White House considered payroll tax cut amid economic concerns, despite public bluster

White House officials at one point in recent days were discussing the possibility of a potential payroll tax cut to stave off an economic slowdown.

Despite saying publicly that the economy is fine and they have no concerns about a recession, the conversations reveal how White House officials are discussing ways to boost confidence in the economy.

Multiple senior officials told CNN they weren’t aware of these discussions — revealing how much these talks were in the early stages.

The Washington Post first reported the talks Monday.

A White House official denied to CNN on Monday that the move was under consideration “at this time.”

“As Larry Kudlow said yesterday, more tax cuts for the American people are certainly on the table, but cutting payroll taxes is not something under consideration at this time,” the official said in a statement.

Millions of American employees pay 6.2% of their salary in “payroll taxes,” which are usually used to fund social safety net programs — like Social Security and Medicare.

It would not be the first time a sitting president has used it as a political maneuver.

Former President Barack Obama, who was seeking re-election in 2012, signed a bill extending a payroll tax cut for workers and unemployment benefits as part of the administration’s economic recovery plan following the financial crisis.

Rather than paying a 6.2% payroll tax, they paid 4.2%, putting an extra $83 a month in the pockets of American workers making $50,000, for example.

Those tax breaks — designed to boost American spending, which accounts for about two-thirds of the economy — would wind up expanding the nation’s deficit.

“A payroll tax would definitely reduce federal revenue and add to the federal deficit,” Kyle Pomerleau, chief economist at the Tax Foundation, told CNN.

The country’s debt has been piling higher under the Trump administration in part due to a $1.5 trillion tax cut signed into law in 2017 along with a massive spending package passed by Congress.

President Donald Trump promised during the 2016 election to eliminate the federal debt.

The White House’s Office of Management Budget has predicted that the deficit will exceed $1 trillion for the entire fiscal year, which ends on September 30. The nonpartisan Congressional Budget Office in May had predicted a slightly smaller shortfall of $896 billion for the year, with deficits rising above $1 trillion starting in 2022.

More here. 

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