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A "Sneaky Way" to Undermine Social Security?

Critics of a plan to end the separate payroll taxes dedicated to Social Security say it would be the first step to cutting benefits. (GotCredit/Flickr)
Critics of a plan to end the separate payroll taxes dedicated to Social Security say it would be the first step to cutting benefits. (GotCredit/Flickr)
April 19, 2017

LINCOLN, Neb. - More than 320,000 Nebraskans receive Social Security benefits, and a proposal to change the way the program is funded is being attacked as a sneaky way of undermining it.

The Trump administration is floating what's being described as a trial balloon to end the separate payroll taxes dedicated to Social Security and replace them with general revenue or a consumption tax, similar to a sales tax. However, socialsecurityworks.orgSocial Security Works president Nancy Altman said those payroll deductions function like insurance premiums: You have to pay in to get benefits. She said stopping those would be the first step to cutting benefits.

"Undermining the premiums, which are the dedicated revenue, which can only be used for Social Security - the dominant source of funding that's been there since 1935 - it fundamentally alters the program," she said.

Critics have charged that Social Security is going bankrupt and has to be changed. The latest federal estimates said the program's trust fund will run out in 2034, but Altman said the program still would pay out nearly 80 percent of current benefits, even with an empty trust fund.

Since Social Security has its own dedicated source of funding, it adds nothing to the deficit. However, Altman pointed out that ending the payroll taxes would make cutting Social Security benefits a way to reduce the deficit at some point in the future.

"So I've actually called it a 'Trojan horse,' because it looks like a gift," she said. "It looks like middle-class tax relief, but really it's undermining middle-class economic security."

During the campaign, President Trump said he wouldn't cut Social Security benefits, but Altman said Trump has criticized the program in the past. She said the payroll-tax structure has been a cornerstone of Social Security since it was founded.

"Before he started running, he called Social Security an 'illegal, criminal Ponzi scheme,' " Altman said. "I think it's like Trumpcare: If there's enough noise, they will see the writing on the wall and drop it."

About two-thirds of American seniors rely on Social Security for most or all of their income. Without the program, economists have estimated the poverty rate for older Americans could multiply by three or four times.

More information is online at socialsecurityworks.org and wikipedia.org.

Mary Kuhlman, Public News Service - NE