With over a million Michigan residents collecting Social Security, the proposed payroll tax cut from the Trump administration could devastate the finances of older Michiganders.
MICHIGAN — Retirees need services like Social Security and Medicare more than ever during the coronavirus pandemic.
As American Ledger reports, more than a million Michiganders rely on Social Security, and President Donald Trump has taken a target to the program in the past. But if the proposed cuts Trump introduced to the payroll tax which funds both that program and Medicare become permanent it won’t just be retirees feeling the pinch. The Motley Fool reports that those impacts could be felt by pre-retirees as well.
This earned him another scathing rebuke from Michigan’s governor.
“The president’s recent actions do nothing to protect the millions of unemployed Americans who need to put food on the table for themselves and their families,” Gov. Gretchen Whitmer said in a statement. “He has routinely proven that he’s more focused on his chances in the November election than fighting the virus that has killed more than 160,000 Americans.”
Slashing Payroll Taxes Slashes Social Security
President Trump tried to circumvent Congress this weekend and freeze the payroll tax that funds Medicare and Social Security, starving the vitally important programs of much needed cash. This isn’t unusual for Republicans, who have been trying for years to downsize Medicare, which provides health insurance for people over age 65, and Social Security, which helps 64 million Americans meet basic living expenses when they are older or disabled.
The president’s legal authority to delay the payroll tax isn’t clear. It also doesn’t do away with it, but defers payments until later, and there is little question that it would take an act of Congress to completely forgive those taxes. In other words, while people might not pay this tax now, it is not at all guaranteed that they wouldn’t have to pay the tax back at a later date. And the money wouldn’t help the 17 million Americans who are currently out of work, instead, aiding highest-wage earners the most.
In addition to being a gift for wealthier Americans, the payroll tax freeze accomplishes another Republican goal. For years, the GOP has worked to undercut Medicare and Social Security, citing a growing deficit, despite passing a massive tax cut in 2017 that grew the US deficit to over $1 trillion and failed to deliver promised benefits for the economy.
One of the most notable efforts came from Sen. Mitt Romney (R-UT) when he was running as the Republican presidential candidate in 2012. Romney proposed handing Medicare over to private health insurance companies, cutting funding, and turning it into a voucher system. Republicans have also dreamed of privatizing Social Security, which was a major policy focus for President George W. Bush in 2005.
President Trump said he wouldn’t cut Medicare or Social Security on the campaign trail, but his 2020 budget called for significant reductions in Medicare funding. And for the fourth year in a row, Trump has called for cuts to Social Security in that same budget, specifically targeting disability benefits.
The continued threats from the GOP to these two popular programs also contradicts public sentiment. According to Gallup, nearly two decades of polling on Social Security indicates that a majority of adults want Social Security left completely intact. Medicare also generally sees positive poll numbers in Gallup surveys. And while Medicaid and Medicare are not the same, Medicaid is one of the largest public programs run by the federal government. As recently as last week, voters in Republican-led Missouri joined those in Oklahoma and other GOP-helmed states to expand lower-income public insurance options like Medicaid. This would seem to put Trump and other GOP politicians at odds with the general sentiment on tax-funded programs like Social Security and Medicare.
Medicare and Social Security will almost certainly come up on the campaign trail, if public sentiment on the popular programs is to be believed. While Republicans are bent on defunding the programs (and slashing federal Medicaid support), Democratic presidential candidate Joe Biden has pledged to keep Medicare as it is, ensuring there is “no disruption to the current Medicare system.” And on Social Security, Biden wants to increase funding to the program by having Americans with “especially high wages to pay the same taxes on those earnings that middle-class families pay.”