The White House is looking intensely at an extended payroll tax cut as its preferred method to get money into people’s pockets in the next coronavirus relief bill, according to sources who have spoken with the administration.
Administration officials have been discussing an extended payroll tax holiday as a response to the coronavirus outbreak since early March, but the discussions have taken on a new fervor in anticipation of a fourth, and possibly final, relief bill. President Trump has said publicly this week and earlier in the year that he likes the idea, but now, aides are moving to make it happen.
Senior officials think that only one more bill will be necessary, a senior business trade association lobbyist said, on top of the nearly $3 trillion that has already been authorized. This makes the payroll tax holiday, which Trump has advocated for since March, a top White House priority.
Like the direct payments approved under the Coronavirus Aid, Relief, and Economic Security Act, the purpose of a payroll tax holiday is to help support consumer demand. Economic stimulus is one of the top focuses for the next package inside the White House, according to this source.
Momentum for payroll tax cuts is coming from the White House, not from Capitol Hill, Club for Growth President David McIntosh told the Washington Examiner. White House officials have said they would like to use the tax cut to incentivize employers and reward people who’ve been out of work with a bigger paycheck.
McIntosh added: “So I think it’ll be in the mix. It’ll be interesting to see how hard the administration pushes forward.”
Stephen Moore, a member of Trump’s economic task force, echoed that the White House looks to be “all-in” on payroll tax cuts, which he favors over a second round of stimulus checks. “If it’s just cutting people [a] check, that’s counterproductive.”
“Absolutely essential to any deal is getting the suspension of the payroll tax for the rest of the year,” he said in an interview on Thursday.
“The only thing they really need to do right now is the payroll tax cut. I mean, there’s nothing else,” he added.
Trump likes the idea, and behind the scenes, there are fervent discussions.
“We’ve already spent $3 trillion. That’s enough. So it has to be right now deregulation and tax cuts,” Moore said. “And what the president has said when I’ve talked to him about this is: We just do the things we did in 2017 and 2018 and 19 that helped rebuild the economy into the might that [it was], which is pro-economic growth, pro-business policies that make America more competitive.”
Trump said in early April that he was weighing a second round of relief checks, but this plan seems to have fallen out of favor. Asked this week if there would be additional direct payments to the public in the next relief package, Trump said he liked the idea of payroll tax cuts.
“I’ve liked that from the beginning — that was the thing that I really would love to see happen,” he said. “A lot of economists would agree with me. A lot of people agree with me. And I think, frankly, it’s simple. It’s not the big distribution, and it would really be an incentive for people to come back to work and for employers to hire. The double tax on the company and also on the person, that’s what I like. And something like that could happen.”
Senior economic adviser Kevin Hassett said earlier this week that the White House was “studying very carefully” the possibility of additional direct payments on top of the $1,200 that many have already received, but Trump suggested it is not what he wants. “A lot of people are talking about it, but we’ve given a lot of stimulus,” Trump said at the White House Thursday.
Top economic adviser Larry Kudlow warned last week that “the liquidity and cash phase is coming to an end” and that the administration would like to see “a more incentive-minded approach” to helping people. “A payroll tax holiday will increase employee wages after tax. … That’s the kind of thing we want.”
