Moore’s Payroll Tax Proposal Means Less Security for American Seniors
In an August 2nd op-ed in the Wall Street Journal, conservative commentator (and former Federal Reserve Board nominee) Stephen Moore urged President Trump to circumvent Congress and impose a payroll tax cut unilaterally.
“The president needs to pull an end run, and there’s a legal way to do that. He should declare a national economic emergency and announce that the Internal Revenue Service will immediately stop collecting the payroll tax.” – Stephen Moore, Wall Street Journal, 8/2/20
Moore is undaunted by the fact that both parties in Congress rejected payroll tax cuts out of hand as part of the next Coronavirus relief package. But the President has been like a dog with a bone — insisting that the taxes that fund Social Security be cut or eliminated — and so has Moore.
This intransigence is completely unwarranted. Economists have said that a payroll tax cut is an ineffective means of economic stimulus. Contrary to the President’s claims, it will not entice employers to hire or re-hire workers. Payroll tax cuts inordinately benefit higher-earners and not the lower-income workers who need the most relief. Worse yet, of course, constricting or cutting off Social Security’s funding stream imperils seniors’ earned benefits – at a time when the program needs more, not less, revenue.
Moore argues that, to protect benefits, President Trump “should order Treasury to put bonds into the Social Security” trust fund. This is a fancy way of saying that the government should substitute general revenue for workers’ payroll contributions, which would undermine the “earned benefit” nature of Social Security – and open up the program to fresh attacks for supposedly increasing federal deficits.
“It is difficult to fathom a worse moment to weaken (Social Security) than during a pandemic and crushing economic recession. While Republicans have long sought to gut these earned benefits, doubling down on those efforts while the COVID crisis rages on would be particularly heartless.” – Rep. John Larson and Rep. Richard Neal, 8/3/20
If payroll tax cuts make little economic sense, then why do conservatives like Moore continue to agitate for them? It could be that Moore and his compatriots on the right have always opposed Social Security at its core – and are anxious to find a back door means to dismantle it. Moore is on temporary leave as a Visiting Fellow at the conservative Heritage Foundation, and currently heads an advocacy group called Unleash Prosperity. The Heritage Foundation was founded with funding from ultraconservative beer baron Joseph Coors, principally to attack New Deal and Great Society programs.
Backed by wealthy and powerful donors, groups like the Heritage Foundation believe in completely unfettered capitalism, and oppose government programs to lift – and keep – society’s most vulnerable members out of poverty. Former Heritage Foundation president Edward Fuelner once called these programs “an assault on founding principles articulated in the 18th century.” Social Security was the landmark program of the New Deal, and as such has been a favorite target of the Heritage Foundation and Stephen Moore in particular. In 1995, Moore attacked the program’s very existence, calling it “a Ponzi scheme that we are all paying for.”
“We’ve probably gone too far in providing the safety net for the elderly. To a large extent, we’ve started a system in this country where we are taxing struggling middle-class families that are young to provide lavish government benefits for people over 65.” – Stephen Moore, C-SPAN, 1995
Never mind that many middle-class families depend on Social Security when their breadwinners retire, become disabled, or pass away. Only a person of financial privilege would consider Social Security’s average $1,500 monthly benefit “lavish.” At that level, the average beneficiary receives $18,000 a year – only a few thousand dollars above the federal poverty line. Seniors face rising costs for basics like groceries, housing, and health care – while their cost-of-living adjustments are often inadequate to keep up with inflation. Yet, nearly half of retirees depend on Social Security for all or most of their income.
Social Security’s opponents cloak their agenda in proposals like payroll tax cuts because they know how popular the program is with the public. Poll after poll indicates that Americans support Social Security and do not want to see the program cut or compromised. In a recent survey of the National Committee to Preserve Social Security’s membership, 96% of respondents said they oppose using Social Security for unrelated purposes, while 88% specifically rejected the president’s payroll tax proposal.
Workers’ payroll contributions are the heart of the Social Security program. That’s what makes it an “earned benefit.” President Franklin Roosevelt realized this after he signed Social Security into law, famously saying that because workers contribute to their retirement benefits, “no damn politician” would ever be able to scrap the program. Social Security has provided American seniors with basic financial security for generations. (The program’s 85th anniversary is August 14th.)
Moore, the Heritage Foundation and other conservative groups who believe the government has no role in keeping seniors out of poverty want to undo the crowning achievement of the New Deal – even if they don’t always say so out loud. Seniors and their advocates must not let them get away with it.