Social Security funds would run out as soon as 2023 if President Trump ends the payroll tax cut and the revenue isn’t replaced, the agency’s chief actuary found.
The agency ran the simulation in response to a request from four Democratic Senators who asked what would happen if the tax was eliminated and all else remained the same.
“If this hypothetical legislation were enacted, with no alternative source of revenue to replace the elimination of payroll taxes on earned income paid on January 1, 2021 and thereafter, we estimate that DI Trust Fund asset reserves would become permanently depleted in about the middle of calendar year 2021, with no ability to pay DI benefits thereafter,” Chief Actuary Stephen C. Goss said in a letter. “We estimate that Old-Age & Survivors Insurance Trust Fund (OASI) reserves would become permanently depleted by the middle of calendar year 2023, with no ability to pay OASI benefits thereafter.”
Trump said during a press conference earlier this month that, if reelected, he would “terminate the payroll tax,” which raised $1.24 trillion last year and funds Social Security benefits.
Trump suggested he would replace the payroll tax revenue with money from the U.S. Treasury’s general fund.
When asked how his administration would replenish the fund, also known as “America’s Checkbook,” Trump promised “tremendous growth” despite the current COVID-19 pandemic – a proposal an Associated Press fact check found “highly unlikely.”
Earlier this month Trump announced a payroll tax deferral through the end of the year. The taxes will ultimately be due unless Congress approves a permanent change to the law, but Democrats have firmly opposed any proposed threat to the tax that funds Social Security.