President Donald Trump, in a meeting with Republican lawmakers Tuesday on Capitol Hill, pitched a 0% payroll tax rate for employers and employees that would last through the rest of this year, a White House official told CNBC.
There was also discussion of making the payroll tax rollback permanent, said the official, who declined to be named. Payroll taxes are used to fund Medicare and Social Security. When asked about the potential cost of a payroll tax cut, the official pushed back and asked why there is always a focus on the cost of tax cuts.
The development comes as Trump and the White House try to put together an economic stimulus plan to counteract the impact from the widening coronavirus outbreak. After a 2,000-point drop by the Dow Jones Industrial Average on Monday, the Dow bounced back somewhat Tuesday, rising 1,000 points late in the trading session.
Earlier Tuesday, CNBC reported that the White House was not ready to roll out a specific plan of action on the economy while the deadly coronavirus spreads. Trump stunned people in the White House on Monday, according to officials, when he said that he would announce economic policy proposals at a news conference Tuesday.
A press briefing with the White House coronavirus task force is slated for 5:30 p.m. ET Tuesday, according to Trump’s official schedule. The White House has also invited Wall Street executives to a meeting Wednesday to discuss an economic response to the coronavirus’s impact.
Trump met with Senate Republicans earlier Tuesday afternoon, but they didn’t reach a resolution on a potential response. Still, the president sounded an optimistic note.
“Be calm. It’s really working out,” he said after the meeting, referring to the government’s response to the outbreak. “A lot of good things are going to happen.”
Trump, who faces a bitter reelection fight this year, mentioned the possibility of a payroll tax cut Monday evening. He has said he wants to help out the airline and cruise industries, as well, while fear of the virus and travel restrictions have crushed demand for tourism and business travel.
Republican senators have reportedly been skeptical of a payroll tax cut, which has been pushed by Peter Navarro, one of Trump’s leading advisors on trade policy.
Payroll taxes are paid by employers and employees. They are used to fund Social Security, Medicare and other government programs. For Social Security, employee wages are subject to a 6.2% tax up to $137,700. Workers pay a Medicare tax of 1.45%. Employers match what employees contribute by kicking in 6.2% toward Social Security and 1.45% for Medicare.
The discussion about potential payroll tax reductions comes as Trump has come under fire for saying that he would consider cutting entitlements. His potential Democratic rivals in November’s election, particularly Sen. Bernie Sanders, have hammered Trump for his remarks on entitlements.
The White House is also considering federal assistance for the shale industry as oil prices have tanked in recent days due to a price war between Russia and Saudi Arabia. The administration doesn’t want it to be perceived as a bailout, the official said.
At least 28 people have died from the coronavirus in the U.S., while at least 805 people have been infected. Worldwide, more than 118,000 people have been infected, resulting in at least 4,262 deaths.
Eamon Javers reported from Washington, and Mike Calia reported from Englewood Cliffs, New Jersey.
— CNBC’s Lorie Konish contributed to this report.
Correction: This story was updated to reflect that the information came from a White House official.