President Donald Trump told Republican senators Tuesday that “he wants a payroll tax holiday through the November election so that taxes won’t go back up before voters decide whether to return him to office,” according to a Bloomberg report citing three people familiar with the president’s remarks.
The Trump administration met Tuesday afternoon with House Republicans, including Senate Majority Leader Mitch McConnell, R-Ky., to discuss a stimulus package to help mitigate the economic effects of the coronavirus.
Administration officials are still working out the details of the plan, Bloomberg reported.
The Dow Jones Industrial Average and the S&P 500 both rose nearly 5% on Tuesday. The yield on 10-year Treasury bonds rose more than 25 basis points to 0.8%.
Trump on Monday proposed cutting payroll taxes, saying such a move would provide “very substantial relief.”
Said Trump: “We are going to take care of, and have been taking care of, the American public and the American economy.”
Lawmakers and Social Security advocates wasted little time in criticizing that idea.
“Focusing on economic assistance first is the wrong approach,” Rep. Don Beyer, D-Va., vice chair of the Joint Economic Committee, stated on Tuesday morning during the Democratic Caucus’ weekly press briefing. “If we just want to protect the economy, the very first thing we have to do is protect public health and the people directly impacted by the coronavirus.”
Beyer stated that “part of the dilemma with the payroll tax cut is that if you’ve lost your job, or you’re in the gig economy, or many other things, [then] you’re not going to get anything. Or if you’re with so many Americans making $25,000 or less, then it ends up being like $10 a week, [which is] not enough to really do anything. So among the many things that we must consider to get the stimulus going again, direct payments will at least be part of that.”
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., said a potential payroll tax cut was “not the best answer” to halting economic fallout from the coronavirus.
“The best way to prevent economic damage is to stop the spread of the virus,” Wyden said in a statement. “President Trump isn’t going to wriggle out of addressing this growing public health crisis with tax cuts. A payroll tax cut can be an effective tool, but it’s not the best answer in this case. A payroll tax cut would do little to help workers without paid sick days or those who have lost shifts and tips.”
Nancy Altman, president of Social Security Works, said in a Tuesday statement that Trump “is using the coronavirus crisis as an excuse to propose a reduction in payroll contributions. This is a Trojan Horse attack on our Social Security system, which will do nothing to meaningfully address the crisis at hand.”
Said Altman: “Under the guise of stimulating the economy, Trump’s plan to reduce Social Security contributions would either undermine Social Security’s financing or employ general revenue, both of which would set the stage for future demands to cut Social Security.”
Rep. Hakeem Jefferies, D-N.Y., chairman of the Democratic Caucus, said during a Tuesday morning press conference that “the American people are the ones who will need the relief if Congress acts — not the millionaires, not the billionaires, not the multinational corporations. We need to put families first.”
“The outbreak of the coronavirus is a public health crisis that has effected tens of thousands of people in the U.S. and abroad,” Beyer said.
Trump’s “incompetent leadership on the coronavirus is really hurting our response, which in turn is hurting the economy,” Beyer said. “As the number of cases proliferates and fear spreads, markets have plunged into chaos; there are even more ominous signs that more might be coming.”
Treasury bonds, he said, are “now trading below 1% yield; that zero threshold is in sight. It’s a strong indicator of a possible recession. Businesses are suffering too because of the coronavirus’ impact on supply chains. And consumer spending, which … has been the main engine of economic growth, is likely to fall as Americans are forced to cut back on their usual activities.”
Goldman Sachs, he continued, is now predicting zero economic growth for the second quarter. Former Federal Reserve Chairwoman Janet Yellen, he relayed, has said that “’the coronavirus could throw the United States into a recession.’”
The Fed “has little room left to cut interest rates,” Beyer added.
Stopping the spread of the disease, he said, “is where the priority must be.”
Last week Congress passed an $8 billion emergency bill to address, principally, the public health crisis with investments for treatment and research, and “now we’re in talks to further strengthen the response and prevent this outbreak from getting even worse,” Beyer said.
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