White House Economic Advisor Larry Kudlow says the U.S. plans to “bond out” to cover Social Security and Medicare if things don’t go well with Donald Trump’s executive order to allow businesses to defer payroll taxes that help fund the programs.
“We will bond out any additional money as we always do. The Treasury – we work through general revenues and issued non-marketable securities to this even with forgiveness,” said Kudlow on Tuesday, adding that “it’s a very manageable number.” At this point time, “we’re not ending the tax,” he said.
Regarding the Social Security and Medicare taxes that get pulled from your checks, Trump is preparing to allow businesses to postpone paying the payroll taxes. However, he claims he will borrow funds to cover any downfalls that may happen with the new payroll tax holiday plan. On Saturday, Trump ordered Treasury Secretary Mnuchin, who oversees the IRS, to stop collecting 6.2 percent of workers’ share of the payroll tax, limiting it to people who earned less than $104,000 between Sept. 1 and the end of the year, according to roll.com.
No specific plan for how this all will all work has been set, which puts businesses in a compromising spot, as they will not know the potential risks of withholding or repaying deferred taxes. The amount of taxes that are expected to be deferred will come out to $100 billion, estimates the Committee for a Responsible Federal Budget. But Trump claims none of that money will have to be repaid. This also leaves taxpayers uncertain about the amount of money they would have to pay back if Congress does 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. According to the Social Security
Administration, the program has roughly 65 million beneficiaries, which consist mostly of people aged 65 and older, some younger retirees, spouses, and children of retirees, survivors, and people on disability insurance, Roll Call reports. Those groups of people receive about $90 billion per month from the program. The outlet reports that at the start of the year, the trust fund that holds the program’s money contained about $2.9 million, but it’s now expected to fall as benefit payments outnumber income from payroll taxes that are paid by workers and employers.
Trump says he plans to forgive the taxes and make permanent cuts to payroll tax. “If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax. Now, Joe Biden and the Democrats may not want that. … So they’ll have the option of raising everybody’s taxes and taking this away,” said Trump.