If President Donald Trump is re-elected and has his way, the payroll tax would be permanently eliminated. Many Americans would cheer this move as in the short term, it would mean a few more dollars in their pockets. What those Americans may be missing is that such a trade-off would mean absolutely no Social Security benefits would be there for them when they retire, assuming they would retire just a few years from now or later.
According to the head actuary at Social Security, Trump’s plan would permanently drain the fund by 2023. The part that pays disability benefits would be depleted by the middle of next year. The part that pays retirees would be destroyed by 2023.
Payroll taxes are what. at least in part, funds things like Social Security and Medicare. Without the payroll tax, those programs would be doomed. While the actuary’s letter only addresses Social Security, one can easily speculate that Medicare would probably not survive either.
Without Trump’s meddling, both Social Security’s disability and retirement funds would be solvent for decades.
According to Stephen C. Goss, who is the Chief Actuary at Social Security, the longtime conservative dream of getting rid of Social Security would come to fruition much sooner than later. The following is from his letter to members of Congress who inquired about what effect Trump’s plan would have on America’s future:
While benefits scheduled in the law for OASI and DI are obligations, such obligations can only be met
to the extent that asset reserves are available in the OASI and DI Trust Funds. The law does not
provide authority for the trust funds to borrow in order to pay benefits beyond the limited authority for
“advance tax transfers.” This limited authority allows all payroll tax income expected for a month to be
advanced to the beginning of that month if needed to meet benefit obligations on a timely basis. Thus,
under this hypothetical legislation, benefit obligations could not be met after the depletion of the asset
reserves and elimination of payroll taxes.
If this hypothetical legislation were enacted, with no alternative source of revenue to replace the
elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that
DI Trust Fund asset reserves would become permanently depleted in about the middle of calendar year
2021, with no ability to pay DI benefits thereafter. We estimate that OASI Trust Fund reserves would
become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI
Of course, with the program out of the way, there would only be two alternatives for a replacement. Either start over with a government program, or privatize American’s retirement plans and hand all of it over to an entity like Wall Street.
If Trump wins re-election, guess which one the GOP will push?