A Letter to the U.S. Senate: Don’t Cut Payroll Taxes
The National Committee to Preserve Social Security and Medicare sent the following letter to members of the United States Senate last night, as they formulate a final version of an economic stimulus package:::
March 23, 2020
Dear Senator:
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to state our strong opposition to:
-
Senators David Perdue and Thom Tillis’s amendment to the coronavirus stimulus bill suspending payment of Social Security payroll taxes for the rest of the year, and
-
A provision in the bill deferring payment of the employer share of Social Security payroll tax – half until next year and the other half until 2022.
We oppose any proposals that would divert Social Security Trust Funds for purposes for which they were not intended, such as a means to stimulate the economy.
While we agree that providing tax relief to middle class Americans is an important consideration as we respond to the many possible economic and social dislocations as a result of the coronavirus epidemic, we do not believe that eliminating or deferring the Social Security payroll tax is an appropriate way to accomplish this goal. Any reductions to this vitally important revenue stream would threaten Social Security’s ability to pay future benefits to 64 million Americans.
Moreover, these proposals would undermine the earned benefit nature of the program. Social Security is an earned benefit fully funded by the contributions of workers throughout their working lives. A payroll tax suspension or deferral chips away at that fundamental idea, making it easier each time it is enacted to turn to it again to meet some future crisis, until the payroll tax is permanently eliminated, undermining the program in this manner would help achieve the goals of opponents of Social Security including those who would privatize the program. This is equally true even if the funds are replaced by general revenues from the Treasury.
Furthermore, there are alternatives to a payroll tax cut or deferral which would be more targeted and effective to stimulate an economy slowed by the spread of the coronavirus. For example, a one-time payment by the federal government can put money in the hands of taxpayers quickly, and the Making Work Pay Tax Credit can be passed by Congress rapidly as can an expansion of the Earned Income Tax Credit. In addition, we strongly support Senators Chuck Schumer, Elizabeth Warren and Ron Wyden’s plan to increase by $200 the monthly benefit for all Social Security, Veterans, and Supplemental Security Income (SSI) beneficiaries through the end of 2021.
Again, the National Committee to Preserve Social Security and Medicare on behalf of its members and supporters are opposed to any alteration to the payroll tax that reduces revenue flowing into the trust funds or undermines the “earned right” nature of the program. We appreciate your consideration.
Sincerely,
Max Richtman
President and CEO of the National Committee to Preserve Social Security and Medicare
Corona Crisis Poses Fresh Challenges for SSA
The coronavirus crisis has thrust extraordinary challenges onto the already beleaguered Social Security Administration (SSA). As the administrator for Social Security, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI), few federal agencies touch the lives of so many Americans so directly. Yet, the SSA faces the same issues as other federal agencies striving to cope with the coronavirus outbreak – protecting workers while keeping operations running as smoothly as possible.
SSA field office across the country were closed to the public as of Tuesday. But SSA employees remain at work – and operations continue. The agency has urged the public to visit its website or to call its toll-free number, 800-772-1213 for customer service. (The public still can obtain limited in person service at those offices if they are blind or terminally ill, or need SSI or Medicaid eligibility issues resolved related to work status.). SSA has also created a special webpage with updates on customer service during the crisis.
“The decision [to close field offices] protects the population we serve – older Americans and people with underlying medical conditions – and our employees during the coronavirus pandemic… However, we are still able to provide critical services.” – SSA statement, 3/16/20
Today, House Ways and Means Committee leadership sent a letter to SSA administrator Andrew Saul, urging the agency to protect its workers against coronavirus while processing claims and benefits without interruption.
“Throughout its 85 year-history, Social Security has never missed a payment. Seniors, families who have lost a breadwinner, and people with disabilities rely on Social Security to pay their rent or mortgage, put food on the table, pay medical bills, and meet other basic needs. It is vital that SSA remains able to send benefits on time.” – House Ways & Means committee leadership letter to SSA administrator, 3/19/20
Most SSA employees work in cubicles and cannot maintain the recommended six feet of separation from others in the workplace. They are just as susceptible to infection as every other federal worker. But they are under pressure to continue processing benefits and claims in a timely manner.
The Ways and Means committee leaders suggest SSA allow employees to telework where possible, in accordance with federal guidelines. National Committee senior legislative representative (and former 35-year SSA employee) Webster Phillips says the agency’s teleworking capabilities have been diminished since Andrew Saul came on board as administrator – and will take time and resources to build back up.
Meanwhile, SSA will discontinue several of its normal activities in order to prioritize beneficiaries’ needs. “There are workloads that they’re not going to process while this is going on, focusing exclusively on paying benefits,” says Phillips. Those include stopping all Continuing Disability Reviews (CDRs) and curtailing eligibility re-determinations for SSI recipients.
SSA also has discontinued in-person disability hearings to protect the health of claimants and employees. Instead, those hearings will take place via telephone or video conference, where possible.
Before the coronavirus pandemic, the agency was already reeling from draconian budget cuts that Congress imposed on the agency between 2010-2017. (Never mind that SSA was already one of the most cost-effective federal agencies – spending no more than 1% of its revenue on administration and overhead.) The agency’s operating budget has only begun to recover lost ground in the past two years. Even now, the Trump administration has proposed a budget increase that amounts to only half of what SSA needs to adequately service its customers. SSA administrator Saul requested a $1 billion hike in operating funds; the President’s budget only proposed $480 million.
With its operating funds constricted for so many years, SSA was forced to furlough employees and close field offices throughout the country – some of them in underserved urban areas where claimants rely on public transportation. Customers encountered busy signals and lengthy hold times on the agency’s toll-free number; elderly and disabled claimants waited in long lines in field offices with limited seating; SSDI applicants languished up to two years waiting for an appeal hearing. Thousands of disabled applicants died before they could obtain one.
Before the coronavirus crisis, SSA was slowly restoring customer service to 2010 levels – but there still was a long way to go. The pandemic will put new strains on this already struggling agency. Beginning now, SSA should receive the funding it truly needs to deliver quality service during – and after – this crisis. It is past time to make SSA’s workers and customers the number one priority.
Biden, Sanders Debate Past Positions on Social Security, Obscuring Threat from Trump
For the first time in 11 debates, Social Security was a prominent topic during last night’s face-off between the Democratic presidential candidates. Unfortunately, the discussion focused on Joe Biden’s and Bernie Sanders’ past positions rather than the very real threat that the Trump administration poses to the program.
As usual, the moderators didn’t raise the topic of Social Security. But about halfway through the debate, Biden did:
“My Lord, Bernie, you’re running ads saying I’m opposed to Social Security.” – Joe Biden, 3/15/20
That began a lengthy exchange between the candidates, with Sanders attacking Biden’s record on Social Security – and the former Vice President defending it.
Sanders: Let me ask you a question, Joe… Have you been on the floor of the Senate… talking about the necessity [of] cutting Social Security…?
Biden: No.
Sanders: You never said that?
Biden: No.
Sanders: Alright, America… go to the YouTube right now.
The Sanders campaign has been running an ad claiming that “Biden has advocated cutting Social Security for 40 years.” But Politifact says Sanders’ broad claim does not stand up to scrutiny. Throughout his political career, Biden has advocated for expanding Social Security – indeed, it is part of his 2020 platform – with some exceptions over the years.
“In roughly 10-year hops, starting in the 1970s, he went from calling for a 7% increase, then for a one-year freeze, then floated raising the retirement age, then backed a change in how benefits would increase, and has ended up today calling for higher benefits.” – Politifact, 3/11/20
Biden re-iterated that he wants to boost Social Security benefits – and urged that the Democratic candidates focus on the future, instead of litigating the past. He pointed out that President Trump is the one who poses the true threat to Americans’ earned benefits. Yet almost all of the discussion in last night’s debate centered on the two Democrats’ past positions rather than clear indications from the Trump administration that it is targeting “entitlements” for future cuts.
*In January, responding to a CNBC interviewer, the president said that he would “look at” cutting Medicare and Social Security because it’s “actually the easiest of all things, because it’s such a big percentage (of the debt).”
*During a town hall on Fox News on March 5th, a moderator asked the president whether he would cut ‘entitlements’ to reduce the soaring debt. Trump replied, “Oh, we’ll be cutting.”
*The President and his advisors are pushing a Social Security payroll tax cut to stimulate the economy. Cutting payroll taxes would choke the flow of much-needed revenue into the Social Security program, endangering benefits, while giving working people little more than pocket change.
Fiscal hawks in the administration and on Capitol Hill have been in President Trump’s ear since 2017, insisting that Social Security be “reformed” in order to help pay for the reckless Trump/GOP tax cuts. Last August, Senator John Barrasso (R-WY) told the New York Times, “We’ve brought it up with President Trump, who has talked about it being a second-term project.”
The President’s 2021 budget cuts Social Security Disability Insurance (SSDI) by some $90 billion over ten years, and underfunds the Social Security Administration as it struggles to service the 10,000 Baby Boomers who turn 65 every day.
Meanwhile, the President propagates the falsehood that he will “protect” Social Security, claiming that the Democrats will “destroy it.” Social Security was created by Democrats. The party has protected Social Security from conservative assault for nearly 85 years. Both of the remaining Democratic presidents would expand – not cut – the program. Squabbling between Joe Biden and Bernie Sanders about the past only serves to distract voters from what President Trump will do to seniors’ earned benefits if he wins a second term.
What National Committee president Max Richtman wrote in The Hill newspaper in January still holds true:
“Today, the Democratic party is nearly unified behind the cause of boosting benefits and strengthening the program’s finances for the long-term future. That’s why it makes little sense for the Democratic presidential candidates to attack each other on Social Security policy. Their focus needs to be on the here and now.”
SSA To Administer New Paid Sick Leave Benefits During Coronavirus Epidemic
New federal sick leave benefits working their way through Congress in response to the coronavirus will be administered through the Social Security Administration (SSA) — if proposed legislation is enacted in its current form. The House is poised to vote on this and other economic measures to alleviate Americans’ financial pain during the coronavirus epidemic.
Details of the relief package have been worked out by House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin on behalf of the Trump administration, which is why the legislation is expected to pass both houses of Congress.
Under the new legislation, workers without employer-provided paid sick leave could apply for up to $4,000 in federal benefits through the Social Security Administration (SSA), with the following conditions:
*The worker has a current diagnosis of COVID-19.
*The worker is quarantined (including self-imposed quarantine), at the instruction of a health care provider, employer, or government official, to prevent the spread of COVID-19.
*The worker is caring for another person who has COVID-19 or who is under a quarantine related to COVID-19.
*The worker is caring for a child or other individual who is unable to care for him/herself due to the COVID-19-related closing of their school, child care facility, or other care program.
House leadership agreed to funnel federal benefits through SSA after the business community objected to the burden that employers would face implementing the program on their own.
The National Committee and other seniors advocates appreciate the need to provide federal paid sick leave during this time of crisis, but are concerned about the additional workload the program will impose on the already strained SSA. The agency’s operating budget was cut by more than 10% (adjusted for inflation) between 2010-2017, and has only recently begun to recover. Those draconian budget cuts forced layoffs and drastic reductions in customer service for everyday Social Security beneficiaries, who have had to endure interminable wait times on SSA phone lines, long delays for in-person service, outright closures of field offices, and years-long delays for Social Security Disability (SSDI) hearings. Thousands of disabled applicants have died awaiting those hearings.
For these reasons, Congress should appropriate at least $1 billion in increased operating funds for FY 2021. That would represent a healthy 7% boost – more than double the $480 million in the Trump administration’s own budget for 2021. Only with those additional operating funds can SSA reasonably be expected to handle the growing workload of serving retiring Baby Boomers plus the new burden of processing paid sick leave claims by millions of workers.
SSA is largely funded through workers’ payroll contributions in order to administer their earned retirement, disability, and survivor’s benefits. The agency typically does not handle anything unrelated to Social Security, Supplemental Security Income (SSI), and some aspects of Medicare. SSA is one of the most efficient federal agencies, spending only 1% of workers’ Social Security payroll contributions on overhead costs.
Here are some of the other key features of the draft legislation:
*Benefit amount: Two-thirds of the individual’s average monthly earnings (based on the most recent year of wages or self-employment income for which records are readily available), up to a cap of $4,000.
*Program and benefit period: The benefits will be available for leave that occurs from January 19, 2020 (the date of the first U.S. COVID-19 diagnosis) through one year after the bill’s enactment.
*Retroactive benefits: Benefits can be paid retroactively, and applications can be filed up to 6 months after enactment.
*Application: Applications will be taken online, by phone, or by mail. Individuals will not visit SSA field offices to apply. Payments will in most cases be issued electronically.
*Program integrity: Applicants must attest that they meet the criteria for eligibility and existing penalties for fraud or misrepresentation with regard to Social Security benefits are applied to the federal emergency paid leave benefits program.
It is imperative that the federal government enact paid sick leave benefits in order to encourage workers with symptoms to stay home and keep the disease from spreading, and to spare those workers from undue financial pain during the coronavirus epidemic. Congressional leadership has decided that SSA is the best option for paying out those benefits. Now Congress must ensure that the agency has the financial resources it needs to administer the new program, while continuing to improve customer service for the 63 million Social Security beneficiaries who already depend on it.
Where is Social Security in Coverage of Trump Payroll Tax Cut Proposal?
The mainstream media have given ample coverage to President Trump’s proposal to cut payroll taxes, but many news outlets have ignored the potential impact on Social Security. In fact, some of the coverage does not even mention Social Security – an odd omission considering that FICA payroll taxes fully fund the income security program! Cutting payroll taxes deprives Social Security of much-needed revenue. But consumers of mainstream news could be forgiven for not knowing that.
In fairness, major news sources — from Newsweek to the New York Times, from the Washington Post to the Associated Press, and from NBC to CNN — are by no means soft-pedaling the president’s proposal. They have chronicled objections from Democrats, Republicans, and economists that a payroll tax cut makes little macroeconomic sense. High earners would receive significantly more payroll tax relief than lower income workers. A payroll tax cut doesn’t help the unemployed. It would do nothing for contract workers in the gig economy.
“Trump’s coronavirus payroll tax cut has ‘important drawbacks’ and is ‘really inferior’ to other ideas, economists say.” – Newsweek
“Democrats… emerged to throw cold water on Mr. Trump’s payroll tax cut, saying it was not ‘what we need right now.’” – New York Times
“Senate Majority Leader Mitch McConnell views the idea with skepticism, privately making clear… that he ‘detests’ pursuing this particular policy, which probably would add to federal debt and deficits.” – Washington Post
No doubt this is valid reporting. But many media outlets failed to include the implications for Social Security itself, leaving it to progressive journalists and seniors’ advocates to warn the public. The National Committee has just sent a letter to Senators and House members warning about the perils of a payroll tax cut.
“It seems as though bad ideas never die in Washington. We do not believe that making cuts to or eliminating the Social Security payroll tax is an appropriate way to [provide financial relief to Americans during this crisis]. Any reductions to this vitally important revenue stream would threaten Social Security’s ability to continue paying benefits to the 63 million Americans who depend on [it].” – NCPSSM letter to the House and Senate
As we have argued in this space and in published opinion pieces, Social Security funds should not be used for unrelated purposes. Depriving Social Security of revenue could threaten retirees’ benefits, most of whom need every dollar of their monthly checks. With the Social Security trust fund facing insolvency in 2035 (if Congress doesn’t act to prevent it), cutting the program’s funding stream, even temporarily, could hasten the insolvency date.
Payroll tax cuts risk undermining the program’s fundamental design. When the Obama administration and Congress enacted a 2% payroll tax holiday during the Great Recession, Social Security funds were replenished using general funds. However, Social Security was designed to be self-funded by workers’ payroll contributions. That model has been successful for almost 85 years. Backfilling Social Security funds from other sources betrays the stability of the program’s worker-funded structure.
When Social Security ceases to become fully self-funded, it opens the door for “entitlement reformers” who seek to cut the program to reduce the deficit (even though Social Security does not contribute to federal debt). Using general funds to replace lost Social Security revenue is the “camel’s nose under the tent” toward cutting benefits. Most “entitlement reformers” insist that reducing future benefits is the only solution to Social Security’s fiscal challenges – while condemning proposals to bring needed revenue into the system. At the end of the Obama payroll tax holiday, fiscal hawks accused Democrats of “raising taxes” simply for restoring FICA contributions to their previous levels.
The news media unwittingly enable the “reformers” by omitting the broader implications for Social Security’s future in their coverage of a payroll tax cut. This is a disservice to the public, because workers and retirees need to be fully informed about the implications of any changes to the Social Security system. Responsible media coverage of a major change like reducing payroll taxes should include the impact on Social Security itself – and the 63 million retirees, disabled and their families who currently depend on it.
A Letter to the U.S. Senate: Don’t Cut Payroll Taxes
The National Committee to Preserve Social Security and Medicare sent the following letter to members of the United States Senate last night, as they formulate a final version of an economic stimulus package:::
March 23, 2020
Dear Senator:
On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to state our strong opposition to:
-
Senators David Perdue and Thom Tillis’s amendment to the coronavirus stimulus bill suspending payment of Social Security payroll taxes for the rest of the year, and
-
A provision in the bill deferring payment of the employer share of Social Security payroll tax – half until next year and the other half until 2022.
We oppose any proposals that would divert Social Security Trust Funds for purposes for which they were not intended, such as a means to stimulate the economy.
While we agree that providing tax relief to middle class Americans is an important consideration as we respond to the many possible economic and social dislocations as a result of the coronavirus epidemic, we do not believe that eliminating or deferring the Social Security payroll tax is an appropriate way to accomplish this goal. Any reductions to this vitally important revenue stream would threaten Social Security’s ability to pay future benefits to 64 million Americans.
Moreover, these proposals would undermine the earned benefit nature of the program. Social Security is an earned benefit fully funded by the contributions of workers throughout their working lives. A payroll tax suspension or deferral chips away at that fundamental idea, making it easier each time it is enacted to turn to it again to meet some future crisis, until the payroll tax is permanently eliminated, undermining the program in this manner would help achieve the goals of opponents of Social Security including those who would privatize the program. This is equally true even if the funds are replaced by general revenues from the Treasury.
Furthermore, there are alternatives to a payroll tax cut or deferral which would be more targeted and effective to stimulate an economy slowed by the spread of the coronavirus. For example, a one-time payment by the federal government can put money in the hands of taxpayers quickly, and the Making Work Pay Tax Credit can be passed by Congress rapidly as can an expansion of the Earned Income Tax Credit. In addition, we strongly support Senators Chuck Schumer, Elizabeth Warren and Ron Wyden’s plan to increase by $200 the monthly benefit for all Social Security, Veterans, and Supplemental Security Income (SSI) beneficiaries through the end of 2021.
Again, the National Committee to Preserve Social Security and Medicare on behalf of its members and supporters are opposed to any alteration to the payroll tax that reduces revenue flowing into the trust funds or undermines the “earned right” nature of the program. We appreciate your consideration.
Sincerely,
Max Richtman
President and CEO of the National Committee to Preserve Social Security and Medicare
Corona Crisis Poses Fresh Challenges for SSA
The coronavirus crisis has thrust extraordinary challenges onto the already beleaguered Social Security Administration (SSA). As the administrator for Social Security, Social Security Disability Insurance (SSDI), and Supplemental Security Income (SSI), few federal agencies touch the lives of so many Americans so directly. Yet, the SSA faces the same issues as other federal agencies striving to cope with the coronavirus outbreak – protecting workers while keeping operations running as smoothly as possible.
SSA field office across the country were closed to the public as of Tuesday. But SSA employees remain at work – and operations continue. The agency has urged the public to visit its website or to call its toll-free number, 800-772-1213 for customer service. (The public still can obtain limited in person service at those offices if they are blind or terminally ill, or need SSI or Medicaid eligibility issues resolved related to work status.). SSA has also created a special webpage with updates on customer service during the crisis.
“The decision [to close field offices] protects the population we serve – older Americans and people with underlying medical conditions – and our employees during the coronavirus pandemic… However, we are still able to provide critical services.” – SSA statement, 3/16/20
Today, House Ways and Means Committee leadership sent a letter to SSA administrator Andrew Saul, urging the agency to protect its workers against coronavirus while processing claims and benefits without interruption.
“Throughout its 85 year-history, Social Security has never missed a payment. Seniors, families who have lost a breadwinner, and people with disabilities rely on Social Security to pay their rent or mortgage, put food on the table, pay medical bills, and meet other basic needs. It is vital that SSA remains able to send benefits on time.” – House Ways & Means committee leadership letter to SSA administrator, 3/19/20
Most SSA employees work in cubicles and cannot maintain the recommended six feet of separation from others in the workplace. They are just as susceptible to infection as every other federal worker. But they are under pressure to continue processing benefits and claims in a timely manner.
The Ways and Means committee leaders suggest SSA allow employees to telework where possible, in accordance with federal guidelines. National Committee senior legislative representative (and former 35-year SSA employee) Webster Phillips says the agency’s teleworking capabilities have been diminished since Andrew Saul came on board as administrator – and will take time and resources to build back up.
Meanwhile, SSA will discontinue several of its normal activities in order to prioritize beneficiaries’ needs. “There are workloads that they’re not going to process while this is going on, focusing exclusively on paying benefits,” says Phillips. Those include stopping all Continuing Disability Reviews (CDRs) and curtailing eligibility re-determinations for SSI recipients.
SSA also has discontinued in-person disability hearings to protect the health of claimants and employees. Instead, those hearings will take place via telephone or video conference, where possible.
Before the coronavirus pandemic, the agency was already reeling from draconian budget cuts that Congress imposed on the agency between 2010-2017. (Never mind that SSA was already one of the most cost-effective federal agencies – spending no more than 1% of its revenue on administration and overhead.) The agency’s operating budget has only begun to recover lost ground in the past two years. Even now, the Trump administration has proposed a budget increase that amounts to only half of what SSA needs to adequately service its customers. SSA administrator Saul requested a $1 billion hike in operating funds; the President’s budget only proposed $480 million.
With its operating funds constricted for so many years, SSA was forced to furlough employees and close field offices throughout the country – some of them in underserved urban areas where claimants rely on public transportation. Customers encountered busy signals and lengthy hold times on the agency’s toll-free number; elderly and disabled claimants waited in long lines in field offices with limited seating; SSDI applicants languished up to two years waiting for an appeal hearing. Thousands of disabled applicants died before they could obtain one.
Before the coronavirus crisis, SSA was slowly restoring customer service to 2010 levels – but there still was a long way to go. The pandemic will put new strains on this already struggling agency. Beginning now, SSA should receive the funding it truly needs to deliver quality service during – and after – this crisis. It is past time to make SSA’s workers and customers the number one priority.
Biden, Sanders Debate Past Positions on Social Security, Obscuring Threat from Trump
For the first time in 11 debates, Social Security was a prominent topic during last night’s face-off between the Democratic presidential candidates. Unfortunately, the discussion focused on Joe Biden’s and Bernie Sanders’ past positions rather than the very real threat that the Trump administration poses to the program.
As usual, the moderators didn’t raise the topic of Social Security. But about halfway through the debate, Biden did:
“My Lord, Bernie, you’re running ads saying I’m opposed to Social Security.” – Joe Biden, 3/15/20
That began a lengthy exchange between the candidates, with Sanders attacking Biden’s record on Social Security – and the former Vice President defending it.
Sanders: Let me ask you a question, Joe… Have you been on the floor of the Senate… talking about the necessity [of] cutting Social Security…?
Biden: No.
Sanders: You never said that?
Biden: No.
Sanders: Alright, America… go to the YouTube right now.
The Sanders campaign has been running an ad claiming that “Biden has advocated cutting Social Security for 40 years.” But Politifact says Sanders’ broad claim does not stand up to scrutiny. Throughout his political career, Biden has advocated for expanding Social Security – indeed, it is part of his 2020 platform – with some exceptions over the years.
“In roughly 10-year hops, starting in the 1970s, he went from calling for a 7% increase, then for a one-year freeze, then floated raising the retirement age, then backed a change in how benefits would increase, and has ended up today calling for higher benefits.” – Politifact, 3/11/20
Biden re-iterated that he wants to boost Social Security benefits – and urged that the Democratic candidates focus on the future, instead of litigating the past. He pointed out that President Trump is the one who poses the true threat to Americans’ earned benefits. Yet almost all of the discussion in last night’s debate centered on the two Democrats’ past positions rather than clear indications from the Trump administration that it is targeting “entitlements” for future cuts.
*In January, responding to a CNBC interviewer, the president said that he would “look at” cutting Medicare and Social Security because it’s “actually the easiest of all things, because it’s such a big percentage (of the debt).”
*During a town hall on Fox News on March 5th, a moderator asked the president whether he would cut ‘entitlements’ to reduce the soaring debt. Trump replied, “Oh, we’ll be cutting.”
*The President and his advisors are pushing a Social Security payroll tax cut to stimulate the economy. Cutting payroll taxes would choke the flow of much-needed revenue into the Social Security program, endangering benefits, while giving working people little more than pocket change.
Fiscal hawks in the administration and on Capitol Hill have been in President Trump’s ear since 2017, insisting that Social Security be “reformed” in order to help pay for the reckless Trump/GOP tax cuts. Last August, Senator John Barrasso (R-WY) told the New York Times, “We’ve brought it up with President Trump, who has talked about it being a second-term project.”
The President’s 2021 budget cuts Social Security Disability Insurance (SSDI) by some $90 billion over ten years, and underfunds the Social Security Administration as it struggles to service the 10,000 Baby Boomers who turn 65 every day.
Meanwhile, the President propagates the falsehood that he will “protect” Social Security, claiming that the Democrats will “destroy it.” Social Security was created by Democrats. The party has protected Social Security from conservative assault for nearly 85 years. Both of the remaining Democratic presidents would expand – not cut – the program. Squabbling between Joe Biden and Bernie Sanders about the past only serves to distract voters from what President Trump will do to seniors’ earned benefits if he wins a second term.
What National Committee president Max Richtman wrote in The Hill newspaper in January still holds true:
“Today, the Democratic party is nearly unified behind the cause of boosting benefits and strengthening the program’s finances for the long-term future. That’s why it makes little sense for the Democratic presidential candidates to attack each other on Social Security policy. Their focus needs to be on the here and now.”
SSA To Administer New Paid Sick Leave Benefits During Coronavirus Epidemic
New federal sick leave benefits working their way through Congress in response to the coronavirus will be administered through the Social Security Administration (SSA) — if proposed legislation is enacted in its current form. The House is poised to vote on this and other economic measures to alleviate Americans’ financial pain during the coronavirus epidemic.
Details of the relief package have been worked out by House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin on behalf of the Trump administration, which is why the legislation is expected to pass both houses of Congress.
Under the new legislation, workers without employer-provided paid sick leave could apply for up to $4,000 in federal benefits through the Social Security Administration (SSA), with the following conditions:
*The worker has a current diagnosis of COVID-19.
*The worker is quarantined (including self-imposed quarantine), at the instruction of a health care provider, employer, or government official, to prevent the spread of COVID-19.
*The worker is caring for another person who has COVID-19 or who is under a quarantine related to COVID-19.
*The worker is caring for a child or other individual who is unable to care for him/herself due to the COVID-19-related closing of their school, child care facility, or other care program.
House leadership agreed to funnel federal benefits through SSA after the business community objected to the burden that employers would face implementing the program on their own.
The National Committee and other seniors advocates appreciate the need to provide federal paid sick leave during this time of crisis, but are concerned about the additional workload the program will impose on the already strained SSA. The agency’s operating budget was cut by more than 10% (adjusted for inflation) between 2010-2017, and has only recently begun to recover. Those draconian budget cuts forced layoffs and drastic reductions in customer service for everyday Social Security beneficiaries, who have had to endure interminable wait times on SSA phone lines, long delays for in-person service, outright closures of field offices, and years-long delays for Social Security Disability (SSDI) hearings. Thousands of disabled applicants have died awaiting those hearings.
For these reasons, Congress should appropriate at least $1 billion in increased operating funds for FY 2021. That would represent a healthy 7% boost – more than double the $480 million in the Trump administration’s own budget for 2021. Only with those additional operating funds can SSA reasonably be expected to handle the growing workload of serving retiring Baby Boomers plus the new burden of processing paid sick leave claims by millions of workers.
SSA is largely funded through workers’ payroll contributions in order to administer their earned retirement, disability, and survivor’s benefits. The agency typically does not handle anything unrelated to Social Security, Supplemental Security Income (SSI), and some aspects of Medicare. SSA is one of the most efficient federal agencies, spending only 1% of workers’ Social Security payroll contributions on overhead costs.
Here are some of the other key features of the draft legislation:
*Benefit amount: Two-thirds of the individual’s average monthly earnings (based on the most recent year of wages or self-employment income for which records are readily available), up to a cap of $4,000.
*Program and benefit period: The benefits will be available for leave that occurs from January 19, 2020 (the date of the first U.S. COVID-19 diagnosis) through one year after the bill’s enactment.
*Retroactive benefits: Benefits can be paid retroactively, and applications can be filed up to 6 months after enactment.
*Application: Applications will be taken online, by phone, or by mail. Individuals will not visit SSA field offices to apply. Payments will in most cases be issued electronically.
*Program integrity: Applicants must attest that they meet the criteria for eligibility and existing penalties for fraud or misrepresentation with regard to Social Security benefits are applied to the federal emergency paid leave benefits program.
It is imperative that the federal government enact paid sick leave benefits in order to encourage workers with symptoms to stay home and keep the disease from spreading, and to spare those workers from undue financial pain during the coronavirus epidemic. Congressional leadership has decided that SSA is the best option for paying out those benefits. Now Congress must ensure that the agency has the financial resources it needs to administer the new program, while continuing to improve customer service for the 63 million Social Security beneficiaries who already depend on it.
Where is Social Security in Coverage of Trump Payroll Tax Cut Proposal?
The mainstream media have given ample coverage to President Trump’s proposal to cut payroll taxes, but many news outlets have ignored the potential impact on Social Security. In fact, some of the coverage does not even mention Social Security – an odd omission considering that FICA payroll taxes fully fund the income security program! Cutting payroll taxes deprives Social Security of much-needed revenue. But consumers of mainstream news could be forgiven for not knowing that.
In fairness, major news sources — from Newsweek to the New York Times, from the Washington Post to the Associated Press, and from NBC to CNN — are by no means soft-pedaling the president’s proposal. They have chronicled objections from Democrats, Republicans, and economists that a payroll tax cut makes little macroeconomic sense. High earners would receive significantly more payroll tax relief than lower income workers. A payroll tax cut doesn’t help the unemployed. It would do nothing for contract workers in the gig economy.
“Trump’s coronavirus payroll tax cut has ‘important drawbacks’ and is ‘really inferior’ to other ideas, economists say.” – Newsweek
“Democrats… emerged to throw cold water on Mr. Trump’s payroll tax cut, saying it was not ‘what we need right now.’” – New York Times
“Senate Majority Leader Mitch McConnell views the idea with skepticism, privately making clear… that he ‘detests’ pursuing this particular policy, which probably would add to federal debt and deficits.” – Washington Post
No doubt this is valid reporting. But many media outlets failed to include the implications for Social Security itself, leaving it to progressive journalists and seniors’ advocates to warn the public. The National Committee has just sent a letter to Senators and House members warning about the perils of a payroll tax cut.
“It seems as though bad ideas never die in Washington. We do not believe that making cuts to or eliminating the Social Security payroll tax is an appropriate way to [provide financial relief to Americans during this crisis]. Any reductions to this vitally important revenue stream would threaten Social Security’s ability to continue paying benefits to the 63 million Americans who depend on [it].” – NCPSSM letter to the House and Senate
As we have argued in this space and in published opinion pieces, Social Security funds should not be used for unrelated purposes. Depriving Social Security of revenue could threaten retirees’ benefits, most of whom need every dollar of their monthly checks. With the Social Security trust fund facing insolvency in 2035 (if Congress doesn’t act to prevent it), cutting the program’s funding stream, even temporarily, could hasten the insolvency date.
Payroll tax cuts risk undermining the program’s fundamental design. When the Obama administration and Congress enacted a 2% payroll tax holiday during the Great Recession, Social Security funds were replenished using general funds. However, Social Security was designed to be self-funded by workers’ payroll contributions. That model has been successful for almost 85 years. Backfilling Social Security funds from other sources betrays the stability of the program’s worker-funded structure.
When Social Security ceases to become fully self-funded, it opens the door for “entitlement reformers” who seek to cut the program to reduce the deficit (even though Social Security does not contribute to federal debt). Using general funds to replace lost Social Security revenue is the “camel’s nose under the tent” toward cutting benefits. Most “entitlement reformers” insist that reducing future benefits is the only solution to Social Security’s fiscal challenges – while condemning proposals to bring needed revenue into the system. At the end of the Obama payroll tax holiday, fiscal hawks accused Democrats of “raising taxes” simply for restoring FICA contributions to their previous levels.
The news media unwittingly enable the “reformers” by omitting the broader implications for Social Security’s future in their coverage of a payroll tax cut. This is a disservice to the public, because workers and retirees need to be fully informed about the implications of any changes to the Social Security system. Responsible media coverage of a major change like reducing payroll taxes should include the impact on Social Security itself – and the 63 million retirees, disabled and their families who currently depend on it.