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Social Security and You: Trump and the Future of Social Security

Tom Margenau on

My inbox has been inundated with emails from worried senior citizens who tell me they have heard that President Donald Trump will end Social Security if he is reelected and that the trust funds will dry up in 2023 and all Social Security checks will stop going out.

I can't imagine the president has plans to end Social Security. But it doesn't help that he puts his famous foot in his famous mouth and says things that people can interpret to mean exactly that. Trump recently made some rather unfortunate remarks about the Social Security payroll tax that has caused all the uproar. And his aides have been scrambling to come up with excuses and clarifications.

On Aug. 8, the president told a gathering of supporters, "If I'm victorious on Nov. 3 I plan to make permanent cuts to the (Social Security) payroll tax."

Because our Social Security system, like almost every other social insurance system in the world, operates on a "pay-as-you-go" basis, meaning that the income derived from today's tax collections is used to fund tomorrow's Social Security benefits, any such major cuts to the Social Security tax would have to result in major cuts to Social Security benefits.

The very next day, White House economic adviser Larry Kudlow told reporters that the president misspoke.

But then, just a couple of days later, on Aug. 12, Trump told another group this: "We'll be terminating the (Social Security) payroll tax after I, hopefully, get elected. We'll be terminating the payroll tax, so that will mean anywhere from $5,000 to even more per family, and also great for businesses and great for jobs."

 

Well, this led to a firestorm of controversy. At the request of some Democratic senators, the Social Security Administration's chief actuary issued a letter stating that if the payroll tax were terminated on Jan. 1, 2021, the disability trust fund would be permanently depleted in about the middle of calendar year 2021 with no ability to pay disability benefits after that. And the actuaries further estimated the retirement and survivors trust fund would become permanently depleted by the middle of calendar year 2023, with no ability to pay retirement and survivor benefits after that.

Once again, Trump's advisers had to scramble to explain what he supposedly meant to say. When asked at a press conference if the president really intended to end the Social Security payroll tax, White House Press Secretary Kayleigh McEnany told reporters he did not. She clarified, "What he was meaning yesterday is that he wants permanent forgiveness of the deferral."

I can hear many of you saying, "Huh, what does that mean?" So, now let me clarify the clarification for the readers of this column. In early August, as one part of an economic stimulus plan, Trump issued a memo stipulating that people who make less than $8,000 per month would not have Social Security taxes deducted from their paychecks. That tax break began on Sept. 1 and will end on Dec. 31. And it is considered a tax "deferral." In other words, the tax payments would be "deferred" to a later date -- meaning they would have to be paid back at some point. (The president does not have the authority to change or eliminate the Social Security payroll tax, but he can order a deferral of the payment of those taxes.)

However, in the same memorandum, the president told his Treasury secretary that he wanted him to "explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred."

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