The NRLN is following a number of new reports on what could happen with legislation for the next federal government economic stimulus package in response to the COVID-19 pandemic.
Senate Republicans are at odds over the cost and contents of a possible $1 trillion legislative bill, the White House is pushing to include the temporary elimination of the payroll tax, while House Democrats are advocating legislation costing $3 trillion.
The news media reported that several Republican Senators told administration officials on July 21 during a policy lunch at the White House they are opposed to a payroll tax cut which funds Social Security and Medicare. Democrat leaders also oppose a payroll tax cut. President Trump said in a recent televised interview that he “would consider not signing it [economic stimulus bill] if we don’t have a payroll tax cut.”
The NRLN is on record opposing a payroll tax cut as an economic stimulus as President Trump has repeatedly requested Congress to pass. On May 5, 2020, I sent letters to the Chairman and Ranking Member of House Committees on Ways and Means, Energy and Commerce, and Senate Committee on Finance to urge them to oppose President Trump’s request because of the damage it would do to the funding for Social Security and Medicare.
A July 16 USA Today headline was The coronavirus pandemic could lead to Social Security cuts happening sooner than you think. The article pointed out: “COVID-19 could make the problem worse, however. Because Americans are unemployed in record numbers [due to COVID-19], there are a lot of people not paying payroll taxes right now. That means the SSA is collecting a lot less than expected in taxes and will likely need to take even more from its trust funds to continue paying out current benefits. While nobody knows exactly what this will mean for the future of Social Security, a report from the Bipartisan Policy Center estimates that because of COVID-19, the trust funds could be depleted as soon as 2028.” That is six years sooner than what the Trustees for Social Security and Medicare projected in their April 22, 2020 report to Congress.
Kaiser Health News (KHN), a news service of the Kaiser Family Foundation, a non-partisan, non-profit source for information on national health issues, carried a July 22 article with the headline: Another Problem on the Health Horizon: Medicare Is Running Out of Money.
The article cited “the Committee for a Responsible Federal Budget, a nonpartisan group of budget experts focused on fiscal policy, estimates that the COVID-19 pandemic will cause the Medicare Part A Trust Fund to be unable to pay all of its bills starting in late 2023 or early 2024.” That is two to three years sooner than the Trustees had projected.
The NRLN believes it makes no sense to eliminate the payroll tax as an economic stimulus since the cuts would mostly benefit people with jobs, not the unemployed. Temporarily suspending the payroll tax could be a “slippery slope.” If the payroll tax were temporarily suspended in 2020, would Congress have the courage to re-institute it in 2021 since some members of Congress could consider it a tax increase?
Also, federal income tax revenue will suffer losses due to the COVID-19 effect on taxable wages. The NRLN is on record as being opposed to Congress pushing the administration to pay private insurance companies $35 billion in rebates in 2020 to subsidize an industry that is not even competitive with Medicare.
Bill Kadereit, President
National Retiree Legislative Network