Yet there it is, the apparent centerpiece of Trump’s new plan. What’s going on?
The answer is that a payroll tax cut is the hydroxychloroquine of economic policy. It’s a quack remedy that somehow caught Trump’s eye, which he won’t give up because sycophants keep telling him he’s infallible. There may be some ulterior motives — this move might end up undermining the finances of Social Security and Medicare — but that’s all secondary. Basically this is a tantrum from a president temperamentally incapable of owning up to his own mistakes.
I’m not sure who first sold Trump on this bad idea. Its most tireless advocate has been Stephen Moore, who has a history of predicting tax-cut miracles — remember how Kansas was going to be the wonder of the world? — that never pan out. Just a few days ago Moore argued publicly that Trump could slash taxes without congressional authorization; and here we are.
Just to be clear, Trump isn’t actually cutting the payroll tax, which would require legislation. Instead, he’s just deferring its collection; workers will still owe the money a few months later. And knowing this, many if not most employers won’t increase paychecks, they’ll just put the money in escrow on workers’ behalf. As far as most workers are concerned, this whole thing may be a nonevent.
But maybe, just maybe, Trump will both win in November and find a way to retroactively cancel those tax obligations. If so, he’ll tear a big hole in the finances of Social Security and Medicare, programs that, whatever he may say, he has always wanted to kill.
The main point, however, is that we’re facing a moment of crisis. The emergency relief that sustained the U.S. economy through the coronavirus has expired, even though the pandemic is still very much with us. Unless very quick action is taken, consumer spending is about to collapse, bringing the whole economy down with it.
This wasn’t hard to see coming. Indeed, Democrats passed legislation to deal with this situation almost three months ago. But Senate Republicans did nothing, and still haven’t gotten serious about proposing remedies.
This would be a really good time for presidential leadership. But what we have instead is a pitchman hawking miracle cures at his country club. In the process he may well have undermined whatever slim chance there was of reaching an even halfway decent deal to avert disaster.