National Committee president and CEO Max Richtman has sent the following letter to President Trump and Treasury Secretary Mnuchin, insisting that a payroll tax cut would undermine the Social Security program:
Dear Mr. President and Treasury Secretary Mnuchin:
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to state our strong opposition to your proposal that would divert Social Security Trust Funds for purposes for which they were not intended, such as a means to stimulate the economy.
While we agree that providing tax relief to middle class Americans is an important consideration as we respond to the many possible economic and social dislocations that may arise as a result of the coronavirus pandemic, we do not believe that cutting, eliminating or deferring the Social Security payroll tax is an appropriate way to accomplish this goal. Any reductions to this vitally important revenue stream would threaten Social Security’s ability to continue paying benefits to the 64 million Americans who depend on those benefits for their economic survival by reducing the trust funds from which benefits are paid.
Moreover, the proposal would undermine the earned benefit nature of the program. Social Security is an earned benefit fully funded by the contributions of workers throughout their working lives. A payroll tax cut or deferral chips away at that fundamental idea, making it easier each time it is enacted to turn to it again to meet some future crisis, until the payroll tax is not just cut or deferred but is eliminated. Undermining the program in this manner would help achieve the goals of opponents of Social Security including those who would privatize the program. This is equally true even if the funds are replaced by general revenues from the Treasury.
Another problem with a payroll tax cut as an economic stimulus is the fact that it leaves out large segments of the population. Large numbers of federal, state and local government workers do not pay into Social Security, and therefore would not benefit from the payroll tax cut. Ironically, the senior population, those who are directly affected by taking their money from the trust fund, will not see a single dime of relief since most of them are not working.
There are alternatives to the payroll tax cut which would be more targeted and effective to stimulate an economy slowed by the spread of the coronavirus. For example, another one-time payment by the federal government can put money in the hands of taxpayers quickly, and the Making Work Pay Tax Credit can be passed by Congress rapidly as can an expansion of the Earned Income Tax Credit. Spending in other programs that directly help those who lose employment as a result of the virus can be the most targeted relief of all.
Again, the National Committee to Preserve Social Security and Medicare on behalf of its members and supporters are opposed to any alteration to the payroll tax that reduces revenue flowing into the trust funds or undermines the “earned right” nature of the program. We appreciate your consideration.