Trump says White House looking at payroll tax cut
President Trump on Tuesday confirmed the White House is discussing a temporary payroll tax cut as a strategy to boost the economy, even as he maintains the country’s economic outlook remains strong.
“Payroll tax is something that we think about, and a lot of people would like to see that,” Trump said Tuesday during an exchange with reporters at the White House.
“We’re looking at various tax reductions. But I’m looking at that all the time anyway,” he added.
{mosads}The president said that the administration is also looking at doing something on the capital gains tax, but cautioned that nothing has been decided. He suggested that he could index the capital gains to inflation unilaterally, though such a move would likely face challenges from Democrats in Congress.
Trump disputed that a recession was looming after reports circulated that the temporary payroll tax cut was being discussed as one way to boost the economy amid anxieties of a looming recession. The White House on Monday and earlier Tuesday denied those reports, and insisted talk of a downturn was overblown.
The Washington Post first reported Monday that the administration was discussing pursuing a payroll tax cut.
People pay payroll taxes in order to finance Social Security and Medicare. Former President Obama had enacted a temporary payroll tax cut during his presidency in an effort to boost the economy.
Cutting those taxes could temporarily help the middle class, but could also increase the deficit and possibly hurt the social safety net programs they fund.
Trump has projected confidence and insisted the U.S. is in a strong economic position, but his calls for an interest rate cut and possible tax cut are moves typically taken to jump-start a sluggish economy.
The president has sought to cast blame on the media for stoking speculation of a recession, and on Tuesday he reiterated his suggestion that the Federal Reserve was holding back the economy and should cut interest rates by a full percent “over a period of time.”
He added that the central bank is “psychologically important” for the health of the economy.
Some economists have suggested that Trump’s trade war with China has spurred on signs of a potential recession. They’ve noted that businesses are bearing the brunt of tariffs, and that Trump’s unpredictability further hampers growth.
Trump pledged to levy additional tariffs on China beginning next month, but later delayed some of the duties amid fears it would affect U.S. consumers during the holiday season.
The president on Tuesday became animated when defending his posture toward China, insisting that the fight with Beijing is more significant than any potential economic drawbacks in the shot-term.
“I am doing this whether it’s good or bad for your statement about ‘will we fall into a recession for two months,'” he said. “The fact is, somebody had to take China on.”
—Updated at 3:25 p.m.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
