Published on
Thursday, September 03, 2020
byCNN
Social Security Could Come To a Screeching Halt
Donald Trump may kill Social Security through the deferral of payroll taxes,
the backbone of the program.
byNancy J. Altman
"Trump has already ordered the Treasury Department to stop collecting Social
Security's dedicated payroll contributions for the next four months pursuant
to the Internal Revenue Code, which permits deferrals of taxes when a
disaster is declared," writes Altman. (Photo: AFGE)
"Trump has already ordered the Treasury Department to stop collecting Social
Security's dedicated payroll contributions for the next four months pursuant
to the Internal Revenue Code, which permits deferrals of taxes when a
disaster is declared," writes Altman. (Photo: AFGE)
Donald Trump once claimed that he could shoot someone in the middle of Fifth
Avenue in New York City and not lose any voters. He's now seeing whether the
same is true if he kills Social Security.
His unilateral, unprecedented step of deferring the collection of payroll
taxes, the backbone of Social Security, is the murder weapon he would use.
Trump has already ordered the Treasury Department to stop collecting Social
Security's dedicated payroll contributions for the next four months pursuant
to the Internal Revenue Code, which permits deferrals of taxes when a
disaster is declared. Once re-elected, if he keeps deferring those taxes,
all benefits will come to a screeching halt, with no Congressional
involvement whatsoever.
According to estimates from the independent chief actuary of the Social
Security Administration, if all Social Security contributions from payroll
tax stopped on Jan. 1, 2021, the nearly 10 million people today getting
Social Security Disability Insurance benefits, which averages about $1,125
every month, would see them stop abruptly in the middle of 2021. Those 55
million receiving Social Security Old-Age and Survivors Insurance benefits,
which average around $1,440 a month, would see them disappear two years
later. Social Security would be without money to pay benefits by 2023
(Congress could only stop Trump by enacting veto-proof legislation, a highly
unlikely proposition).
"With a presidential threat to have zero benefits paid whatsoever,
congressional supporters of Social Security would effectively be held
hostage, with little they could do but give into Trump's demands."
Section 7508A of the Internal Revenue Code allows deferrals for up to one
year, long enough to stop the disability insurance payments. Killing off the
rest of Social Security takes two years longer, but a newly elected
President Trump could interpret the statute to permit an additional 12-month
deferral with the declaration of a new disaster. All benefits could be
stopped with just two new disaster declarations. Concerningly, the Supreme
Court has found that President Trump has "broad discretion" in making
findings.
With a presidential threat to have zero benefits paid whatsoever,
congressional supporters of Social Security would effectively be held
hostage, with little they could do but give into Trump's demands. It is not
hard to imagine, at that point, a backroom deal that fulfilled the
longstanding right-wing goal of eliminating the features of Social Security
that have made it so successful and so popular.
Prior to running for president on the Republican ticket, Trump endorsed
privatizing Social Security and raising its full retirement age to 70,
asking, "How many times will you really want to take that trailer to the
Grand Canyon?" Other longstanding right-wing goals are to means-test Social
Security and adopt the technical but far-reaching change of price-indexing.
Those are not only deeply unpopular, but would impose enormous cuts, while
also ending Social Security as it has existed since its enactment 85 years
ago.
Some pundits are giving Trump the benefit of the doubt, arguing that
Congress would simply make up for the missing payroll contributions with
general revenue. That, though, is highly unlikely. We are talking about
general revenue of over $1 trillion a year. Since no one is suggesting
raising taxes to make up the lost revenue from Social Security, that
additional $1 trillion would have more than doubled the fiscal year 2019
deficit.
And, of course, spending has already gone up and revenue has gone down,
thanks to the pandemic. According to the Congressional Budget Office,
spending has increased 50% in the first 10 months of this fiscal year and
the deficit has more than tripled.
Importantly, even just substituting general revenue would fundamentally
alter Social Security. Its dedicated revenue and inability to deficit-spend
means that Social Security does not add a penny to the nation's federal
debt. Social Security's creator, President Franklin D. Roosevelt clearly
understood the importance of those Social Security contributions, which, in
his words, "give the contributors a legal, moral, and political right to
collect their [Social Security] pensions."
Trump has shown himself willing to attack numerous fundamental institutions.
He has attacked the US Postal Service, which the Constitution explicitly
lists as an enumerated power of Congress. He has attacked the free press and
our elections. Does anyone believe he wouldn't take our Social Security
system hostage to attain a radical reform?
Adding insult to injury, it is easy to imagine that Donald Trump will host a
Rose Garden signing ceremony for legislation ending Social Security as we
know it. He will use the occasion to brag about "saving" Social Security-as
he signs its destruction.
Nancy J. Altman is president of Social Security Works and chair of the
Strengthen Social Security coalition. She has a 40-year background in the
areas of Social Security and private pensions. Her latest book is The Truth
About Social Security. She is also the author of The Battle for Social
Security and co-author of Social Security Works!
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