WASHINGTON (Reuters) - Senior White House officials are discussing the possibility of a temporary payroll tax cut in an effort to boost the economy in the face of a potential slowdown, the Washington Post reported on Monday, citing three people familiar with the discussions.
But a White House official, speaking on condition of anonymity, pushed back against the report in comments to Reuters, saying: “As (White House economic adviser) Larry Kudlow said yesterday, more tax cuts for the American people are certainly on the table, but cutting payroll taxes is not something under consideration at this time.”
The Post said the talks on payroll taxes were in the early stages and that officials had not decided whether to push Congress to formally approve a reduction.
Millions of U.S. workers pay payroll taxes on their earnings to finance the Medicare health insurance program for the elderly and Social Security, which provides income payments for retirees.
The Post did not say how large a tax cut officials were discussing. Payroll taxes were temporarily cut during President Barack Obama’s administration to boost consumer spending after the last recession, but they expired in 2013.
Discussion of a payroll tax cut comes at a time of concern about a possible economic slowdown as the United States and China engage in a trade war. The U.S. Treasury bond yield curve inverted last week for the first time since 2007 in a sign the economy could be headed toward a recession.
A strong economy is seen as key to President Donald Trump’s re-election prospects in 2020. Trump has been talking up the economy in recent days, as have other White House officials, and dismissing recession fears.
“We’re doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they’re loaded up with money,” Trump said on Sunday.
Kudlow, speaking on “Fox News Sunday,” said: “There is no recession in sight. Consumers are working. Their wages are rising. They are spending and they are saving.”
Commerce Secretary Wilbur Ross reiterated the administration view on Monday, saying: “Eventually there will be a recession, but this inversion (of the Treasury yield curve) is not as reliable, in my view, as people think.”
Reporting by David Alexander; Editing by Tim Ahmann and Peter Cooney