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Donald Trump
Ceci Freed / Media Matters

Trump’s payroll tax push would gravely endanger Social Security and Medicare — and right-wing media are lying about it

This proposed tax cut would do nothing for those vulnerable workers who are being laid off or sent home without pay

Written by Eric Kleefeld

Published 03/12/20 11:51 AM EDT

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President Donald Trump has proposed zeroing out the payroll tax as part of a package to deal with the economic shocks caused by the coronavirus. And right-wing media are now going all-in for an idea that could, in effect, gut the funding for Social Security and Medicare — and probably not result in much economic stimulus, anyway.

And on top of that, they are also misleadingly claiming that President Barack Obama had done the same thing, but Democrats are only balking now at Trump doing it. In the days leading up to the proposal’s official unveiling, Fox News ran a headline declaring “Dems condemning Trump's proposed payroll tax cut after previously supporting Obama's,” while the Washington Examiner proclaimed, “In cutting payroll taxes to spur the economy, Trump would be following in Obama's footsteps.”

On this morning’s edition of Fox & Friends, co-host Brian Kilmeade said: “Nancy Pelosi all of a sudden doesn't like the payroll tax cut. When Barack Obama proposed it, she thought it was a brilliant thing that all the working families will benefit from, because if you get a paycheck you’re gonna take home more money.”

Video file

Citation From the March 12, 2020, edition of Fox News’ Fox & Friends

Well, these things are not exactly the same. For one thing, Obama’s payroll tax cut was for 2 percentage points, costing $175 billion per year. Trump, by contrast, is proposing to zero out the tax, which brings in $1.3 trillion per year. (This particular tax proposal would presumably not go for a full year, but it would still be large.) All totaled, this could seriously endanger the funding for important programs like Social Security and Medicare, per CNBC:

Those contributions help to keep both programs going, and their trust funds already face shortages. The Medicare Part A trust fund is projected to run out of money in 2026. Meanwhile, the latest estimate projects Social Security’s trust funds will be insolvent in 2035.

“They would have to find some way to replenish those trust funds,” said Howard Gleckman, senior fellow at the Urban Institute, a non-partisan Washington, D.C., think tank.

And for an extra idea of the scale here, this would amount to a stimulus package larger than the Obama-era stimulus, passed in the depths of the 2008-2009 financial crisis, which Republicans attempted to block by filibuster in the Senate. It would also be larger than the 2008 Wall Street bailout, enacted in the closing months of the George W. Bush administration, and would likely push the annual federal budget deficit to over a record $2 trillion for the year.

Later on Fox & Friends, Fox Business host Charles Payne touted the payroll tax elimination as “a trillion-dollar boost to the — to folks,” while co-host Ainsley Earhardt suggested  it’s “great for everyone, even if you don’t own a business.” (But even Kilmeade started to get the point, interjecting: “Except for the government — you don’t get the revenue.”)

Video file

Citation From the March 12, 2020, edition of Fox News’ Fox & Friends

But as Los Angeles Times business columnist Michael Hiltzik explains, “a payroll tax cut would be poorly targeted, delivering the most help to households least in need.” It would mostly help more affluent workers who are still getting paid — but do nothing for those vulnerable workers who are being sent home without pay or laid off, “namely service workers such as waiters and waitresses, hotel staff and office cleaners.”

And yet on Fox’s purported “news” side, anchor Ed Henry claimed that Democrats had previously supported a “payroll tax holiday” — which implies zeroing out the tax, rather than just cutting the rate, as was actually done — though he, of course, wasn’t “pointing fingers in any direction moving forward.”

Video file

Citation From the March 12, 2020, edition of Fox News’ America’s Newsroom

ED HENRY (ANCHOR): The fact that Speaker Nancy Pelosi and other Democrats seem to be completely dismissing his initial idea of a payroll tax holiday — previously, Democrats in the Obama administration thought this was a great way to get money to people fast. So, without pointing fingers in any direction moving forward, what's the best prescription to get both sides together here, to actually help the American people?

CHARLES PAYNE (FOX BUSINESS HOST): It's heartbreaking. You know, President Trump should try to get Nancy Pelosi in the White House today. No more intermediaries, just sit down and talk about this. Let's not politicize it. It seems — I don't understand why the Democrats would be against a payroll tax cut. I just really don't.

Also notable: The tax cut would be crafted to last precisely through Trump’s reelection campaign in November.

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In This Article

  • Coronavirus (COVID-19)

    Covid-19 / Coronavirus
  • Social Security

    Social Security
  • Ed Henry

    Ed Henry
  • Charles Payne

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