Not being an economist, I still have to wonder: does this make sense

https://www.cnbc.com/2020/03/10/trump-pitched-0percent-payroll-tax-rate-for-the-rest-of-this-year-white-house-officials-say.html

A trillion dollar deficit, and the White House is thinking about eliminating SS and Medicare payroll taxes and adding in oil industry subsidies.

“President Donald Trump, in a meeting with Republican lawmakers on Capitol Hill Tuesday, pitched a 0% payroll tax rate that would last through the rest of this year, a White House official told CNBC.
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.
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 big problem could be layoffs, particularly in lower wage, service jobs. Payroll tax cuts might not do much for those folks.

Apparently there was some chat about making them permanent. Nice. Nothing like using a pandemic affecting seniors to wipe out Medicare and SS, a classic GOP move.

Oil subsidies? Come on, some of the largest industry giants can’t weather a drop in crude oil prices. I thought cheap gas was a good thing according to the regime. Why not try to slip in a friggin coal subsidy while they are at it.

This whole mess is starting to border on the surreal.

12 thoughts on “Not being an economist, I still have to wonder: does this make sense

    1. @ tabor

      My apologies, I was being a bit sarcastic, The issue, to me, is that paying that small tax is no burden to me and $137K as a cut off is WAY too low a threshold. IMO.

      Liked by 1 person

    1. I understand that. That was the original idea. But at this point, is cutting the payroll taxes useful?

      The problem is that people are avoiding eating out, flying, buying retail , cruising, theaters, etc. not because they are broke. It’s the virus. And if a lot get laid off, no payroll tax anyway.

      Liked by 1 person

      1. I wasn’t endorsing the policies, just pointing out that SS was set up to limit the degree to which in transferred wealth.

        As to the bailouts, no.

        Businesses are supposed to have reserves to cover interruptions and workers are supposed to have savings. Government should not reward those who don’t.

        Like

        1. Understand. Just remember that there are a lot of people just starting out. They have a degree, a job and $30k in student debt. No chance to start saving enough to weather 6 months or a year.

          I think if a stimulus should be needed this might be a great time to start some of the long promised infrastructure work that we desperately need.

          Liked by 1 person

  1. RE: “Not being an economist, I still have to wonder: does this make sense?”

    It is impossible to say without knowing the objectives or the details of a specific proposal.

    As a rule, it is hard to imagine that the benefits of a FICA tax holiday would go very far, but the idea of helping people instead of helping banks seems instinctually correct.

    Similarly, there might be national defense reasons for propping up parts of the oil industry.

    My guess is that the proposal is more of a political trial balloon than anything else. Perhaps it is just a preemptive strike against those who would exploit the current crisis to line the pockets of special interests.

    It is too early to say.

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  2. FICA relief is only good for those that still have jobs. And they are not going to spend it in public venues anyway so long as the primary problem is the virus.

    I think rolling out some infrastructure jobs would be a twofer: work for those whose industries are crippled like airlines, cruises, restaurants, services, etc. which are a huge part of the economy and work that we need to get done anyway.

    Liked by 1 person

    1. With SS set to run out of money to cover retirees sometime in the 2030’s, is it such a great idea to cut the revenue stream? I think you are right that this could be a way for the GOP to fully defund SS/Medicare/Medicaid. They’ve screamed about since the 1930’s-40’s

      Good call on infrastructure. I believe a couple of House members (from BOTH sides) have suggested it as a potential financial stimulus plan that will actually accomplish something.

      Like

    1. Same way Republicans have always paid: borrow, borrow, borrow.

      Zoologists have a common classification for such a species.

      Homo Sapiens Mutuari

      “Borrowing animals”.

      Liked by 1 person

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