On August 8th,
Donald Trump took four executive actions on coronavirus relief. One was a
memorandum deferring, to the end of the year, payment of the employee portion
of the payroll tax for employees making less than $4000 biweekly. (Employer
payments had already been deferred in the CARES act.)
He did this,
according to the language of the memorandum, because “This modest, targeted
action will put money directly in the pockets of American workers, and generate
additional incentives for work and employment, right when the money is needed
most.”
In an
additional Trumpian flourish, he stated: “If victorious on November 3rd, I
plan to forgive these taxes and make permanent cuts to the payroll tax…I’m
going to make them all permanent,” and: "If I win, I may extend and terminate… I'll extend
it beyond the end of the year and terminate the tax."
To that
effect, he included this language in the memorandum: “The Secretary of the
Treasury shall explore avenues, including legislation, to eliminate the
obligation to pay the taxes deferred pursuant to the implementation of this
memorandum.”
The “payroll
tax” is, of course, the FICA tax—part paid by the employer and part by the
employee—that is earmarked for the Social Security and Medicare Trust Funds. The
understanding is that Social Security and Medicare (SS&M) benefits are paid
out from these funds. For FDR, that understanding “justified” SS&M in
fiscally stringent terms that would make SS&M impervious to challenge from
conservative politicians: “We put those pay roll contributions there so as to
give the contributors a legal, moral, and political right to collect their
pensions and their unemployment benefits. With those taxes in there, no damn
politician can ever scrap my social security program.”
