A payroll tax cut to add money to workers’ pockets was taken off the table Wednesday by President Trump — who said the economy was healthy enough without it.
“We don’t need it. We have a strong economy,” the president told reporters at a White House press briefing.
Trump also squashed a plan he floated earlier in the week to lower capital-gains taxes by indexing gains to inflation, which would slash what investors pay on profits from the sale of assets.
“I’ve studied indexing for a long time and I think it will be perceived — if I do it — as somewhat elitist. I don’t want to do that,” Trump said.
Word of the potential tax cuts first emerged Monday in news reports claiming the White House was scrambling for ways to avoid an economic slowdown ahead of the 2020 election. White House officials denied the reports, but Trump on Tuesday said he was considering both the payroll tax move and the changes to taxation of capital gains.
A payroll tax cut would return to workers a portion of the 6.2% of wages that currently go to funding social security programs. Economists like Mark Zandi of Moody’s Analytics have estimated that for each $1 cut in payroll taxes, the gross domestic product would increase by 80 cents.
On the flip side, any tax breaks would add to the government’s sea of red ink. The administration is forecasting the deficit for the full budget year, which ends on Sept. 30, will exceed $1 trillion — up from $779 billion last year.
Fears of an economic slowdown intensified last week after the yield on 10-year Treasury notes briefly dipping below the yield on the two-year note — a rare economic indicator that has predicted all seven of the recessions over the past 50 years.
Trump on Wednesday blamed any national economic “speed bump” on Federal Reserve Chairman Jerome Powell, whom the president has been pushing to lower interest rates.
”He’s a golfer who can’t putt, has no touch,” Trump tweeted of Powell. “Big US growth if he does the right thing, BIG CUT.”