President Donald Trump on Tuesday confirmed that he is considering whether to push for a temporary payroll tax cut amid mounting concerns about an economic slowdown, rebutting numerous White House officials who had insisted that such an idea was not under review.
Trump’s remarks came one day after The Washington Post reported that several senior White House officials had begun discussing such a move.
“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.
The White House had previously disputed that a payroll tax was under consideration. But Trump said it is something he has considered, as well as other ideas, such as broadening capital gains tax benefits for many investors.
Trump’s comments pulled back the curtain on a freewheeling policy process within the White House. Senior administration officials are both trying to assess the real weaknesses in the economy while also determining whether they should take any steps to intervene before the 2020 elections. Trump and many of his advisers believe the economy’s strength could be key to his political success.
One of his top Democratic rivals, Sen. Elizabeth Warren of Massachusetts, has argued that Trump’s handling of the economy has been irresponsible and will push the U.S. into a recession. And former vice president Joe Biden has said Trump has botched a trade war with China in a way that has hurt many U.S. companies.
Last week, White House officials fervently rejected any sense that the economy was weakening, even in the face of numerous signals that the U.S. and global economy had begun to slow. Instead, they blasted the Federal Reserve, alleging that any weakness in the economy was the fault of central bankers who had raised interest rates last year.
In the past few days, however, a new process has kicked off within the West Wing. Numerous top officials have met with Trump and each other to try and determine what precisely is happening with the economy and what — if anything- they should do about it. Trump has also discussed the economy with a range of confidants and business leaders, and the content of those conversations hasn’t always been shared with senior White House officials.
The analysis of a payroll tax cut centers on a firm belief among White House officials that they need to do whatever they can to ensure that consumers continue spending money. Consumer spending has been a bright spot of the economy this year, and consumer spending and retail sales have helped pull the economy through weaker business investment numbers.
But passing a payroll tax cut could be unpopular with lawmakers from both parties. Many Democrats traditionally support payroll tax cuts, because they tend to disproportionately benefit middle-class Americans. But Democrats could be reticent to back another tax cut less than two years after Republicans pushed through a controversial $1.5 trillion tax cut package that has had mixed effects on the economy.
And Republicans have long resisted payroll tax cuts, believing the impact of such changes to be inefficient and temporary. Also, the last payroll tax cut that was put in place in 2011 and 2012 was very costly, pulling away more than $100 billion in federal revenue each year. The deficit is already projected to hit $1 trillion this year and worsen next year.
The White House scramble comes as senior administration officials grapple with dimming economic projections ahead of the 2020 elections. White House officials had insisted that the economy would grow at a roughly 3 percent pace this year, a clip that many economists believe is too rosy.
One of Trump’s top trade advisers, Peter Navarro, has estimated that the Dow Jones Industrial Average will hit 30,000 by Christmas. It is hovering at around 26,000 now and could slip.
White House officials have not presented a coordinated plan for how to deal with the changing economy. Just a few hours before Trump considered that he has thought about a payroll tax cut, spokesman Hogan Gidley flatly denied it.
“It’s not being considered at this time, but he’s looking at all options out there to try and give people back so much of the hard-earned money they’ve made,” Gidley said.