Trump's Desired Coronavirus Payroll Tax Cuts Met With Pushback Amid Debate Over Stimulus Package

President Donald Trump is pushing for an economic stimulus package that includes payroll tax cuts for workers and financial relief for businesses as the spread of the novel coronavirus exacerbates fears of a global recession.

But as the details for such a plan remain absent, so too does the support for a payroll tax cut among many members of Congress, including some Republicans. Democrats are putting forth proposals of their own that they say would better prevent the American economy from slipping into a prolonged period of economic downturn.

In order for a politically divided Washington to reach a speedy agreement, it appears likely that the president will need to go further than the payroll tax cuts he's proposed.

"Stopping all this depends on stopping the spread of the disease. That's where the priority must be," said Rep. Don Beyer (D-Va.), vice chairman of the Joint Economic Committee. "We don't want people having to choose between a paycheck and preventing the spread of the disease."

Trump and his top administration officials have sought to quell fears over potential economic impacts coronavirus could have on the American economy. However, those fears only grew after the Dow Jones industrial average on Monday experienced a record plummet of more than 2,000 points, on top of plunging oil prices.

The president is pushing for payroll tax cuts for workers and businesses, a rate that is currently at 6.2 percent on an employee's first $137,700 earned for Social Security and 1.45 percent of all earned income for Medicare. As of Tuesday, it remained yet to be seen by what amount and for how long the president wants the tax to be slashed.

Congress Trump coronavirus stimulus package
President Donald Trump arrives at the US Capitol to attend the Republicans weekly policy luncheon on March 10 in Washington, DC. He is flanked by (L-R) Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steve Mnuchin, Vice President Mike Pence and Republican Policy Committee Chairman Senator Roy Blunt (R-MO). Photo by Samuel Corum/Getty

Sen. John Thune (R-S.D.), the majority whip, suggested it would be cut by roughly 2 percent as it was under President Barack Obama in response to the Great Recession.

Trump has also said they'll provide small businesses with loans and work to prop up travel industries like airlines and cruises hit hard as the Centers for Disease Control and Prevention recommends consumers skip such forms of travel.

And Vice President Mike Pence said that after meeting with private health insurance companies, they agreed to waive copays for coronavirus testing and treatment, in addition to promising no surprise medical billing and covering telemedicine sessions for elderly patients so they can avoid leaving their home. Medicaid and Medicare said last week they would also cover all coronavirus costs.

"We want to protect our shipping industry, our cruise industry, cruise ships. We want to protect our airline industry," Trump told reporters on Capitol Hill Tuesday after meeting with Senate Republicans during their weekly luncheon. "The consumer is ready, and the consumer is so powerful in our country with what we've done with tax cuts and regulation cuts and all of those things."

But the payroll tax cut proposal has been met with opposition by Democrats and skepticism from some Republicans, including Sen. Lindsey Graham (R-S.C.), a close ally to Trump. Various GOP lawmakers argue that such a loss in tax revenue would be costly for the government and do little to help the overall economy.

"I'm not so sure that's the right stimulus," Graham said. "But we need something."

In 2018, federal payroll taxes generated $1.17 trillion, or 35.2 percent of all federal revenues, according to the Center on Budget and Policy Priorities. Asked Tuesday during a press conference at the White House how the government would make up for the lost revenue, Trump senior economic adviser Larry Kudlow responded: "Let us put the proposal out in concrete details and flush that out, and we'll have much better answers."

Democrats argue that payroll tax cuts would only benefit a certain portion of workers and would leave out the unemployed and retired. And they also point to the fact that many workers, particularly those who are paid hourly, don't receive paid time off and decreases the likelihood they would choose to forgo paychecks by staying home and self-quarantining.

Democrats have come out with a laundry list of solutions they say need to be included in any stimulus package in order to reach all corners of the U.S. economy. That includes paid sick leave, free coronavirus testing, expanding federal food assistance programs like SNAP and school lunches, enhancing unemployment insurance, providing loans and grants to small businesses and reimbursing patients for any non-covered coronavirus-related costs.

"That'll get money into the economy where it belongs—the people who are affected—not dropping money out of an airplane and hoping a few dollars land on the people who are affected," said Senate Minority Leader Chuck Schumer (D-N.Y.).

"You know what doesn't help stop the spread of the coronavirus? More corporate tax cuts," he added, citing a Washington Post story that the White House will likely provide aid to oil and natural gas producers impacted by the drop in oil prices.

In an effort to curb the spread of the virus, Congress passed a bipartisan supplemental funding bill of more than $8 billion last week. The measure will fund research for treatments and vaccines, as well as help state and local health facilities that may be resource-strapped or ill-prepared for such a pandemic.

Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that Treasury Secretary Steven Mnuchin will have "ball control for the administration" when it comes to negotiations with Congress on a stimulus package.

Mnuchin and Kudlow also met with GOP senators at lunch on Tuesday. Afterward, Mnuchin crossed the Capitol to meet with House Speaker Nancy Pelosi (D-Calif.), who has called for the same proposals outlined by Schumer.

The below graph provided by Statista shows the number of confirmed cases and deaths from coronavirus in the United States as of Wednesday at 4 a.m. ET.

Coronavirus cases and deaths in United States
This chart shows the number of confirmed cases and deaths from coronavirus in the United States as of March 11 at 4 a.m. ET. Statista

This story was updated with an infographic.