Team Trump is considering a temporary payroll tax cut to stimulate the economy and avoid a slowdown — or even a recession, a new report said Monday.
The plans reveal the administration’s top economic aides’ growing concerns about a possible slowdown as the 2020 election nears — despite President Trump’s glowing reviews of the US economy, The Washington Post reported.
A White House spokesperson denied a payroll tax cut is under consideration “at this time.”
The Washington Post reported that talks were still in their early stages, and officials have not decided whether to ask Congress to approve the cut.
Most working Americans pay a “payroll tax” on their earnings, a 6.2% levy pays for Social Security programs.
The payroll tax was cut during the Obama administration to 4.2% to encourage consumer spending during the Great Recession but went back up to 6.2% in 2013.
Americans only pay the tax on income up to $132,900, so a payroll tax cut would give many middle-class families relief they didn’t see under Trump’s tax cuts.
Payroll tax cuts also add to the deficit and can take billions from Social Security.
The administration’s discussions about a new payroll tax cut have only begun in the past few days, the paper reported. Specific details about the design have not been reached yet, it said.
The talks follow a weekend blitz in which the president and his top economic advisers touted the economy — and blamed Democrats for talking it down.
“Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to ‘will’ the Economy to be bad for purposes of the 2020 Election. Very Selfish!” Trump tweeted Monday.
But a number of business economists appear sufficiently concerned about the risks of some of Trump’s economic policies that they expect a recession in the by the end of 2021.
Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report being released Monday, said they believe a slowing economy will tip into recession in 2021.
That’s up from 25% in a survey taken in February.
Only 2% of those polled expect a recession to begin this year, while 38% predict that it will occur in 2020.
Trump, however, has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the Dow Jones Industrial Average.
A strong economy is key to the Republican president’s 2020 reelection prospects.
The economists have previously expressed concern that Trump’s tariffs and higher budget deficits could eventually dampen the economy.
The Trump administration has imposed tariffs on goods from many key US trading partners, from China and Europe to Mexico and Canada.
Officials maintain that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade.
But US trading partners have simply retaliated with tariffs of their own.
With Post wires