Payroll tax cut would destroy Social Security and Medicare

If President Trump actually proposes to cut the payroll tax in a recession,

Several news organizations reported Monday evening that Trump is in charge of the economy – yes, the same economy that Trump keeps bragging is already supposedly strongest in history. At least one White House official is under active consideration. Let's hope he's right. The idea is a stinker.

The total payroll tax of 15.3%, half paid by employees and half by employers, finance Social Security and Medicare. Both of these retirement funds are already running out of money. The system has been reported in April that "Social Security's total cost is projected to exceed total income (including interest) in 2020 for the first time since 1982." Unlike 1982, though, it is expected to continue "throughout the remainder" of their foreseeable projections. By 2035, the trust fund's reserves are expected to be depleted.

Medicare is in even worse shape. They are already in the process of being taxed, and are projected to be depleted in 2026.

Granted, in some respects the trust funds are accounting gimmicks, because government funds are essentially fungible. But when those trust funds are depleted, the government will be forced to become more or less financially secure, the record of high deficits each year. to service ever-higher debt.

And unlike "supply side" tax cuts, which in some instances are at least partially "pay for themselves," the rate of inflation is not so high, but do not change in economic incentives for long-term growth. An economy with record-low unemployment and record-high deficits needs more stimulus, especially at the cost of even greater deficits and debt.

Worse, Trump would be letting politics, not economics, tax policy. Trump's re-election chances. The president reportedly fears that even a mild economic slowdown would ruin his prospects. He seems to want to juice the economy now even at the risk of horrid long-term damage.

Yet what Trump is reported to be the economic equivalent of seeing a drug addict coming from a cocaine high and prescribing more cocaine to "cure" him. It would be grossly irresponsible.

It would be very similar to what President Richard Nixon did by spending big in 1971 and 1972, while the 1972 issue of the 1972 Convention.

Nixon's tactics worked in the short term as planned. But just beyond the immediate electoral horizon, they were devastating. Combined with oil embargoes by Arab nations, Nixon's recklessness (and, later, President Jimmy Carter's ineptitude) catalyzed terrible economic conditions for the rest of the 1970s. That era of "stagflation" – a combination of hideously high inflation and stagnant growth – was arguably bad in Nixon legacy as Watergate was.

Trump should not emulate Nixon. Instead, if he wants to high-flying the economy, he should be in a business. This economy does not require more stimulus, especially at the expense of the Social Security and Medicare trust funds. It needs stability instead.