Trump's radical plan to waive payroll tax would punch hole in Social Security, Medicare budgets

https://news.yahoo.com/trumps-radical-plan-waive-payroll-192517459.html

Howard Schneider, Steve Holland
March 11, 2020 / 3:18 PM


https://www.reuters.com/article/us-health-coronavirus-usa-payroll-analys/trumps-radical-plan-to-waive-payroll-tax-would-punch-hole-in-social-security-medicare-budgets-idUSKBN20Y351

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Trump advisers on the White House economic team and Republican lawmakers are pushing for more targeted stimulus. But Trump has held firm on the idea, White House and Republican sources say.

Trump told Republican senators in a meeting Tuesday he would like to waive the payroll tax entirely through the end of the year, or even permanently suspend it, one attendee told Reuters.

If approved by Congress, the move would result in a massive, roughly $1 trillion dollar cash injection into the pockets of workers and businesses over the rest of the year, based on a Congressional Budget Office estimate www.cbo.gov/topics/taxes of current projected federal tax revenue.

It would also mean “you’ve blown a trillion dollar hole” in the trust funds that pay Social Security benefits for retirees and help fund the Medicare health care program for Americans over age 65, said Howard Gleckman, a senior fellow at the Tax Policy Center. “What do you do about that?”

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If Trump were successful in making the payroll tax cuts permanent, he would hope to fund Social Security and Medicare from general revenue, a Republican source says.

That move could balloon the U.S. budget deficit, which will top $1 trillion this year, despite the strong economy, the CBO estimates.

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Senator Ron Wyden, the ranking Democrat on the Senate Finance Committee, said Tuesday the tax cut would not necessarily help the most vulnerable workers.

To benefit from a payroll tax cut, first of all, you need to be employed, he said.

In addition “it doesn’t do a lot for people who rely on tips. It doesn’t do much for people who have lost shifts. It does very little for folks who don’t have sick leave,” Wyden told reporters. “So there are important issues to work through.”