Senate Finance President Chuck Grassley, an Iowa Republican, rejected the idea of including a payroll tax cut in the Republican Party’s emerging recovery plan, saying Monday it is a “public relations problem” and it would have little economic impact.
Republican Senator John Cornyn of Texas warned that a payroll tax cut “divides our conference,” while Senate Majority Leader Mitch McConnell did not say whether Republicans will accept a payroll tax cut. leaving the Senate on Monday afternoon.
Lawmakers have an important feat to accomplish when they try to craft a new stimulus proposal that can cross the finish line in a deeply divided Congress in the middle of an election year.
Democrats and Republicans already disagree about competing priorities they want to see the bill focus on without a clear way to reconcile major differences.
Major Republicans’ rejection of the idea of including a payroll tax cut in the legislation, which Trump has been advocating, underscores the scope of the divisions that will need to be overcome to pass any legislation, not just between Democrats and Republicans, but within the Republican Party as well. The President recently said that he would consider not signing the stimulus package if the payroll tax is not included in the package.
When asked about the possibility of a payroll tax cut, Cornyn told CNN Monday: “I think he divides our conference because the Social Security and Medicare trust funds are not exactly on dry land.”
“We need to do something in that space anyway, but reducing income through payroll tax is problematic because it will eventually have to be increased anyway and is only exacerbating the already difficult state of both trust funds,” he said.
Grassley also warned on how the public can perceive such a cut, as enacting such a tax exemption would have an impact on the Social Security trust fund. Grassley said that even though Congress would replenish the fund, people would think Washington was “attacking” it.
“People would think that we are hurting Social Security funds when we really are not,” Grassley said, explaining why he thinks it could be a “public relations problem.”
At the White House on Monday, Trump reiterated his support for a payroll tax cut during a meeting with Republican leaders.
“It has been shown to be successful,” Trump said. “It is a great saving for people. It is a tremendous saving.”
McConnell said he plans to follow the White House meeting with a discussion among members at the Republican luncheon Tuesday to “see if we can develop a kind of common approach on this side,” after which he will begin to reach out to Democrats. , he said.
Some Senate Republicans have already opposed the huge price tags associated with the billions of dollars already in place, and are reluctant to spend significant amounts of additional money. A cut in payroll taxes could end up increasing the deficit, a feature of the policy proposal that could make it less likely to win the support of the Republican Party.
Grassley argued Monday that a better way to stimulate the economy is through another round of stimulus controls, rather than passing a law to impose a small cut in payroll taxes on American workers.
“If the purpose of (a payroll tax cut) or a check is to stimulate the economy and help people in need, I think when a person has a check in hand … I think that’s going to do more good It’s cheaper than if we haggle $ 30 each paycheck, “Grassley said on Capitol Hill. “Because people will notice it and maybe take some action as a result.”
When asked if he was open to both stimulus checks and a payroll tax exemption, Grassley said: “I don’t think I can fit them into the approximate price (price tag) … Let’s say approximately $ 1 billion: I don’t think I can fit them both. ”
CNN’s Ali Zaslav and Jason Hoffman contributed to this report.
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