani noted, “the rumored mechanism for making up the lost funding…would hit workers the hardest.”
A value-added tax “would increase the cost of goods and services,” Jilani explained, citing Paul N. Van de Water, a senior fellow at the left-leaning Center for Budget and Policy Priorities, “arguably canceling out the value of the reduced payroll tax for most lower- and middle-class workers.”
She wrote on Tuesday:
Fact Check: Trump Payroll Tax Cut Is Social Security Risk
Baltimore President Donald Trumps proposed payroll tax cut is a threat to Social Security no matter how he casts it.
During a news conference Wednesday, he insisted he could eliminate the tax if he were reelected, and do it without undercutting retirement benefits or greatly adding to the deficit. He said economic growth would offset the revenue losses.
That claim has little basis in reality.
He also pointed to a manufacturing boom during the coronavirus pandemic but there isnt one.
A look at some of his economic claims:
TRUMP: At the end of the year, the assumption that I win, Im going to terminate the payroll tax Well be paying into Social Security through the General Fund.
THE FACTS: Trump, in effect, has endorsed defunding Social Security by not providing an alternative source of revenues.
The risk is that this could destabilize an anti-poverty program that provides payments to roughly 65 million Americans. It also could force people to cut back on the spending that drives growth so they can save for their own retirement and health care needs if they believe the government backstop is in jeopardy.
A 12.4% payroll tax split between employers and workers funds Social Security, while a 2.9% payroll tax finances Medicare. These taxes raised $1.24 trillion last year, according to the Congressional Budget Office. Over a 10-year period, Trumps idea would blow a $16.1 trillion hole in a U.S. budget that is already laden with rising debt loads.
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Column: Republicans Seek To Exploit Covid
One has to hold begrudging admiration for the determination of the enemies of Social Security among Republicans and conservatives:
Not only are they refusing to let a global crisis such as the COVID-19 pandemic divert them from the long-term campaign to undermine the program, they’re using the crisis to justify cutting benefits.
The latest idea making the rounds of the anti-Social Security caucus is to pay for coronavirus stimulus aid for the neediest Americans by forcing them to borrow from their future retirement benefits to keep themselves fed and housed today.
Social Security is an earned insurance benefit. It is not a piggy bank.
Alex Lawson, executive director of the advocacy group Social Security Works
Word that the White House is eyeing the idea comes from the Washington Post, which reported over the weekend that the administration is fretting about the impact on the national debt of the battle against COVID-19.
It’s no secret that Republicans have begun to muster a deficit argument against further assistance to Americans who have lost working hours or jobs because of the virus.
Senate Majority Leader Mitch McConnell because of concerns about the federal budget almost immediately after passage of the $2-trillion CARES Act in April. Since then, they’ve solidified their stand against further relief.
For higher-income and younger workers, the deferral would be shorter. But as Biggs and Rauh show, the burden is greater on those with the lowest incomes.