WASHINGTON – President Donald Trump’s push to cut Social Security payroll taxes for the rest of the year — and even arguing for a permanent cut — would do little to bolster the coronavirus-battered economy in the short term and could destabilize long-term funding for benefits that millions of Americans depend on.
Trump this week said that he could eliminate the tax if he is reelected without undercutting the retirement program or greatly adding to the deficit, arguing that economic growth would offset the revenue losses.
“At the end of the year, the assumption that I win, I’m going to terminate the payroll tax, which is another thing that some of the great economists would like to see done,” Trump told reporters on Wednesday, adding that “tremendous growth” in the U.S. will cover the costs of Social Security. “We’ll be paying into Social Security through the general fund.”
But aides to the president on Thursday sought to walk back Trump’s comments. White House press secretary Kayleigh McEnany said Trump meant to say he would seek forgiveness of employee payroll tax payments that he had already ordered deferred for the rest of the year.
Employers are pressing the Trump administration to walk back even more parts of the plan. They want Treasury to make it voluntary, letting companies decide if they want to offer their workers the option of deferring payroll taxes. The U.S. Chamber of Commerce says it has “serious concerns” whether the tax deferral would be workable.
In comments Wednesday to reporters, Trump said at least four times that he would end the payroll tax.
The president added that the tax would be eliminated after the “beginning of the New Year,” while the deferral only applies to the closing months of 2020. Trump said his planned payroll tax reduction would be a “number that’s bigger than any of the numbers we talked about.” A typical family would get back $5,000 or more, Trump said, an average economists said would not be achieved.
When pressed Wednesday about how the U.S. government would then pay for Social Security after the payroll tax is “permanently” rescinded, the president did not revise his previous comments. Instead, he insisted that economic growth would surge to cover the mammoth expense that would exceed $1 trillion.