Donald Trump's recent executive action on payroll taxes could have dire effects on Social Security — at a time when Trump is already losing support from older Americans more broadly.
Over the weekend, Trump directed the Treasury Department to stop collecting the tax, which funds Social Security, through the end of 2020 for anyone making less than $100,000 a year, an attempt to go around Congress and buff up his own electoral chances this November.
Trump promised that if he wins reelection, he will "extend it beyond the end of the year and terminate the tax."
Around 63 million people benefit from the Social Security program each year. According to the Center on Budget and Policy Priorities, "older Americans make up about 4 in 5" of those beneficiaries.
Economists who spoke to the Washington Post warned that Trump's actions could have "catastrophic fiscal effects" on Social Security because the federal program is already facing financial hardship.
"By having a permanent cut, that immediately makes you ask the question on what's going to happen on the benefits side. That would make it worse if you didn't have a source of revenue to backfill [the cut]," said Garrett Watson, senior policy analyst at the Tax Foundation.
Chye-Ching Huang, senior director of economic policy at the Center on Budget and Policy Priorities, told the Post that the payroll tax holiday also offered zero benefit to Americans impacted by coronavirus-related layoffs, or those who are already retired.
"The people who would be seeing the biggest increase in their paychecks still have jobs, still have earnings … People who lost jobs or retired or get income from other sources would see no help from this," she said.
North Carolina Rep. G.K. Butterfield (D) also warned Sunday that retirement benefits could be reduced dramatically in the next 10 years without funding from the payroll tax.
Trump's executive action "will endanger the long-term stability of the Social Security Trust Fund," Butterfield said in a statement.
"The Fund was facing a revenue shortfall prior to the Pandemic and now Trump's actions will further deplete the fund," he added. "It is foreseeable that the Social Security Trust Fund could run out of money within ten years which would reduce retirements payments by 31 percent."
Trump's attack on Social Security may further endanger his 2020 reelection bid, as he struggles to maintain support among older Americans.
Trump won 56% of voters aged 65 and older in 2016. An average of nine polls since June, however, shows his support among the same group at only 45% currently, according to NBC News.
Presumptive Democratic nominee Joe Biden, meanwhile, has the support of 50% of seniors, 9 percentage points more than Democratic nominee Hillary Clinton received in 2016.
Three of the five states with the largest population of retired Americans — Florida, Texas, and Pennsylvania — are considered battleground states in the 2020 election. Biden currently leads in Florida and Pennsylvania, according to a RealClearPolitics aggregate, and trails Trump by just two percentage points in Texas.
Trump won all three states in 2016.
Trump had threatened programs like Social Security before his most recent action. During a January CNBC interview, Trump was asked if he would ever consider cutting entitlement programs and replied that he would "take a look at that."
"At the right time, we will take a look at that," he said at the time, calling such programs "the easiest of all" to get rid of because they made up a large percentage of the government's total budget.
Trump's announcement to defund Social Security "exacerbates people's already-heightened fears and concerns about their financial and retirement security," Nancy LeaMond, executive vice president of AARP, said in a statement on Saturday responding to the payroll tax holiday.
Nancy Altman, president of the Social Security advocacy group Social Security Works, went a step further, accusing Trump on Saturday of wanting to "destroy" the program.
"Social Security is the foundation of everyone's retirement security," she said in a statement. "At a time when pensions are vanishing and 401ks have proven inadequate, Trump's plan to eliminate Social Security's revenue stream would destroy the one source of retirement income that people can count on."
Published with permission of The American Independent Foundation.
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