Trump eyes Social Security cuts by slashing payroll tax

Amid new reporting that former U.S. President Donald Trump's economic advisers are urging him to cut the federal payroll tax, a key revenue source for Social Security and Medicare, advocates on Thursday urged voters to remember that the presumptive Republican presidential nominee has long threatened to do just that.

"Don't be fooled," said Nancy Altman, president of Social Security Works, which lobbies to strengthen the social safety net for retired Americans. "At the end of his term in office, Trump delayed Social Security's dedicated revenue paid from workers and their employers. He was quite explicit that, if reelected, he would convert that delay into a permanent cut."

Altman was referring to an executive order Trump signed in August 2020, allowing companies to delay payroll tax payments—an option most companies declined to take as the Treasury Department made clear they would have to pay all of the deferred taxes the following year and that employees would see smaller paychecks as a result of the program.

Trump promised to make the payroll tax cut permanent, and as Reuters reported late Wednesday, the former president is discussing the proposal with economic advisers including Fox News host and former National Economic Council Director Larry Kudlow and right-wing commentator Stephen Moore.

The former president is weighing cuts to Social Security's revenue stream even as Republicans complain that the popular program is unaffordable and push to raise the retirement age to delay Americans' use of the funds.

The GOP has long claimed Social Security is headed toward insolvency and pushed to privatize the program or cut benefits, but last year's Social Security trustees report found that the program's trust fund currently has a $2.85 trillion surplus and could pay 80% of benefits for the next 75 years even if Congress takes no action to expand it—as long as it continues to be funded through taxes.

"Social Security can only pay benefits if it has sufficient dedicated revenue to pay its costs. That is why it doesn't contribute even a penny to the deficit," said Altman. "If Trump succeeds in slashing that dedicated revenue so that it is no longer sufficient to fully cover the cost, it will result in an automatic benefit reduction. This would happen without any Republicans having to vote for the cuts, or Trump having to sign them into law."

"He is dusting off the old Republican playbook and bringing back the strategy known informally as 'Starve the Beast,'" said Altman of Trump. "In this case, Social Security is the beast."

Along with cutting payroll taxes, which are paid by workers and employees and amount to 7.65% of each employee's gross pay in order to fund senior citizens' post-retirement income, Trump has proposed extending the 2017 Tax Cuts and Jobs Act, the vast majority of which benefited the wealthiest Americans, according to the Economic Policy Institute and the Center for Popular Democracy.

Altman noted the contrast between Trump's tax proposals and those of President Joe Biden, who has proposed strengthening Social Security and extending its solvency by requiring people with wealth over $100 million to pay at least 25% in income taxes, raising the corporate tax rate to 28%, and quadrupling the stock buyback tax to disincentive companies lavishing their shareholders with their profits instead of investing in their workforce.

"The choice this election is clear: Trump and the Republicans will cut Social Security and give tax breaks to millionaires and billionaires," said Altman. "The Democrats will expand Social Security, paid for by requiring millionaires and billionaires to pay their fair share."