Ad Watch: Biden exaggerates Trump’s Social Security action

Joe Biden has a new message in Florida, where one in five residents receives Social Security: President Donald Trump is jeopardizing the retirement benefit with his new move on payroll taxes.

Trump on Aug. 8 directed the Treasury secretary to withhold the payroll tax that funds Social Security for a few months. The measure was one of four meant to help the economy through the pandemic, but it’s close link with Social Security has made this measure a focal point in the presidential race. 

What’s more, Trump has gone beyond the temporary deferral of payments outlined in the memo to talk about ending the payroll tax altogether — raising legitimate questions about Social Security’s solvency. 

A Biden TV ad running in Florida portrays Trump as a golfer on a mission to hurt Florida’s seniors:

"Donald Trump stepped off the golf course and signed an executive action directing funding cuts for Social Security. He also proposed slashing hundreds of billions of dollars from the Social Security Trust Fund every year, putting your hard-earned benefits in jeopardy. Nearly 4 million Florida seniors rely on Social Security, and once again Donald Trump’s failed leadership is hitting seniors the hardest."

Biden also warned about Trump’s plan in a Tampa Bay Times opinion-editorial, saying Trump "promised to defund Social Security."

But like a claim from running mate Kamala Harris, Biden’s warning goes too far and stretches what Trump said he would do. Trump never said he intended to cut Social Security benefits or "defund" the program. 

Trump has said he not only wants to forgive the deferred payroll tax payments, but he has said multiple times that he will try to eliminate the payroll tax altogether in a second term. Even ending just the workers' side of the payroll tax would drop Social Security trust fund revenues by about $450 billion a year. 

"Long-term, of course, all of this talk about weakening the role of the payroll tax in funding Social Security does raise questions about whether its financial foundation would be shakier and, thus, benefit cuts more likely," said Alicia Munnell, director of the Center for Retirement Research at Boston College.

Here’s what you need to know to understand the Social Security attacks in Biden’s ad.

RELATED: Donald Trump’s payroll tax holiday: What you need to know

This is oversimplified. Trump has not proposed cutting Social Security benefits.

Trump’s memo directed the Treasury secretary to defer the withholding of the payroll tax on wages paid between Sept. 1 and Dec. 31. Each paycheck, employees see 6.2% of their wages go to Washington to help fund Social Security while employers pay the same amount.

That means someone making the median weekly wage of about $1,000 would see an extra $62 in their paycheck. Trump’s memo applies to people making up to $2,000 per week, so people who earn $104,000 a year or higher wouldn’t get the tax break. 

It is not clear how many employers will choose to defer withholding of taxes, but the nonpartisan Committee for a Responsible Federal Budget estimated that up to $100 billion in payroll taxes will be deferred during the last four months of the year.

Biden’s ad calls this delay a "cut," but the group’s analysis doesn’t use that word.

"The $100 billion is a deferral," said Marc Goldwein, a senior vice president of the group. "If it is all paid back by the end of the year as intended, there is no deficit impact."

Left uncertain is how the federal government handles that deferral in the future.

Trump said he doesn’t want workers to pay it back. His memo tells the Treasury secretary to "explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred."

If the money isn’t paid back, the money either comes out of Social Security’s trust funds, or general revenues.

Treasury Secretary Steve Mnuchin told Fox News Sunday that the money would be made up with dollars from the general fund. The administration can’t promise that on its own; Congress would have to pass a bill.

RELATED: Social Security: A critical program with an uncertain future

This part of Biden’s ad deals with Trump musing about ending the payroll tax entirely if he wins another term in office — a stance routinely contradicted by White House officials. 

At an Aug. 8 press briefing, Trump said: "If I’m victorious on Nov. 3, I plan to forgive these taxes and make permanent cuts to the payroll tax. So I’m going to make them all permanent. …. But if I win, I may extend and terminate. In other words, I’ll extend it beyond the end of the year and terminate the tax."  

Asked if he really meant he wanted to end the tax, White House economic adviser Larry Kudlow said on CNN’s State of the Union, "I believe he was referring to doing away with the payback of the deferral."

But Trump brought up ending it again at an Aug. 10 briefing: "I signed directives to give a payroll tax holiday, with the understanding that after the election — on the assumption that it would be victorious for an administration that’s done a great job — we will be ending that tax. We’ll be terminating that tax."

At that point, the Biden campaign started running this ad in Florida. Biden’s ad extrapolates the potential $100 billion cost of deferring payroll taxes for the rest of 2020 and assumes that if Trump delivers on his statements to reporters, that will add up to "hundreds of billions of dollars."

But Trump says his actions on the payroll tax — which remain malleable — won’t hurt the retirement program. 

"When I win the election, I’m going to completely and totally forgive all deferred payroll taxes without in any way, shape, or form hurting Social Security," Trump said Aug. 12. "That money is going to come from the General Fund."

But Trump went on and said, "We’ll be terminating the payroll tax after I, hopefully, get elected.  We’ll be terminating the payroll tax, so that will mean anywhere from $5,000 to even more per family."

The only way to get to $5,000 is by eliminating the tax completely.

The next day, White House spokeswoman Kayleigh McEnany said, "What he was meaning yesterday is that he wants permanent forgiveness of the deferral."

Trump can say that using general revenues to pay Social Security benefits is his goal, but funding is up to Congress. Last year, the full payroll tax put $944 billion into the program. If not funded through borrowing, replacing those dollars would eliminate all non-defense discretionary spending, including money for veterans, highways and more.