GOP leadership embraces President Trump's payroll tax cut proposal

House GOP leader Kevin McCarthy: next COVID bill to include Trump’s payroll tax cut proposal

President Trump’s push for a payroll tax cut has received the blessing of GOP leadership on Capitol Hill, who promise that the proposal will be included in new Coronavirus relief legislation.  Some Republicans – and almost all Democrats – oppose payroll tax cuts. But the proposal gaining a foothold on Capitol Hill has understandably alarmed Social Security and Medicare advocates – and is receiving fresh scrutiny in the media.

“Make no mistake:  payroll tax cuts are the first step in dismantling Americans’ earned benefits.  In acceding to the President’s payroll tax ploy… Republican leadership makes plain that they stand with those who least need help and against American families struggling every day to make ends meet.” – Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare

“Trump to Social Security:  Drop Dead” reads the headline for Michael Hiltzik’s recent column in the Los Angeles Times, echoing one from 45 years ago in the New York Daily News.  That headline, “Ford to City:  Drop Dead,” chiding President Gerald Ford for seemingly refusing to bail out New York City in the depths of a fiscal crisis, was credited (in part) with his failed re-election bid. Hiltzik clearly feels the stakes are similarly high for President Trump in pressuring Congress to cut the payroll taxes that fund Americans’ earned benefits.

“Trump has been fixed on this idea virtually since the start of his presidential term. Occasionally he has toyed with the idea of eliminating the payroll tax entirely, which would pile stupidity upon stupidity. Never has he offered a thoughtful, logical rationale for cutting the tax wholly or in part.” – Michael Hiltzik, Los Angeles Times, 7/17/20

Of course, there is no thoughtful, logical rational for cutting payroll taxes – especially as a means of stimulus during a pandemic.  Payroll tax cuts are an ineffective and unfair means of stimulus that would do little for the unemployed and lower-income Americans who need the most help during the COVID crisis.  But eliminating payroll taxes could be an extremely efficient way to undermine Social Security and Medicare (programs that President Trump promised to protect), as Forbes columnist Ziv Shahar noted on Monday:

“Critics fear that the real aim is to tighten the screws on Social Security Medicare by constricting their sole funding source. ” – Ziv Shahar, Forbes, 7/20/20

Analysts are unsure whether the President actively desires to dismantle these programs (a long-held dream of hardline conservatives) or whether he simply does not understand the implications of tampering with their funding streams.  Either way, payroll tax cuts are dangerous for Social Security and Medicare, because they deprive the programs of much-needed revenue at a time when both face fiscal challenges.

“Since payroll taxes fund the Social Security and Medicare systems, cutting those taxes means sapping revenue from their respective trust funds, which will need to cover benefits as the number of retirees relative to current workers rises in the coming years.” – Paul Waldman, Washington Post, 7/20/20

Even if payroll taxes are temporarily replaced by general federal revenue, the policy still undermines Americans’ earned benefits.  First of all, it compromises the worker-funded nature of our social insurance programs.  Secondly, it allows so-called ‘fiscal hawks’ to claim that Social Security and Medicare are driving federal deficits, paving the way for potential cuts to both programs.  Seniors struggling to stay financially and physically healthy cannot afford cuts to their earned benefits.  If anything, these benefits need to be boosted to meet the needs of today’s and tomorrow’s seniors.

It’s telling that the Chairman of the Senate Finance Committee, Charles Grassley (R-IA), opposes Trump’s proposal – and has warned the President and fellow Republicans that messing with Americans’ earned benefits is a risky political play.

“Social Security people think we’re raiding the Social Security fund. And we are raiding it, but we have always put in general fund revenue in it so it is made whole. But that creates — it might create political problems.” – Sen. Charles Grassley, 7/20/20

He’s right. Surveys show that Americans want their earned benefits expanded and protected – not defunded and dismantled under the guise of Coronavirus relief.