From Jennifer Rubin writing for the Washington Post:
Biden was referring to Trump’s suggestion to eliminate the payroll tax, the funding mechanism that supports Social Security and Medicare. The Associated Press explained: “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.”
The chief actuary of the Social Security Administration, Stephen Goss, sent a letter last week to Senate Democrats, explaining, “If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that [the Disability Insurance] Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter.” Goss added, “We estimate that [the Old Age and Survivors Insurance] Trust Fund reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter.”
In a sign that this issue may have hit a nerve, the Chairman of the Senate Finance Committee and the senior Republican on the House Ways and Means Committee have written Stephen Goss, Social Security's Chief Actuary, to complain about his response to the hypothetical question. However, Goss had little option but to respond to the hypothetical question. That's what his office does. He can't refuse to answer questions because he thinks a question because it seems political. All the questions are political.
Republicans have long thought that Goss is against them. I think the problem is that they keep putting forward foolish proposals because they have never bothered to try to understand how Social Security works or even given much thought to the politics of Social Security. It's not Goss' fault the GOP keeps coming up with untenable ideas.
This needs to be explained to the taxpayers. When Trump talks about eliminating the payroll tax (he said he'd make it permanent, if re-elected), he does not tell the truth, that will mean eliminating social security benefits. It appears to be another way to get rid of social security by (literally) defunding the Trust Funds. Those of us who represent folks before SSA & those who work for SSA will be out of a job, in large part, if this ever came to pass. Yes, according to our laws and Constitution, the power of the purse is Congress', so this is not within the President's authority -- but that has not stopped Trump before and won't in this case unless there is a great outcry. Trump "governs" by throwing xxxx against the wall to see what sticks (i.e., doesn't immediately get shot down). We cannot depend on the spineless ones in the Senate to oppose any such power grab by Trump. On this single issue of social security alone, anyone who gets social security or expects to get social security must vote against Trump and his enablers.
ReplyDeleteI've pretty consistently posted my disbelief in the argument that the trust funds are not solvent to the extent cutting benefits or increasing taxes is necessary.
ReplyDeleteThat's under normal circumstances. This idea is insane and really will deplete the trust funds in the near future if it were to actually go into effect for an extended period of time.
SSA Chief Actuary Stephen Goss has calculated that the Dib Trust Fund would be depleted mid-2021 (yes, in a year or less) and the Retirement & Survivors Trust Fund would be depleted mid-2023. After that, no more social security checks -- for anyone.
ReplyDeleteNancy Altman, president of Social Security Works, has an op-ed piece on CNN dated 9/1/2020 which explains that Trump can defer these payroll taxes for 12 months based on an emergency declaration, and can only be overridden by Congress enacting veto-proof legislation (what are the odds of that?). That would mean no more disability checks, for anyone.
Oh yeah, Congress could fund social security from general tax revenues, but then social security checks become a tug-of-war in the yearly budget tussle, including being stopped whenever there is a government shutdown.
This is evil, a way for far-righters who have never liked social security to do an end run around the law.
This is evil and needs to be reported more broadly. I discussed this when he first proposed this in the beginning of the pandemic shut down. A payroll tax holiday doesn't do much to help anyone and exacerbates existing budget problems. This is what happens when someone totally incompetent is elected as president. There are systems in place that provide us some protection, but all of them are being strained.
ReplyDelete"Oh yeah, Congress could fund social security from general tax revenues...."
ReplyDeleteExcept that income tax revenues are likely to be dramatically reduced for the year thanks to the economic downturn and the recent Tax Cuts and Jobs Act (AKA the "Tax Cuts for Rich Political Donors Act")
This is more of a "mystery" than anything else at this point. Trump is talking about eliminating the tax, but also protecting Social Security. How would that work? That's the mystery.
ReplyDeleteI can tell you this, personally, I would be in deep trouble even if SSDI were cut and not eliminated. I only survive by accepting financial help from my family at 56 years old and that is bad enough.
Any cuts or a complete termination would be literally fatal for me as I received more bad news from a doctor just yesterday.
I really am not going to worry about it because it does not make sense that they would cut or terminate, as countless millions would be plunged into homelessness; you think the riots are bad now?
There seems like a breach of contract issue just like with any insurance company. I tell my non-lawyer friends and family that Social Security is basically a forced retirement and disability insurance program.
ReplyDeleteForced may be a strong word. You can choose to work a job that does not pay into Social Security. For example, my wife works for Los Angeles County that does not pay into it. But most jobs pay into it.
So if you paid into it, then there is some kind of implied contract to deliver services when needed.
If Chump and his cronies want to eliminate Social Security, then simple contract law presumes they would have to substitute something else for those who already paid?
Remember who created this program and who has been against it for years when you go to the polls in November. The radical extreme right Koch Bros/Heritage Foundation want SSA gone period. The reason the current regime sells violence, hate, and bigotry is because they have nothing else left to attract voters. If they tell you that you deserve to be poor and your elderly mother can eat cat food you sure as hell wouldn't be voting for them would you.
ReplyDeleteWas there this much fear when Obama did this for 2 years a decade ago? So far this isn't even a holiday more like a loan for 4 months that has to be repaid next year. Other than the federal government, are many employers going along with this? This may just be a ploy to get Congress to pass a bill re virus and economic relief. If Trump is reelected and people have to repay this "loan," Trump gets a few more votes this fall w/o really doing anything except making a short term loan. Getting people back to work is important and how is better suited to do it, Biden or Trump?
ReplyDeleteFICA taxes raised roughly 1 Trillion dollars in 2019. If that is eliminated, then the only way to pay for SS would be to pay out of general revenue. General income taxes raise about about 1.5 trillion. In order to cover Social Security, genial income taxes wold have to go from 1.5 trillion to 2.5 trillion. Isn't going to happen.
ReplyDeleteWon't happen for several reasons. Most importantly, the current FICA tax is actually a regressive tax (lower income people pay more) since taxes are only paid up until the cap on earnings and the tax is only paid on wage income 9or self employment) and is not paid on other categories of income such as investment income. So, not only would there have to be a massive tax increase of roughly 40% accords the Board, those with higher earners would actually pay much more, and pay it on income now not being taxed.
Does anyone, even the most delusional Trumpists, think there is any chance of that ever happening?
Trump doesn't understand that keeping SS restricted to a payroll tax is a bonus for the rich. Great businessman!
The end game, of course, is eliminating Social Security. The strategy is to kill the Trust fund and make payment of Social Security dependent on the congressional appropriations process to pay benefits out of the general fund. The question you have to ask is do you trust congress to agree on timely appropriating and delivering Social Security benefits on an ongoing basis. If you do, then I've got a bridge I'd like to sell you.
ReplyDeleteI think this is more important to the blog now that many on it are approaching retirement age.
ReplyDelete@5:59
ReplyDeleteSimple contract law doesn't generally involve sovereign immunity providing blanket protection of one party from suit. Also, even if social security were more akin to a private insurance contractual relationship, federal ERISA (which governs the vast majority of private disability insurance policies) preempts many state claims of breach of contract.
So if Social Security does end, I am not hopeful that any recompense would be available to prior beneficiaries who paid into the system, legally.
Politically, I suspect there would be riots to the degree we haven't had since the 18th century.
12:11, a decade ago the payroll tax holiday was passed by Congress, not done singlehandedly by Obama, and included in the deal was that the foregone tax revenues were being replaced by general revenues.
ReplyDeleteHere, the concern is that Trump says he wants to forgive the deferred FICA taxes without any indication that the hole will be plugged, and that he specifically said he will try to end the payroll tax altogether.
Pretty ironic coming from Biden who opposes Medicare for All because he claims it would be a tax burden on the middle class.
ReplyDeleteThat disappointment aside, I'm glad he's standing up for Social Security here.
What Grassley and Brady should also be doing is making it clear that Trump cannot legally unilaterally abolish the collection of payroll taxes nor can he replace the payroll tax with general revenues. That is for Congress to do and they, along with other Congressional members, need to make that crystal clear.
ReplyDelete