Payroll Tax Cut Extension Puts Social Security Payments at Risk
Extension Would Jeopardize Social Security Benefits, Bring System Closer to Bankruptcy
WASHINGTON, Sept. 8, 2011 /PRNewswire-USNewswire/ — Extending the payroll tax cut would unnecessarily place the benefits of millions of seniors at risk, warns The Senior Citizens League (TSCL), one of the nation’s largest nonpartisan seniors groups.
“This is one tax cut that no member of Congress should vote to renew,” says Larry Hyland, Chairman of TSCL. “It hasn’t generated new payroll taxes, but it has been increasing the deficit and threatens our ability to pay benefits to 59 million people who rely on Social Security, including low to middle-income seniors and the disabled.”
Later today, President Obama will ask Congress to extend the two-percent payroll tax holiday (enacted in December 2010 and due to expire at the end of this year) as a way to boost the economy and create new jobs. However, the unemployment rate is now higher than when the payroll tax cut began.
According to the Congressional Budget Office, this year’s tax cut will cost the Social Security system about $112 billion in lost revenue and borrowing costs. This is a significant blow to the already over-stretched program, which since last year has been paying out more in benefits than it receives in revenues. The federal government has been borrowing the difference to pay benefits.
But during the recent debt limit battle, it became clear that Social Security benefits could not be guaranteed once the debt limit is reached.
Although Social Security benefits were paid in full and on time, due to the last-minute debt limit deal, major changes to Social Security, Medicare and taxes may be coming in the not-too-distant future. At highest risk right now is the Social Security program that pays disability benefits. The Social Security Disability Trust Fund will become fully insolvent in as little as six years, leaving the program unable to pay full benefits unless Congress takes action.
“The $112 billion in revenues that would come from allowing the Social Security payroll tax to simply revert to its normal rate is needed now,” Hyland points out.
TSCL is urging seniors to contact their members of Congress and tell them to say “no” to another payroll tax cut extension.
With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit www.SeniorsLeague.org or call 1-800-333-8725 for more information.
SOURCE The Senior Citizens League