Trump May Try To Bolster Economy With Payroll Tax Cut
WASHINGTON – President Donald Trump said Tuesday that his administration is considering a temporary payroll tax cut as a way to bolster the U.S. economy though he continues to insist the nation is not inching toward a recession.
“I’ve been thinking about payroll taxes for a long time,” Trump said during an Oval Office meeting with Romanian President Klaus Iohannis.
“We’re looking at various tax reductions. But I’m looking at that all the time anyway,” he said, adding “Many people would like to see that.”
He also said that the administration is also looking at doing something on the capital gains tax, saying he’d “love” to do something in that regard, but he cautioned reporters that nothing has been decided.
“We’re looking at various tax reductions,” Trump said. “That’s one of the reasons we’re in such a strong economic position. We’re right now, the No 1 country anywhere in the world by far as the economy. Europe’s got a lot of problems. Asia’s got a lot of problems. You look at China, China’s had the worst year they’ve had in 27 years.”
The White House has been disputing that a recession is coming since last week, when a number of respected analysts and an automatic inversion in the Treasury bond all suggest a recession could come any time in the next two years.
Trump and members of the White House staff continued to push back at the recession talk Monday and Tuesday, but the president also lashed out at the Federal Reserve and Fed Chairman Jerome Powell, saying “If the Fed would do its job … lowering interest rates … we’d have a tremendous spurt of growth.”
“I’d like to see a cut of the Fed rate, because they should have happened a long time ago,” Trump continued. “I think they’re being very tardy not doing it and not having done it …They also did quantitative tightening, which was ridiculous, and despite that, our economy’s grown fantastically.
“If you take a look at the previous administration, they had no interest. They had no interest rates, they had loosening, not tightening, and, frankly, the difference in our job is that we have to be proactive,” the president said.
While cutting payroll taxes could result in a temporary jump in spending by middle class consumers, it would also increase the deficit and make it harder to finance Medicare and Social Security, both of which are funded by payroll taxes.
