Social Security is safe with us, Mnuchin says

WASHINGTON — Treasury Secretary Steven Mnuchin said Wednesday that the Trump administration will “create a level of certainty” to encourage businesses to participate in President Donald Trump’s payroll tax holiday, and that after November’s election a victorious Trump would push legislation “to fully top up” Social Security’s finances.

Trump on Saturday ordered Mnuchin, who oversees the IRS, to stop collecting the 6.2% workers’ share of the payroll tax that funds Social Security — limited to those earning less than about $104,000 annually — between Sept. 1 and the end of the year. Treasury has yet to issue guidance on how this will be accomplished, leaving businesses uncertain about their potential liabilities in withholding and repaying the deferred taxes.

Trump’s directive expresses a vague hope that the deferred taxes, which the Center for a Responsible Federal Budget estimates will amount to $100 billion, will somehow not have to be repaid. And it leaves unanswered how soon taxpayers would have to pay back what would amount to a loan if Congress doesn’t forgive the deferred taxes.

“We can’t force people to participate, but I think many of small businesses will do this and pass on the benefits,” Mnuchin told Fox Business.

The prospect of wiping out that tax liability rather than forcing what could be an unpleasant tax surprise on lower-income workers has given Democrats an opening to paint Trump and the GOP as willing to undermine Social Security.

The program’s roughly 65 million beneficiaries, mostly those aged 65 and older but also younger retirees, spouses and children of retirees, survivors and those on disability insurance, receive payments worth about $90 billion per month, according to the Social Security Administration.

The trust fund holding the program’s assets contained about $2.9 trillion at the beginning of this year, but that’s projected to start dwindling next year as benefit payments outpace income from the payroll taxes paid by both workers and employers, who kick in another 6.2% of wages, up to $137,700 this year.

Social Security actuaries said in April the fund would be able to pay full benefits only through 2035, though that’s since moved up due to the pandemicinduced recession sapping payroll tax receipts and sparking more and earlier retirements. The Bipartisan Policy Center says the exhaustion date might now be as soon as 2029.

A one-time loss of $100 billion in Social Security taxes, about one-tenth of the program’s annual income, probably won’t hasten the program’s demise that significantly. But Trump himself on Saturday opened the door to permanently undoing the workers’ share of payroll taxes.