WASHINGTON — President Donald Trump told lawmakers he wants a payroll tax cut that would last at least through the election to give consumer spending a jolt as the coronavirus threatens to cripple economic growth.
The president told Republicans at a closed-door lunch Tuesday that he wants the payroll tax rate to drop to zero through the end of the year, according to a White House and a Senate official.
Another White House official added that different timelines were discussed. Trump is currently backing only those that would stretch through at least November or December, with some talk of expanding the cuts beyond 2020. The official argued that anything shorter would be bad politically and make less economic sense, with the impact of the coronavirus likely to stretch through the summer.
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Trump has made the growing economy, record stock market numbers and low unemployment a keystone of his re-election pitch, sometimes telling crowds that they have no choice but to vote for him or else their retirement savings will be at risk. Under the president’s timeline, he would ensure that the tax is zeroed out throughout his re-election campaign.
Trump also repeated to senators his comments from Monday expressing a desire for federal assistance to provide paid sick leave, loans for small businesses and tax relief for specific industries, according to White House aides and senators who attended the lunch.
Help for the oil industry was also discussed, senators said. The White House is considering federal assistance for the shale oil industry, which has been hit hard by the oil price collapse this week, a White House official said. But the official cautioned that the situation is still fluid and that any aid would not be on the level of an industry bailout.
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Payroll taxes, which are distinct from income taxes, are paid by both employers and employees, with workers paying 6.2 percent of their salaries up to $137,000 to fund Social Security and employers matching that amount. The cut applies only to those who get paychecks, so it would provide little relief to people who are laid off as a result of an economic downturn.
“They are talking about specific industries that would be hurt the worst and to try and get first of all this payroll tax deduction,” said Sen. David Perdue, R-Ga., who, like the president, is up for re-election this year. “So I think that’s at the top of my list as having immediate impact. My view is whatever you do, you want to roll it through the end of the year.”
But Perdue admitted that the stimulus tool would not help everyone.
“If you’re not getting paid, that doesn’t help,” said Perdue, a member of the Banking and Budget committees.
The tax cuts and other forms of major economic stimulus would have to be approved by Congress to go into effect, so they would require support from Democrats. Trump’s allies in Congress have publicly been told to put politics aside and work with Democrats to pass an economic assistance package.
House Speaker Nancy Pelosi, D-Calif., met Tuesday with Treasury Secretary Steven Mnuchin to discuss the outlines of a stimulus package. Asked whether any measure could pass this week before recess, Pelosi said that she “will see” and that Democrats are readying their own package.
Eamon Javers, CNBC contributed.