Trump Proposes Change in How Social Security is Funded
SALT LAKE CITY -- A proposal to change how Social Security is funded is being attacked as a sneaky way of undermining the program.
The Trump administration is floating what's being described as a trial balloon - end the separate payroll taxes dedicated to Social Security and replace them with general revenue or a consumption tax, similar to a sales tax.
But Nancy Altman, president of Social Security Works, 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,” Altman said.
Critics charge that Social Security is going bankrupt and has to be changed. The latest federal estimates say 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 with an empty trust fund.
Since Social Security has its own dedicated source of funding, it adds nothing to the deficit. But Altman pointed out that ending the payroll taxes would open up the possibility of cutting Social Security benefits as 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, it looks like middle class tax relief, but really it's undermining middle class economic security,” she said.
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 is 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 estimate the poverty rate for seniors could multiply by three or four times.