money Biden claims Trump could deplete social security
On Thursday, Joe Biden suggested President Trump could deplete social security by 2023. Yahoo Finance's Rick Newman weighs in.
Video Transcript
- Time for Word on the Street. We hear a lot about Social Security, especially as some of us approach those years. Rick Newman, when we talk about insolvency for Social Security, what we're talking about isn't a total bankruptcy. We're talking about if the agency can-- the administration can pay a hundred cents on the dollar. And the day of being to do that-- when they will no longer be able to do that is growing sooner and sooner, right?
RICK NEWMAN: Well, that is what Joe Biden tried to get everybody to think last night in the debate. And he said something that made me go back and try to understand what he was talking about. Biden said that Trump wants to bankrupt Social Security by 2023. And Social Security-- it does need to be reformed, but Social Security, as it stands, is funded into the 2030s.
So what is Biden talking about? He's going back to this Trump idea to either curtail or eliminate the payroll tax. Now, Trump has been all over the map on this. First he said he just wanted to defer the payroll tax for four months. And then he said, well, maybe we should just kill the payroll tax altogether.
The payroll tax, which both companies and workers pay in equal portions-- that funds Social Security and Medicare. So what Biden is kind of doing here, the tricky math is that if you eliminated the payroll tax, Social Security would run out of money in '23. I can reassure everybody that there's no chance Congress is going to vote to eliminate the payroll tax. And whether Trump wants to do it or not, Social Security is not going to go bankrupt by 2023.
- But what the Bipartisan Policy Center actually did a study which shows that that date of into the 2030s is no longer relevant because of COVID-19-- no political party's responsibility here. But it moved up because of the loss of the payroll tax, which between all of us, employer and individual, is 12.4%. So that date of no longer being able to get a hundred cents on the dollar-- it drops down to about $0.76 on the dollar 'cause the trust fund runs out of money-- is now 2029.
RICK NEWMAN: Yeah, but there's a more urgent problem than that, which the Bipartisan Policy Center also highlighted, which is Medicare, which is going to run short of money a lot sooner. So the official run-short date that the government says I think is 2024. But that was before the COVID crisis, which as you point out, has cut sharply into federal revenue.
So Medicare is going to run short of money during the first term of the next president. That is pretty clear. So this is going to be something the next president is going to have to deal with.
