Trump’s Go-It-Alone Stimulus Won’t Do Much to Lift the Recovery


“The downside of executive orders is you can’t address some of the small business incidents that are there,” Mr. Meadows said. “You can’t necessarily get direct payments, because it has to do with appropriations. That’s something that the president doesn’t have the ability to do. So, you miss on those two key areas. You miss on money for schools. You miss on any funding for state and local revenue needs that may be out there.”

The actions will not even provide the payroll tax cut that Mr. Trump has long coveted as a centerpiece of stimulus efforts. They will simply suspend collection of the tax, as one of Mr. Trump’s longtime outside economic advisers, Stephen Moore, has recently urged him to do. Workers will still owe the tax, just not until next year. And while Mr. Moore has said that Mr. Trump could promise to sign a law that would permanently absolve workers of that liability, there is no guarantee that Congress would go along.

The uncertainty raises a host of questions for companies and workers, including a cascade of intricate tax questions, according to a recent analysis published by Joe Bishop-Henchman of the National Taxpayers Union Foundation. (For example: If workers owe less payroll tax, they would owe slightly more income tax; would employers change, on the fly and in the middle of the year, how much income tax they withhold?) He concluded that most companies were unlikely to take any risks.

“Without detailed answers to some of these questions,” Mr. Bishop-Henchman wrote, “employers might just steer clear of all of it by continuing to do what they’ve always done, blunting the desired economic impact of reducing taxes.”

Outside of Mr. Moore and the conservative group FreedomWorks, which cheered the payroll tax memorandum even before it was announced, few economists expressed confidence that Mr. Trump’s actions would change the trajectory of an economic recovery that has slowed in the last two months as the virus surged anew in many parts of the nation.

Instead, analysts and lawmakers saw politics at play. Republicans said Mr. Trump was forcing Democrats back to the bargaining table and showing Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the Democratic leader, that they had overplayed their hands in pushing for a $3.4 trillion aid package.

“I am glad that President Trump is proving that while Democrats use laid-off workers as political pawns, Republicans will actually look out for them,” Senator Mitch McConnell of Kentucky, the majority leader, said on Saturday.



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