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Wednesday, March 11, 2020

Trump wants to curb economic impact of COVID-19 by cutting the funding for Social Security

Here are two articles suggesting right ways and wrong ways to handle the coronavirus crisis
First, the wrong way: Trump Condemned for Exploiting Coronavirus Crisis to Push Payroll Tax Cut
Image may contain: possible text that says 'OUTRAGE OF THE DAY March 11, 2020 The New York Times just reported that 2018, the White House pandemic response team met to mark the 100-year anniversary of the 1918 Spanish which killed tens of millions. An official present said, "The threat of pandemic flu is the health security concern. Are we ready to respond? I fear the answer is no." THE NEXT DAY, TRUMP FIRED THE ENTIRE PANDEMIC RESPONSE TEAM AND DID NOT REPLACE THEM. OCCUPY DEMOCRATS'Economists and progressive advocacy groups are warning that President Donald Trump's proposal to cut or temporarily suspend the payroll tax in an effort to mitigate the economic impact of the coronavirus is "a Trojan Horse attack on our Social Security system" that will do little to help most U.S. households.

Slashing the payroll tax, the primary funding mechanism for Social Security, "is the wrong way to go," said Dean Baker, senior economist at the Center for Economic and Policy Research (CEPR).

"Trump and the Republicans in Congress cannot be trusted to protect the Social Security trust fund," Baker said. 

"They have frequently proposed cuts to the program, and under President Bush, sought to privatize it. They may well use a temporary tax cut as an opportunity to weaken the program's finances so that they can then push for cuts or privatization."

Trump met with Senate Republicans on Tuesday to discuss possible economic stimulus measures, including a payroll tax cut, amid fears of a recession sparked by the coronavirus outbreak. The meeting ended without any "consensus over how to proceed," according to the Washington Post.

"At the meeting, Trump proposed having a temporary payroll tax cut that could last a period of months," the Post reported. "The cut could amount to $40 billion per month, people briefed on the discussions said, which would make it quite substantial."


Nancy Altman, president of progressive advocacy group Social Security Works, accused Trump of "using the coronavirus crisis as an excuse to propose a reduction in payroll contributions." 

Last Thursday, as Common Dreams reported, Trump said he plans to cut non-discretionary government programs like Social Security if reelected in November.

"Other proposals to stimulate the economy, such as restoring the Making Work Pay Tax Credit or expanding the existing Earned Income Tax Credit, are more targeted and provide more fiscal stimulus," Altman said in a statement Tuesday. 

"They are fairer in their distribution and place no administrative burdens on employers."

"The only reason to support the Trump proposal above those others is to undermine Social Security," Altman added.

Social Security Works on Tuesday circulated a petition urging Congress to reject Trump's payroll tax cut proposal and push hard for policies that would actually "put money into the pockets of those most impacted by the coronavirus," such as paid sick leave for all workers.

"The so-called 'payroll tax cut' is both a stealth attack on Social Security, and ineffective economic stimulus. We need our representatives in Congress to know that," the group said. "There's no economic justification for this cut―which means this proposal is just another part of Trump's attack on our earned benefits."

CEOs of the major Wall Street banks have been summoned to the White House to discuss the coronavirus its economic fallout. I’m told Trump administration is considering more corporate tax cuts, tax cuts targeted to the airlines and hospitality industries, and a temporary payroll tax cut. 

The bank CEOs will approve of all these. 

But they would be useless. They’d be too slow to stimulate the economy, and wouldn’t reach households and consumers who should be the real targets. And they’d reward the rich, who don’t spend much of their additional dollars, without getting money into the hands of the poor and middle-class, who do. 

In short, our imminent coronavirus and economic crises won’t respond to trickle-down economics. 
Instead, Congress must immediately enact an emergency $400 billion. 

The money should be used for

1. Coronavirus testing and treatment. 

2. Paid sick leave and family leave this year, renewable for next year if necessary.

3. Extended Medicaid and unemployment insurance.

4. Immediate one-time payments of $1000 to every adult and $500 per child, renewable for next year if necessary.

I don’t think this is an over-reaction to what’s imminent. It will help us prevent a health and economic calamity.