…Okay, now we’re getting confused.
Forbes As we’ve all heard by now, several weeks ago, the Administration made series of comments leading everyone to believe if victorious in November, it would terminate the payroll tax.
We’ve gone over this in a few of our previous posts, but just to reiterate the important facts:
- The White House has not passed anything to terminate the payroll tax yet.
- The Executive Order regarding the deferral of payroll taxes until next year has nothing to do with terminating the payroll tax—these are two separate things said on two separate days.
- Yes. By “payroll taxes,” the President meant FICA payroll taxes. Not federal income taxes.
On August 12, answering a question from a reporter during a press conference, the President seemingly made very clear through his response that we heard and understood his termination comments correctly.
Asking how the government would fund Social Security if it terminated the payroll tax, the President answered that the program would operate as usual, only funding benefits through the general fund.
In a follow-up question, the reporter expressed concern the general fund wouldn’t be able to pay benefits from the general fund if it incurs a $2.8 trillion debt—the sum total of the surplus funds owed to Social Security. The President’s responds that he expects large economic growth to make up for this large debt.
Based on that exchange, there seems to be no question that the Administration DID absolutely mean it wanted to fully terminate the payroll tax in the future and fund Social Security from the general fund.
And if that wasn’t enough, we received further confirmation from Stephen C. Goss, Chief Actuary of the Social Security Administration, that while he was not aware of any such active proposal, terminating the payroll tax would deplete Social Security by 2023. Apparently he provided this estimate at the request of multiple Senators who also heard what so many of us heard.
It seems pretty clear what the issue at hand is.
But now that’s…changing?
White House economic advisor Larry Kudlow has been making the rounds on different media networks asserting a brand new theory: we all misunderstood.
Kudlow vehemently claims “terminating the payroll tax” was just a way of reiterating that the taxes deferred by the unrelated (or so we thought, anyway) Executive Order would be “terminated” in the form of being forgiven.
Additionally, Treasury Secretary is echoing these remarks.
Fox Business So…what exactly is going on?
We don’t know. But we’re going to go have a nap.
