Coronavirus Stimulus Planning: Payroll Tax Reduction Still in Play
Details of a massive stimulus package to combat the economic fallout from the evolving coronavirus pandemic are still unfolding this morning in Washington, with direct payments vs. a payroll tax cut continuing to be one of the points of contention in the planning process. As an example of the divergent thinking, The Hill’s Alexander Bolton in a post this morning contrasts the positions of Indiana Sen. Mike Braun (“…cutting the payroll tax makes ‘more sense’ than ‘cash payments or this stipend idea’”) and South Carolina Sen. Lindsey Graham (“…It won’t help the economy just throwing money at a problem…”) with those of Utah Sen. Mitt Romney and Arkansas Sen. Tom Cotton who are leading the charge for making direct payments to adult Americans. Bolton’s post highlights the list of opposing views that are slowing down progress on the critical stimulus bill.
One of the sticking points often not mentioned in the many discussions swirling around the stimulus issue is the longer-range impact a payroll tax reduction would have on the already gloomy Social Security solvency issue. Without additional revenue sources to offset the loss of FICA tax income, the potential for full depletion of the Social Security OASDI Trust Fund could move substantially closer. (By the way, the Medicare Trust Fund also faces a similar situation.) This reality makes it increasingly imperative that legislative action on Social Security’s fundamental solvency moves to the forefront of Congressional planning as early as possible after, of course, the coronavirus pandemic is under control.
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