A new fact check by the Associated Press makes clear that “no matter how he casts it,” Trump’s payroll tax cut is a threat to Social Security. Despite making sweeping proclamations that he can “terminate” the payroll tax without slashing retirement benefits, Trump’s claim “has little basis in reality” and following through with his proposal could “could destabilize an anti-poverty program that provides payments to roughly 65 million Americans.” 

While Trump claimed at his 2016 campaign launch that he would “save Medicare, Medicaid and Social Security without cuts,” Trump has repeatedly said he wants to permanently eliminate the payroll tax that funds Social Security, while offering no plan to replace lost funds. As the oldest state in the nation, a disproportionate share of Maine people rely on Social Security for part or all of their income. Defunding a critical program that’s been the bedrock of American retirement since it was first signed into law 85 years ago today would have devastating consequences for Maine people. 

“First, Trump’s failed coronavirus response left older Mainers to fend for themselves. Now he’s attempting to axe the income safety net that hundreds of thousands of Maine people rely on while the pandemic continues to threaten our health and safety,” said Maine Democratic Party Chair Kathleen Marra. “Donald Trump’s threats to defund the program are shameful and would cause untold suffering in our state. It’s clear that in order to protect the future of Social Security and the future of older Mainers, we must defeat Donald Trump this November.”

 

Associated Press: AP FACT CHECK: Trump payroll tax cut is Social Security risk

By Josh Boak

August 14, 2020

 

  • President Donald Trump’s proposed payroll tax cut is a threat to Social Security no matter how he casts it.

 

  • During a news conference Wednesday, he insisted he could eliminate the tax if he were reelected, and do it without undercutting retirement benefits or greatly adding to the deficit. He said economic growth would offset the revenue losses.

 

  • That claim has little basis in reality.

 

  • TRUMP: “At the end of the year, the assumption that I win, I’m going to terminate the payroll tax ... We’ll be paying into Social Security through the General Fund.”

 

  • THE FACTS: Trump, in effect, has proposed a dramatic restructuring of how Social Security is financed by not relying on the payroll tax as a dedicated source, but instead by tapping the general fund. Trump campaign officials stressed that the general fund consists of assets and liabilities that finance government operations and could do so for Social Security. The general fund is nicknamed “America’s Checkbook” on the Treasury Department’s website.

 

  • The risk is that the loss of a dedicated funding source could destabilize an anti-poverty program that provides payments to roughly 65 million Americans. It also could force people to cut back on the spending that drives growth so they can save for their own retirement and health care needs if they believe the government backstop is in jeopardy.

 

  • A 12.4% payroll tax split between employers and workers funds Social Security, while a 2.9% payroll tax finances Medicare. These taxes raised $1.24 trillion last year, according to the Congressional Budget Office. Over a 10-year period, Trump’s idea would blow a $16.1 trillion hole in a U.S. budget that is already laden with rising debt loads.

 

  • TRUMP, asked how the general fund can sustain the payments: “We’re going to have tremendous growth. ... You will see growth like you have not seen in a long time.”

 

  • THE FACTS: It is highly unlikely that economic growth would be enough to offset the loss of the payroll tax. Indeed, Trump suggested that his 2017 income tax cuts would propel economic growth as high as 6% annually. That never happened. Growth reached 3% in 2018, then slumped to 2.2% and the U.S. economy crumbled into recession this year because of the coronavirus.

 

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