Can Trump Politically Survive Cutting Social Security’s Payroll Tax?

Published in the Pawtucket Times on May 11, 2020

As Congress begins to hammer out the fifth coronavirus stimulus package to continue its efforts to jump start the nation’s economy, President Donald Trump warns he will not sign any bill that does not include a payroll tax cut.

“We’re not doing anything without a payroll tax cut,” Trump bluntly warns at a two-hour “virtual town hall” event hosted by Fox News, at the Lincoln Memorial in Washington, D.C. According to Nielson Media Research, nearly 4 million viewers tuned into this the town hall, entitled “America Together: Returning to Work,” aired on May 3, that focused on COVID-19 and the reopening of the nation’s economy.

Aging advocates and Democratic lawmakers charge that trump is using the virus pandemic as an excuse to slash payroll contributions, Social Security’s dedicated funding. Cutting the Social Security payroll taxes would reduce the amount of money withheld from employee paychecks, increasing their take-home pay.

Payroll Tax Cuts: Reducing Social Security’s Financial Stability

The Washington, DC-based National Committee to Preserve Social Security and Medicare (NCPSSM) quickly released a statement warning that Trump’s efforts to remove the payroll tax by a provision in the next COVID-19 stimulus package will ensure the fiscal insolvency of Social Security, threatening the program’s ability to continue paying benefits to 64 million Americans who depend on those benefits to financially survive their retirement years.

“President Trump set off alarm bells for America’s seniors and their advocates by insisting once again on eliminating Social Security payroll taxes – both employer and worker contributions. The President even threatened to hold hostage the next phase of badly-needed Coronavirus relief legislation unless he gets his reckless payroll tax cuts. Make no mistake: by pushing to cut off the program’s funding stream, President Trump is taking the first step toward dismantling Social Security, says NCPSSM’s president and CEO, Max Richtman in a statement.
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“While we agree that providing tax relief to middle class Americans is an important consideration as we respond to Coronavirus pandemic, we do not believe that cutting, eliminating or deferring the Social Security payroll tax is an appropriate way to accomplish this goal, says Richtman.

In an April 24 correspondence to Trump, NCPSSM’s top official reminded the president that Social Security is an earned benefit fully funded by the contributions of workers throughout their working lives. He pointed out that a payroll tax cut is an assault on that fundamental idea, equally true even if the funds are replaced by general revenues from the Treasury.

In his correspondence, Richtman suggests that a payroll tax cut should not be viewed as an economic stimulus because 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,” he note.

Richtman also identified alternatives to the payroll tax cut that he believes would be more targeted and effective to fire up an economy slowed by the spread of the coronavirus. “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,” he suggests.

“In light of the recent Social Security Trustees report, it is clear that Social Security needs more revenue – not less,” observes Richtman, who served as a former staff director of the Senate Special Aging Committee.
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“The President’s campaign to eliminate payroll taxes is a violation of his patently false promises to seniors ‘not to touch’ Social Security. This proposal goes way beyond ‘touching.’ Choking off Social Security’s funding stream is an existential threat to seniors’ earned benefits,” charges Richtman.

Nancy Altman, president of Social Security Works, came out swinging when she heard Trump stating that he will block all coronavirus response measures unless they include cuts to the payroll tax, whose revenue is dedicated to Social Security.

In a statement, Altman stated: “More than 30 million Americans are newly unemployed due to the coronavirus pandemic. Their paychecks are gone, but their rent, utility, grocery bills and other expenses still must be paid. Seniors in nursing homes are dying at alarming rates. Hospitals are desperate, as are state and local governments.”

Dead on Arrival on Capitol Hill????

“Trump made it clear weeks ago that his obsession with cutting payroll contributions has nothing to do with the coronavirus or the resulting economic fallout,” says Altman, noting that he said he’d like a “permanent” reduction in payroll contributions, and that he’d support it “regardless” of the current situation. He has also said he wants to cut Social Security once he is re-elected, she added.

While Democratic lawmakers push for strengthening and expanding the Social Security Program, GOP lawmakers are signaling their opposition and aversion to risking political capital on supporting Trump’s efforts to cut the payroll tax. Trump’s calls for this tax policy change are falling on deaf ears. According to Politico, when asked if he supports Trump’s ultimatum that a payroll tax must be placed in the next stimulus package, Sen. Chuck Grassley (R-Iowa), the Senate Finance Committee chair, responded, “Right now, not much.”

“I’m going to give it due consideration, if I can see a strong group of people who think it’s the right thing to do,” added Grassley, whose Senate committee oversees federal tax policy, in the May 5 Politico article. “The president proposes, we dispose,” he quips.

Although Senate Majority Leader Mitch McConnel (R-Kentucky) is not ruling out payroll tax cuts, he is focusing his efforts to put liability protections provisions in the next major stimulus package to protect businesses against virus-related lawsuits from workers, stockholders, and consumers.

Stepping on the “Third Rail”

Political insiders consider Social Security to be the “third rail of a nations politics.” Wikipedia states that this metaphor comes from the high-voltage third rail in some electric railway systems. Stepping on it usually results in electrocution and the use of the term in the political arena refers to “political death.”

At an Iowa campaign rally in 2016, Republican presidential candidate Trump boasted that his loyal voter base would still standby him even if he shot someone in the middle of 5th Avenue in New York City. Many political pundits responded to his comment by rolling their eyes and chuckling.
Can Trump politically survive, keeping his loyal voter base, if he steps on the “third rail” by continuing his efforts to cut Social Security’s payroll taxes, pushing the program toward fiscal insolvency. When the dust settles after the upcoming November 2020 elections, we’ll see if the older voters consider Social Security an untouchable program.

Congress Must Protect Seniors in ‘Phase Four’ Stimulus Package

Published in the Woonsocket Call on April 12, 2020

Just weeks after Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the $2.2 trillion emergency stimulus package signed into law by President Donald Trump on March 27, lawmakers continue to look for ways to jump start the nation’s economy by passing another stimulus package. Lawmakers had previously passed two bipartisan stimulus bills to lessen the economic impact of the virus pandemic. Now, Congress is looking to hammer out another emergency stimulus bill to follow up the historic CARES Act.

Days ago, Senate Democrats successfully blocked Senate Majority Leader Mitch McConnell (R-KY) efforts to pass a $250 billion in small business coronavirus relief funds to put more money into the CARE Act’s Paycheck Protection Program, expected to quickly run out of money.

McConnell sought to pass the GOP crafted bill without negotiating with Senate Democrats. The Democrats had no objection to passage but wanted some loans reserved for businesses owned by women, minorities and veterans. They also wanted their priorities like unemployment benefits, foods stamps and community health centers to be added to the bill. Even if the legislation passed in the Senate it would have difficulty passing in the House without including Democratic priorities.

Providing for Seniors in Next Emergency Stimulus Package

The Washington, DC-based National Committee to Preserve Social Security and Medicare (NCPSSM), calls for more to be done in the fourth stimulus package to help seniors survive the COVID-19 pandemic, both physically and financially.

On April 7, Max Richtman, NCPSSM’s president and CEO, sent a letter to Congress urging lawmakers not to forget seniors as they begin to craft new Coronavirus relief legislation. He called for provisions to be put in the legislative package to boost Social Security benefits and to expand Medicare and Medicaid services to help seniors survive the pandemic crisis.

“We have been aggressively working to improve seniors’ programs for many years, but the pandemic has ratcheted their needs to the top of the list. Older Americans are among the most vulnerable to the ravages of COVID-19. Their struggles are significantly aggravated by the crisis. It makes sense to expand and protect the health and income security for older citizens, who in turn contribute so much to the economy and our quality of life,” says Richtman.

Richtman called on Congress to increase by $250 the monthly benefit for all Social Security, Veterans, and Supplemental Security Income (SSI) beneficiaries through the end of 2021. He pushed for the enactment of the improvements in Rep. John Larson’s Emergency Social Security Benefits Act, including an increase in widows’ and widowers’ benefits for lower-and-middle-income beneficiaries, and raising the threshold for the minimum benefit to 125 percent of the federal poverty line.

Richtman also lobbied for creation of a new Medicaid grant for states to boost their home and community-based long-term care services and to extend the 90-day prescription refill rule applied to Medicare in the CARES Act to all patients. He asked Congress to ensure all prescription drugs for COVID-19 be provided at no cost for all individuals whether they are insured or not.

Protecting the Fiscal Viability of Social Security

“A Marshall Plan for the beleaguered Social Security Administration (SSA) is what is need, considering all of the workloads that currently are being deferred,” says Richtman.

This could be accomplished by appropriating additional $400 million for the SSA’s operating budget to help the agency cope with the increase in coronavirus-related claims, including expected survivors’ benefit applications, he says.

During the economic 2011 and 2012 economic downturns, Congress passed SSA payroll tax cuts to reduce the amount of money withheld from employees’ paycheck to increase take-home pay. Lasts month, President Trump successfully pushed Congress to include a payroll tax cut provision in the recently passed CARES Act to stimulate the economy during the economic slowdown caused by the COVID-19 epidemic.

Seeking to protect Social Security’s fiscal viability, Richtman called on lawmakers to oppose any attempts to allocated Social Security Trust Funds for the “purposes for which they not intended, such as a means to stimulate the economy. “A payroll tax cut, suspension or deferral chip away at the 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 permanently eliminated,” he added.

Richtman reminded Congressional lawmakers that many low-income seniors will no longer be able to eat at the local senior and day care programs, or at charitable mean programs while they shelter in place. “That’s why Congress should increase the Supplemental Nutrition Assistance Program benefits by 15 percent of the duration of the downturn,” he said, noting that a small increase (around $100) per month would help to put food on the table while boosting the economy.

Millions of seniors will require assistance as public health officials attempt to but the brakes to the skyrocketing number of confirmed COVID-19 cases and deaths. Congress must not forget that seniors especially those with severe underlying medical conditions like heart or lung disease or diabetes are at a higher risk in developing the more serious complications from COVID-19 illness. Congress lawmakers must not forget seniors as they begin their efforts craft the next COVID-19 relief legislation.

Tune in on Next Tuesday’s Senor Telephone Townhall

Congressman David N. Cicilline will host a telephone town hall this Tuesday, April 14th at 2pm on how seniors can best access benefits included in the $2.2 trillion of relief passed by Congress. The Democratic Congressman will be joined by Rhode Island Office of Healthy Aging Director Rosamaria (“Rose”) Amoros Jones. The event is the third in Cicilline’s “Relief for Rhode Island” series on how folks can get the assistance they need during the COVID-19 pandemic.

Cicilline’s Seniors Telephone Town Hall is free and open to the public and members of the media. Those interested in joining the telephone town hall this Tuesday at 2pm can do so by dialing 855-962-1055.

Millions of seniors will require assistance as public health officials attempt to but the brakes to the skyrocketing number of confirmed COVID-19 cases and deaths. Congress must not forget that seniors especially those with severe underlying medical conditions like heart or lung disease or diabetes are at a higher risk in developing the more serious complications from COVID-19 illness. Congress lawmakers must not forget seniors as they begin their efforts craft the next COVID-19 relief legislation.