by
TCCF
in Social Security Posted on
01/04/2022 03:24 PM
The Conservative Caucus Foundation works to safeguard your contributions to Social Security. Our outreach programs bring the results of our research to hundreds of thousands of Americans annually.
TCCF President Peter J. Thomas used this op-ed to spell out his views on the current impeachment controversy. Income Tax Rebate, Not Payroll Tax Holiday, Is the Proper Stimulus Vehicle During the debate over the stimulus bill, one point of contention has been whether income tax rebates or a temporary payroll tax cut would be a better way of getting money into the hands of American consumers. It appears that the income tax will be chosen, and that choice is correct. Using the income tax offers several advantages over the payroll tax. To begin with, it allows a significant and immediate impact.
The rebate is likely to be much larger than what most Americans would receive through a reduced payroll tax, allowing substantial relief at once. Furthermore, as the virus forces layoffs in the most-affected industries, the unemployed would get no help from the payroll tax, even though they need it the most. Perhaps an argument could be made for the payroll tax if the need was for a smaller but more sustained stimulus, but the current emergency demands something that will produce a big impact right away. Income tax rebates also allow for targeting that will maximize the effect of the measure.
The stimulus will probably limit the rebate to those below a certain income level, putting money in the hands of those most likely to spend it instead of saving it. Reducing the payroll tax would involve a sort of counterproductive targeting, since it would provide the smallest relief to low-income Americans who need it the most. The income tax rebate is also easier to keep within limits, and less likely to be continued beyond the time of need. If a second stimulus is considered later this year, it would require positive action by Congress. In the case of a payroll tax cut, the positive action would be needed to end it, leaving open the possibility that political pressure could extend it well beyond the point at which it was beneficial. Even if the original bill included a specific time limit, politics might force one or more extensions.
Last, but certainly not least, is the potential impact on the Social Security Trust Fund and the long-term solvency of Social Security. For the past decade, Social Security has been paying out more in benefits more than it collects in taxes. This requires drawing on the almost three trillion dollars loaned to the Treasury over three decades, and which is now being repaid to keep benefits at their full amount.
There is reasonable concern that Congress may balk at continuing those payments, which grow larger every year. Several liberal journalists have called for reducing Social Security payments so as to free up money for other liberal spending programs. While a stimulus bill would no doubt contain appropriations from the general fund to maintain Social Security benefits, it opens the door to later manipulation.
A future Congress could declare that the general fund appropriations (along with those from the Obama years) should be counted as money repaid to the Trust Fund. This would accelerate that day when the Trust Fund would have been fully repaid, and Social Security benefits would be in danger of reductions of 20% or more. This is a risk that should not be taken.
TCCF President, Mr. Peter J. Thomas
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