Trump payroll plan would deplete Social Security by 2023: Administrator
President Trump’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 I’m 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, I’ll 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.
In a response to a letter from Congressional Democrats asking how such a policy would affect the trust funds, Social Security Administration Chief Actuary Stephen Goss said it would lead to their quick depletion.
Without other taxes to refill the funds or cover the benefits, they would be wiped out in a matter of years.
“If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that [Disability Insurance] DI Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter,” he wrote in a letter to the Democrats.
“We estimate that [Old Age and Survivors Insurance] OASI Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter,” he added.
Sen. Chris Van Hollen (D-Md.) — who spearheaded the letter to Goss along with Senate Minority Leader Charles Schumer (D-N.Y.), Senate Finance Committee ranking member Ron Wyden (D-Ore.) and Senate Budget Committee ranking member Bernie Sander (I-Vt.) — said the policy would wreak havoc on older Americans.
“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,” Van Hollen said, vowing to fight the policy.
Nancy Altman, president of the progressive advocacy group Social Security Works, said Trump’s policies would wipe out the popular benefit.
“If Donald Trump is reelected, Social Security will cease to exist before the end of his second term,” she said.
Such a policy, however, would have little chance of advancing in Congress.
Senate Republicans threw out the temporary deferral Trump signed in his executive order from their own COVID-19 relief bill proposal.
Even the deferral order Trump signed is not expected to have a major effect. Without legislation, the deferred tax payments would come due early next year, leaving workers with a significant bill. As a result, most businesses are not expected to stop the withholding.
The Trump campaign pointed to Trump’s past promises to protect Social Security, saying he would not allow benefit cuts to move forward.
“Joe Biden’s allies are dusting off the old Social Security scare tactic playbook and talking about hypothetical legislation that does not exist,” said Trump campaign communications director Tim Murtaugh.
“The President has clearly stated repeatedly that he will always protect Social Security and Medicare, including from Democrats pushing plans to give benefits to illegal aliens,” he added.
Biden’s health proposal would allow undocumented immigrants to buy into a public health care option.
The letter from Goss comes just 10 weeks before the 2020 election, where older voters are expected to play a key role in states such as Florida.
This post was updated at 2:12 p.m.