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Team Trump is considering a temporary reduction in payroll taxes to boost the economy and avoid a slowdown or even a recession, a new report said Monday.
The plans reveal growing concerns from key government economic assistants about a possible slowdown in the run-up to the 2020 elections – despite President Trump's glowing criticism of the US economy, the Washington Post reported.
A White House spokesman has denied that a payroll tax cut is being studied "yet."
The Washington Post said negotiations were still in the early stages and officials had not yet decided to ask Congress to approve the cut.
Most working Americans pay a "payroll tax" on their earnings: a 6.2% levy is used to finance social security programs.
The payroll tax had been reduced to 4.2% under the Obama administration to encourage consumer spending during the Great Recession, but returned to 6.2% in 2013.
Americans pay income tax only up to $ 132,900; a reduction in payroll taxes would therefore provide relief to many middle-class families whom they did not see as part of Trump's tax cuts.
Reductions in payroll taxes add to the deficit and can take billions of dollars from social security.
The administration's discussions on further cuts in payroll taxes have only begun in recent days, the newspaper reported. Specific details on the design have not yet been achieved, the statement said.
The talks follow a weekend blitz in which the president and his top economic advisers touted the economy and blamed the Democrats for rejecting it.
"Our economy is very strong, despite the dreadful lack of vision of Jay Powell and the Fed, but Democrats are trying to" want "the economy to be bad for the 2020 election goals. selfish! Trump tweeted On Monday.
However, a number of economists seem sufficiently concerned about the risks inherent in some of Trump's economic policies to expect a recession by the end of 2021.
Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report released Monday, said they believe that a slowdown in the economy will plunge into recession in 2021.
This figure is up 25% from a survey conducted in February.
Only 2% of respondents expect a recession to begin this year, while 38% predict it.
Trump, however, dismissed worries over a recession, offering upbeat prospects for the economy after last week's sharp drop in the Dow Jones Industrial Average.
A strong economy is key to the Republican president's prospects for reelection for 2020.
Economists have already expressed concern over Trump's tariffs and the increase in budget deficits that could potentially dampen the economy.
The Trump administration has imposed tariffs on the goods of many US trading partners, from China to Europe, Mexico and Canada.
Officials argue that tariffs, which are taxes on imports, will help the administration to obtain more favorable terms of trade.
But the US trading partners simply retaliated with their own tariffs.
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