We hardly needed more evidence that President Trump didn’t really mean it when he promised as a candidate “not to touch” Social Security and Medicare. But the past week’s news has once again shown how hollow that promise is. First, the White House floated the idea of temporarily cutting FICA payroll taxes to stimulate an economy buffeted by President Trump’s trade war, only to back off the proposal within 48 hours.
“Trump said Tuesday that a payroll tax is ‘something we think about.’ But when he was asked about it the following day, he said it wasn’t being considered.” – The Hill, 8/23/19
If the payroll tax cut idea truly has been put to rest for now, that’s a good thing. Social Security relies on payroll contributions to fund benefits. Cutting payroll taxes – even temporarily – undermines the financial health of the system. In fact, Social Security needs more, not less, revenue to continue paying full benefits in the decades to come. That’s why Congressman John Larson’s Social Security 2100 Act increases revenue to keep the program financially sound – and expand benefits at the same time.
Not surprisingly, the benefit from a payroll tax cut would accrue mostly to high earners, who tend to save rather than spend extra cash – muting any economic stimulus effect for working people.
“The Penn-Wharton Budget Model estimated in a report Thursday that if a 2 percentage point payroll tax cut were enacted for 2020, about 43% of the tax change would go to those in the top fifth of income (earners).” – The Hill, 8/23/19
On the same day that the President denied that a payroll tax cut was in the works, the New York Times reported that key Republican Senators were pressuring Trump to support Social Security and Medicare cuts if he wins a second term.
“With the budget deficit set to surpass $1 trillion in 2020 thanks in large part to Trump’s tax cuts and trade war, Republicans and right-wing groups are pressuring the president to take a sledgehammer to Social Security and Medicare, widely popular programs Trump vowed not to touch during his 2016 campaign.” – Common Dreams, 8/23/19
Again betraying his pledge not to cut either program, Trump seemed to be receptive to the Republicans’ entreaties. Senator John Barrasso (R-WY) told the New York Times, “We’ve brought it up with President Trump, who has talked about it being a second-term project.”
The administration has already proposed cutting billions of dollars from both Social Security and Medicare in its FY ’19 and ’20 budgets. Fortunately, Congress ignored these proposals. But the past week’s developments foreshadow what President Trump and a Republican-controlled Congress might do if they prevail in 2020. That’s a scenario that current and future seniors – and their families – should find deeply disturbing.