The Social Security Act was signed into law by President Franklin Delano Roosevelt, a Democrat, on August 14, 1935, to function as a “federal safety net for elderly, unemployed and disadvantaged Americans,” while legislating that it cannot spend more than it receives through payroll taxes.
More than just a retirement program, it provides important life insurance and disability insurance protection as well. Over 64 million people, more than 1 in every 6 U.S. residents, collected Social Security benefits in June 2020.
One-third of all retirees are dependent on Social Security for 90 percent or more of their income, and over 60 percent depend on it for more than half of their income. About 61 million people are enrolled in Medicare.
Social Security and Medicare are both funded entirely through payroll taxes paid into “The Social Security Trust Funds” Every penny paid out must be paid with money coming in now and in the future from payroll taxes. There are no other funding sources.
We know the Republican Party, in its chronic itch to defund entitlement programs, has sought to cut Social Security, even though it operates at a very efficient administrative cost of around 2 percent.
Last month, due to his administration’s disastrous response to COVID-19, Trump signed an executive order delaying some payroll taxes until next year — but would then require payroll taxes to be doubled from January through April 2021 to restore losses.
However, within this executive order, Trump also asks his treasury secretary to “explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred.” He was sounding an early call to scratch the itch and de-fund Social Security, along with Medicare.
And then, out campaigning more recently after his payroll tax delay order, Trump said: “If I win, I may extend and terminate. In other words, I’ll extend it beyond the end of the year and terminate the tax.”
If he were, in fact, to “terminate” the payroll tax, Trump would effectively leave the Social Security system with no ongoing funding at all. That means no Social Security and no Medicare benefits, since all funding of the system will have been terminated.
The Social Security Administration’s chief analyst, Stephen Goss, recently stated that if Trump’s (Republican) plan goes into effect, “we estimate that [the Disability Insurance] Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021,” and that “the Social Security Trust Fund would become permanently depleted by the middle of calendar year 2023 with no ability to pay [Old-Age and Survivors Insurance] benefits thereafter.”
What does this mean for us if Trump, with his Republican majority, win?
What else does it mean?
Published as a letter to the editor in the Southampton Press this week.