Chief actuary warns against termination of payroll tax
Stephen Goss, the chief actuary of the Social Security Administration, has condemned President Donald Trump’s plan to terminate the payroll tax.
While condemning it on Tuesday August 25, 2020, Goss stated such plan could incapacitate the federal government to pay Social Security benefits mid-2023.
As a response to a request by a group of Senate Democrats for an explanation on possible consequences that could face the nation if Trump succeeded in permanently eliminating payroll tax especially when there is no alternative funding streams available for Social Security benefits, Goss, in a letter, predicted that asset reserves for Disability Insurance (DI) Trust Fund would suffer depletion.
He said the depletion would occur in the middle of 2021 calendar year and there may not ability to pay DI benefits thereafter especially if that happens in next year January.
While giving a prediction for Social Security Old Age and Survivors Insurance (OASI) Trust Fund for retired workers, Goss said that the reserves would see permanent depletion by the middle of 2023 calendar year.
He further said that it would occur with no ability to pay OASI benefits thereafter.
Responding to the analysis, Chuck Schumer, Senate Minority Leader, D-N.Y., said, “President Trump’s plan to eliminate Social Security’s dedicated funding would endanger seniors’ Social Security and could mean the end of Social Security as we know it by 2023.”
Similarly, in her response to the estimate, Nancy Pelosi, House Speaker, called president’s move to terminate the payroll tax “reckless”.
She added that by doing so, the president would be breaking what she called “the sacred promise of Social Security.”
Meanwhile, President Trump, at a press conference in Bedminster, N.J. earlier this month, said he would permanently eliminate payroll tax, if he was reelected in November election.
“If I’m victorious on November 3rd, I plan to forgive these taxes and make permanent cuts to the payroll tax…I’m going to make them all permanent,” said Mr. Trump.
The president added that the legislation to eliminate payroll taxes would indicate that the money comes from general fund.
However, President’s Trump decision to terminate the payroll tax might be all unrealistic for the reason that such a decision could not be made unilaterally. It requires legislation by Congress for it to pass.
Given the today’s Congress composition with the Democrats constituting the majority in the House, the probability that such proposal by the President would be rejected is very high.