- The White House is still calling for a payroll-tax cut, even with thin support among Senate Republicans.
- In a statement, a White House spokesperson said the tax break “must” form a piece of the next economic relief package.
- But Republicans have expressed skepticism about the effectiveness of a payroll tax cut to boost the economy.
- “A payroll tax cut is extremely expensive… it would only benefit individuals who are working. It also would displace other spending that I think is far more important,” Sen. Susan Collins said.
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The White House is digging in on a payroll-tax cut that President Donald Trump has championed, despite weak support from Senate Republicans who say it wouldn’t be an effective measure to boost the economy.
White House spokesman Judd Deere said in a statement issued to Business Insider on Tuesday that the tax break “must” form a piece of the next economic relief package that Congress is now designing.
“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,” Deere said. “He’s called on Congress to pass this before and he believes it must be part of any phase four package.”
The same statement was given to The Washington Post last week before talks started in earnest on Monday — and before Republicans fell into disarray over the size of the spending package and which priorities to pursue.
Trump pushed the payroll-tax cut in March as the economy cratered due to the coronavirus pandemic. Lawmakers from both parties rebuffed the idea in the $2 trillion CARES Act, but the president now appears determined to push the measure again.
He threatened to tank the economic relief bill if a payroll tax holiday wasn’t included in a Fox News interview that aired Sunday. Republican lawmakers, however, are largely cool to it, which has complicated the GOP’s efforts to keep spending levels below $1 trillion.
Payroll taxes are the 7.65% of earnings taken out of employee paychecks and another 7.65% that’s levied on employers to finance the Social Security and Medicare trust funds. If a cut or outright holiday is implemented, it would bump wages for workers across their paychecks.
But it wouldn’t do much for the 20 million Americans that are out of work. Sen. Susan Collins of Maine told reporters that the tax break would absorb a significant amount of federal spending that’s needed for other priorities.
“A payroll tax cut is extremely expensive… it would only benefit individuals who are working. It also would displace other spending that I think is far more important,” Collins said.
Sen. John Thune criticized the payroll tax cut and said a stimulus check would generate bigger economic benefits.
“I’m not a fan of that,” Thune said. “If it’s a choice between doing checks and payroll tax cut, I think it’s pretty clear the checks actually have a more direct benefit to the economy.”
That was echoed on Monday by Sen. Finance Chair Chuck Grassley. In an interview with CNN, Grassley said, “I think when a person has a check in his hand… I think that’s going to do more economic good than if we dribble out $30 every paycheck.”
Senate Majority Leader McConnell said on Tuesday that Republicans back a second round of stimulus checks, though details on the cash payments remain scarce.
Yet GOP lawmakers are still deeply divided on other components to include in another economic relief package, such as boosted unemployment benefits. Those expire within five days.
“I’m going to introduce a bill in the next few days that is a starting place, that enjoys fairly significant support among Republican senators,” McConnell said after the Senate Republican lunch. “Probably not everyone.”