Social security provides financial benefits to the most vulnerable of society. Without this, Americans would be hit severely every day.
Earlier this month, President Donald Trump announced his plans to temporarily terminate the payroll taxes for employees who make less than $100,000 per year. An executive order was signed by him to temporarily stop employers from deducting money from the employees' paychecks. He then promised to permanently remove payroll taxes if reelection for another term. "If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax," he said, adding that it would save families thousands of dollars, according to CNBC. But is this move the best solution to help rebuild the American economy? Well, experts seem to disagree.
I don’t like the idea that I’ve paid into SS for about 40 years just for the government to tell me there’s no money for me when I retire! We earned that money! As far as the 401k, what goes up must come down! Most retirement accounts are already tied in a 401k.— Proud Hockey mom #BlackLivesMatter✊🏿✊🏾✊🏽 (@Ronniejf) August 25, 2020
Payroll taxes are an important component of America’s tax system which are used to fund crucial government facilities, including the Social Service Program such as Federal Unemployment Insurance (UI), Old-Age, Survivors, and Disability insurance (DI), and Medicare. The social insurance taxes makeup 23.05 percent of combined federal, state, and local government revenue and are the second-largest source of government revenue in the United States, as per a recent Tax Foundation research.
It doesn't have to. Once we oust the Lunatic in the WH, Congress can work to make SS solvent. Yes..it will take some tweaks, but Reagan and Tip O'Neal did reform in 1984 that made basically fair adjustments to everyone across the board... including making Congress pay in!— Nancy Stanton-Lrng 2 spk truth 2 bullshit (@senraba) August 25, 2020
Social security provides financial benefits to the most vulnerable of society like the elderly, disabled workers and their spouses, or dependents. Without this, every American would be hit severely as eliminating the payroll tax could completely deplete the Social Security trust fund over a few years unless an alternative source of revenue is introduced to bridge this gap. After the POTUS declared his plans, four Democratic senators asked the agency to run the number in case Trump is elected to serve another term as the leader of the country. The agency's chief actuary, Stephen Goss, noted that if the payroll taxes are eliminated permanently, it would dry up the federal fund within three years, without any other source of revenue, leaving the elderly, the disabled and their dependant members to suffer.
That is exactly what the @realDonaldTrump administration wants. They have been itching to move older folks (and everyone else) into private investment accounts, to prop up the stock market. Wherever the stock market is, is how Trump judges his success. It's all he cares about.— I'm Just Dan (@DanielAshley13) August 25, 2020
Goss also added if the termination was to happen in January next year, the Disability Insurance (DI) Trust Fund “asset reserves would become permanently depleted in about the middle of the calendar year 2021, with no ability to pay DI benefits thereafter,” per the estimation of the Social Security Administration, reports NBC News. Everything from Social Security Old Age to Survivors Insurance (OASI) Trust Fund for retired workers will suffer due to this as the reserves "would become permanently depleted by the middle of the calendar year 2023, with no ability to pay OASI benefits thereafter." House Speaker Nancy Pelosi reacted to the analysis and said that it "shows the swift potential devastation of President Trump’s reckless call to ‘terminate’ the payroll tax: shattering the sacred promise of Social Security."
Most of us have been working and paying into this system most of our lives; I retire next year & this is getting more than a little scary.— Karen Vasile (@Sokrlovr) August 25, 2020
Even Senate Minority Leader Chuck Schumer reacted to this estimate and said, "President Trump’s plan to eliminate Social Security’s dedicated funding would endanger seniors' Social Security and could mean the end of Social Security as we know it by 2023." But Trump claims that the elimination of these taxes would have no impact on Social Security as the money from the government's general fund would simply be shifted there. Treasury Secretary Steven Mnuchin seemed to agree with that notion. "There would be an automatic contribution from the general fund to those trust funds. The president in no way wants to harm those trust funds, so they would be reimbursed, just as they’ve always been in the past when we’ve done these types of things," said Mnuchin. But it's not that simple.
Exactly! I don’t want to be a burden on my son but the time would come— if I didn’t have SS— that he would have to take care of me. This added burden would devastate some young people/families. Nobody wants that.— Melinda (@underHiswing914) August 26, 2020
Currently, Social Security has $2.9. trillion as reserves, while payroll taxes helps bring in $1 trillion annually. "If he throws it until the end of 2023, then benefits will stop because there’s not enough money in the accumulated reserve," said the president of Social Security Works, an advocacy organization, Nancy Altman. Even using general revenue to fund Social Security would require an act of Congress as Trump cannot do it unilaterally. "[Trump] certainly will make the case that he has the power. It’s not clear to me that he has," said Altman. The Democratic-controlled House would surely obstruct any such proposals from passing and a number of Republicans have already rejected calls for payroll tax cuts.
Responding to Trump's recent assurance, "If I win, I may extend and terminate. In other words, I’ll extend it beyond the end of the year and terminate the tax," Altman said, "If you terminate the funding, you terminate the program."