No, Trump’s Payroll Plan Wouldn’t Deplete SOCIAL SECURITY by 2023

Perhaps by now you’ve seen the scary headlines from today like “Trump payroll plan would deplete Social Security by 2023,” and I want to fill you in on what the real story is.

So what is actually going on here?  Let me fill you in.

So if you saw my video from August 9 titled “Does Trump Want to Kill Social Security?” I showed you clips where Trump appeared to imply that he wanted to not only defer the employee portion of the Social Security tax as stated in his recent memorandum on the payroll tax but that if re-elected he would seek a permanent payroll tax cut.

I talked about how that would be terrible for Social Security if that actually happened, which it won’t, and of course Kudlow was defending Trump, saying, no, he’s just referring to the portion of the taxes that would be deferred under the memorandum, and then Treasury Secretary Mnuchin was saying, well, you know, if there was a permanent payroll tax cut, we would simply make a transfer from the General Fund.

And that is likely true, if there were an actual payroll tax cut or elimination, whether of simply the amount deferred under Trump’s memorandum, or perhaps an entire elimination of the payroll tax cut, there would almost certainly be an increase in income taxes and a transfer from the General Fund of the United States Treasury to the two Social Security trust funds, the Federal Old-Age and Survivors Insurance Trust Fund, which pays out Social Security retirement, and the other being the Federal Disability Insurance Trust Fund, which pays out SSDI, Social Security Disability Insurance.

So with this backdrop in place, in response to Trump’s statement, four Democratic senators, Chris Van Hollen of Maryland, Bernie Sanders of Vermont, Ron Wyden of Oregon, and Senate Minority Leader Chuck Schumer of New York on August 19 wrote a letter to Stephen Goss, Chief Actuary of the Social Security Administration, asking him to run a calculation of what would happen to Social Security if the Social Security tax was permanently eliminated effective January 1, 2021.

And they asked about the Social Security tax not only paid by employees but also paid by employers, and of course Trump’s payroll tax memorandum does not speak to the deferral of employer-paid Social Security tax, so that’s of red flag number one that should tip you off that this is just political maneuvering, a political request so that headlines could be created exactly like we’re seeing.

Anyway, specifically, what the senators wanted to know is, if that happened, if the Social Security tax is completely eliminated for everybody, then at what point the Social Security trust fund asset reserves would be depleted.

Yesterday, Chief Actuary Goss gave his answer in a letter.

Goss said, look, if the Social Security trust funds were “held harmless” by the payroll tax elimination, meaning that funding would be received from the General Fund, the Treasury, just like Mnuchin said would happen if this were to be the case, the trust fund reserves would be unaffected, obviously.

If this payroll tax elimination ever happened, which it won’t, then this is exactly what would happen, despite the original intention of Social Security and how it’s worked for the most part for the past eighty-five years, that’s what would happen.

But assuming that’s not the case, the payroll tax is eliminated and there is no transfer from the General Fund to mitigate the immense loss of no more payroll taxes funding Social Security, making the only sources of income to the trust funds interest income on current reserves as well as revenue derived from the taxation of Social Security benefits, then the Chief Actuary said well in this case the trust funds would lose over 90% of their projected income under current law for calendar year 2021.

And then for years after 2021, it would be even more of a loss because there would be less interest on trust fund reserves because reserves would be depleted faster than projected because there’s no payroll tax funding Social Security.

But the Chief Actuary being the Chief Actuary he ran the numbers and concluded well, with no more payroll taxes whatsoever funding Social Security, the Federal Disability Insurance Trust Fund would be depleted in the middle of calendar year 2021 with no ability to pay SSDI benefits after that point and the Federal Old Age and Survivors Insurance Trust Fund would be depleted in the middle of calendar year 2023 with no ability to pay Social Security benefits thereafter.

But this is all a never-gonna-happen nightmare scenario.  This is not any politician’s plan, it is not Trump’s “payroll plan.”  If a plan was ever in place to completely eliminate payroll taxes, there would be some alternative funding source for the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, they wouldn’t just be left to die, this headline is just ridiculous, and then this article quotes somebody, Nancy Altman, president of the progressive advocacy group Social Security Works, who said, “If Donald Trump is reelected, Social Security will cease to exist before the end of his second term,” this headline is just just there to scare you and to get clicks and ad revenue and over 34,000 shares.

But you know what would be really cool?  If this got more shares than that clickbait headline article, so share this, I will be sharing it on all my social media, and if you could do the same, that would be really cool because there are legitimate criticisms of our sitting president just like there are legitimate criticisms of Joe Biden, but let’s stick to facts and not scare headlines as we are now 70 days away from the November election.