White House says stimulus package must include tax cut.
WASHINGTON — The White House is insisting that Congress include a payroll tax cut as part of the next coronavirus stimulus package, potentially complicating talks with lawmakers by pushing a measure that President Donald Trump has tried but failed to advance for almost a year.
“As he has done since the beginning of this pandemic, President Trump wants to provide relief to hardworking Americans who have been impacted by this virus, and one way of doing that is with a payroll tax holiday,” White House spokesman Judd Deere said. “He’s called on Congress to pass this before, and he believes it must be part of any Phase 4 package.”
Trump’s renewed push for a payroll tax holiday comes as Senate
Majority Leader Mitch McConnell, R-Ky., prepares to unveil legislation next week that he hopes will launch negotiations on the next major coronavirus bill.
Key Republican senators have been cool to the idea of a payroll tax cut in the past, partly because it only helps workers who are actually employed. Congress has rebuffed Trump’s previous demands for a payroll tax cut for individuals, instead approving a round of checks to individual Americans as part of the $2 trillion Cares Act in March.
But now, as Congress and the administration prepare to write what will likely be the last major coronavirus spending bill before the November election, Trump is again demanding a payroll tax cut. He and some allies view the policy as an effective way to stimulate the economy and quickly give workers a boost.
“High-ranking White House officials have told me that we will not sign a phase four deal without a payroll tax cut,” Stephen Moore, a White House economic adviser, said in an interview Thursday.
It is unclear if McConnell will bend to Trump’s demands and include a payroll tax cut in the legislation he intends to roll out next week. A McConnell spokesman declined to comment.
The payroll tax is the 7.65 percent tax that is taken out of workers’ paychecks and goes to fund the Social Security and Medicare trust funds. President Barack Obama at one point temporarily reduced the tax, but Trump wants to eliminate it entirely for some period of time.
Lawmakers of both parties have been anticipating that the upcoming coronavirus bill will contain a new round of checks to individuals, something Trump has signaled public support for.
But it’s unclear whether the legislation could include a new round of stimulus checks and a payroll tax cut, especially since McConnell has been aiming to keep the overall price tag at around $1 trillion — a figure Democrats say is much too low.
In the past, lawmakers have compensated for lost payroll tax revenue by diverting other money from the Treasury Department to continue funding the Social Security and Medicare trust funds. The government’s response to the pandemic so far, though, has already led to a giant budget deficit, and some lawmakers are starting to raise concerns that some of the tax cuts and spending increases might be misguided and lack desired impact.
House Speaker Nancy Pelosi, D-Calif., and other Democrats have repeatedly voiced opposition to a payroll tax cut. If included in McConnell’s bill, or demanded by the White House, it would become just one more point of contention between the two parties. Democrats and Republicans already are at odds over multiple issues, including liability protections for businesses and others that McConnell says must be in the bill; enhanced unemployment insurance that is expiring in late July; whether to send more aid to cities and states; and how much funding for education to include and whether to tie it to schools reopening.
Complicating matters is that senior Trump officials appear at odds over the administration’s top priorities. Treasury Secretary Steven Mnuchin has said the administration is pushing the payroll tax cut but is viewed internally as prioritizing another round of $1,200 stimulus payments, according to three people in communication with administration officials.