President Donald Trump’s executive order on the payroll tax cut could “drain the Social Security trust fund,” Sen. Ron Wyden, D-Ore., a ranking member on the Senate Finance Committee said over the weekend.
“While employers are unlikely to risk a massive tax liability by not collecting payroll taxes or having to double up collection later, if they do go along with this stunt, it would drain the Social Security trust fund,” Wyden explained in a statement.
“This fake tax cut would also be a big shock to workers who thought they were getting a tax cut when it was only a delay. These workers would be hit with much bigger payments down the road,” he added.
In separate comments Monday morning on MSNBC’s Morning Joe program, Senate Minority Leader Chuck Schumer, D-N.Y., stated that Trump’s unemployment order, which allows for $400 weekly jobless benefits, “is not going to be able to be put into place for a month or two, if at all.”
The unemployment order would, according to Wyden, “throw already overburdened state unemployment insurance programs into chaos, making it harder to get benefits out the door.”
Trust Fund Issues
Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, told ThinkAdvisor in a Monday email message that the Medicare Hospital Insurance Trust Fund “was also already in danger of becoming insolvent sooner than the currently estimated year of 2026 due to the crushing impacts of COVID-19.”
Johnson explained, “Decreasing the revenues going into this program at this time is like pushing Medicare off the cliff.”
Where will the funding come from “to cover Social Security and Medicare benefits of the more than 61 million retirees who depend on current payroll tax revenues to cover their Social Security and Medicare benefits?” she asked.
A recent Senior Citizens League poll found that the No. 1 concern for retirees “is that a few years from now, benefits for both programs will have to be permanently cut to pay for this ‘temporary’ payroll tax cut,” Johnson pointed out.
A payroll tax cut, she added, “does not help people who have lost their jobs and need help the most. Employers have already received a payroll tax cut deferral for two years through earlier stimulus legislation.”