Last week our friends Stephen Moore and Phil Kerpen proposed in an op-ed for the Wall Street Journal that President Trump reset the debate on the latest coronavirus relief bill through an Executive Order deferring collection of the payroll tax. We agreed with that idea, in large measure because feckless Senate Republicans had already scuttled a payroll tax cut – their best pro-growth idea – and instead, released a $1 trillion spending bill.
President Trump had already figured out that compromising with Speaker Nancy Pelosi is a fool’s errand, because the House won’t agree to anything that boosts growth and job creation. The Democratic plan he was supposed to “compromise with” includes a six-month extension of the $600-a-week unemployment bonus and $3 trillion in new spending, that would sink the economy and imperil Mr. Trump’s re-election, which of course was the whole idea.
Over the weekend President Trump acted boldly to bypass the congressional dithering and political gamesmanship and announced his own version of the payroll tax deferral, saying, “it is clear that further temporary relief is necessary to support working Americans during these challenging times.”
To that end, the Executive Order directed the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need – which the Executive Order defined as any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is “less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.”
“This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most,” said President Trump.
Predictably. Democrats and the hard Left of Republican anti-Trumpers went nuts when the President announced the Executive Order.
During an interview on Fox News Sunday, Democrat Speaker of the House Nancy Pelosi called the orders “unconstitutional slop.”
“No, in fact, what the president did is – I agreed what the Republican senator said – is unconstitutional slop,” Pelosi said, echoing comments made Saturday by GOP Sen. Ben Sasse of Nebraska.
“While it has the illusion of saying we’re going to have a moratorium on evictions, it says I’m going to ask the folks in charge to study if that’s feasible. While he says he’s going to do the payroll tax, what he’s doing is undermining Social Security and Medicare, so these are illusions,” Pelosi said.
However, the reality is, as President Trump said before signing the orders, negotiations between the White House, and congressional Democrats and Republicans were at an impasse.
“Democrats have refused these offers. What they really want is bailout money for Democrat governors and mayors that have been run very very badly for many years,” Mr. Trump said. President Trump is right, there should be no bailout of poorly managed Democrat states – such as New York, Illinois, and California.
What’s more, President Trump has now made the election a referendum on middle-class taxes – he’s given Americans a tax cut now and can campaign on forgiving the taxes if reelected. And by targeting it to the taxes owed by those making $4,000 or less bi-weekly Democrats can’t credibly call it a tax cut for the rich.
Even better, it gives Republican House and Senate candidates something to campaign on and energizes the Republican base, which has been in a state of near rebellion over the idea of trillions more in spending, which is guaranteed to include billions in Democrat priorities as the price of passage.
The Phase 4 stimulus negotiations – with the focus on trillions in spending – are a train wreck for the GOP. There is no possible positive outcome in “compromising” with the Democrats. This strategy is a game-changer for the economy and the GOP’s congressional election prospects, if Republican candidates are smart enough to embrace it.
We urge CHQ readers and friends to call the White House at 202-456-1111 or use this link to email the White House to let President Trump know you back him and you support this bold move to enact pro-growth economic policy and rearrange the political chessboard for the 2020 election. And while you have the phone in your hand, contact the National Republican Senatorial Committee and the National Republican Congressional Committee and tell them to get GOP Senate and House candidates on board with the President’s pro-growth plan by committing to forgive the deferred taxes in the next Congress.
congress relief bills
national economic emergency
payroll tax cut
Section 7508A of the U.S. Tax Code
Treasury Secretary Steve Mnuchin