WASHINGTON – President Donald Trump on Tuesday confirmed that he is considering whether to push for a temporary payroll tax cut or other tax changes amid mounting concerns about an economic slowdown.
Trump tried to tout the economy’s strength while also spelling out a number of steps he might push for that are usually reserved for periods of significant economic weakness. In addition to tax-cut ideas that Trump said are under review, he continued Tuesday to push the Federal Reserve to slash interest rates.
Trump’s comments laid bare increasingly urgent White House discussions that have shifted from public denials that anything is wrong to a review process aimed at soliciting ideas to stimulate the economy. Few economists believe the country is in a recession, but most say it is slowing, and White House officials fear that a weak economy in 2020 could impair Trump’s re-election chances.
White House officials want to buttress business spending, which has already weakened sharply, and consumer spending, which has helped undergird the U.S. economy even as soft spots begin to emerge.
A payroll tax cut would give most working Americans more disposable income and lead to more spending, but such proposals in the past have proved unpopular with Republicans. There appears to be little appetite to advance the idea on Capitol Hill.
Trump’s acknowledgment that he is considering the idea came a day after the Washington Post reported that White House officials had begun discussing such a move. At the time, the White House denied it was under consideration.
Some administration officials had become concerned that if the public knew they were looking at new ways to stimulate the economy, it could actually hurt the economy by making more people worry. That caution was erased, however, when Trump said he was open to new ideas.
“Payroll tax is something that we think about, and a lot of people would like to see that, and that very much affects the workers of our country,” Trump said Tuesday during an exchange with reporters at the White House.
Millions of Americans pay a payroll tax on their earnings, a 6.2% levy that is used to finance Social Security programs. The payroll tax was last cut in 2011 and 2012, to 4.2%, during the Obama administration as a way to encourage more consumer spending during an economic downturn. But the cut was allowed to reset back up to 6.2% in 2013.