WASHINGTON – President Donald Trump’s move to defer Social Security payroll taxes could be taking him into treacherous political territory.
His directive — aimed at boosting an economy shaken by the coronavirus pandemic — doesn’t affect retirement benefits but impacts how they're paid for. Democrats seized on it Monday as a signal that Trump would cut the social safety net and break a promise he made as a candidate in 2016 not to touch Social Security and Medicare. Some nonpartisan experts also expressed concerns.
Deferral of the 6.2% payroll tax on employees for the last three months of this year could mean that up to $100 billion in payments to the Social Security Trust Fund would be delayed, according to an updated estimate by the nonpartisan Committee For A Responsible Federal Budget, which advocates for reducing government deficits.
“What it does is undercut Social Security,” Rep. John Larson, D-Conn., said Monday, addressing Trump's move. The president “is defunding Social Security and breaking his promise. ... He will say, ‘I’m not doing anything to touch Social Security, I'm just deferring this,' but it's as clear as my hand in front me.” Larson chairs the House Ways and Means subcommittee overseeing the retirement program.
The Democratic National Committee was out with a video accusing Trump of breaking his promise to older Americans.
The White House pushed back.
“Providing a payroll tax deferral poses no risk to the Social Security Trust Fund and puts more money in the pockets of hardworking Americans as we fight to end this pandemic from China and rebuild our economy safely,” spokesman Judd Deere said in a statement. “This has been a priority for President Trump and while congressional Democrats played politics the president acted for the forgotten men and women of this country as he has done so many times before."
With more than 60 million beneficiaries, Social Security is funded by a 12.4% payroll tax evenly divided between employees and employers. But there's a cloud over the program's long-term finances, and even before the pandemic, government experts estimated it would be unable to pay full benefits starting in 2035. Medicare's hospital fund is also financed by a payroll tax, but that's not affected by Trump's directive.