The Phase 4 stimulus negotiations are a train wreck for GOP. There is no possible positive outcome. Except…this strategy could be a game-changer for the economy.
Our latest in today’s WSJ:
President Trump needs to reset the debate on the latest coronavirus relief bill. Senate Republicans have scuttled their best pro-growth idea—a payroll tax cut—and instead released a $1 trillion spending bill. Last week Mr. Trump acknowledged that compromising with Speaker Nancy Pelosi is a fool’s errand, because the House won’t agree to anything that boosts growth and job creation. The Democratic plan includes a six-month extension of the $600-a-week unemployment bonus and $3 trillion in new spending. It would sink the economy and imperil Mr. Trump’s re-election.
The president needs to pull an end run, and there’s a legal way to do that. He should declare a national economic emergency and announce that the Internal Revenue Service will immediately stop collecting the payroll tax. This is technically called a deferral of the tax payments.
The catch is that under any deferral, workers would still be on the hook for paying the taxes later. Or would they?
Mr. Trump could also pledge to sign a bill—now or after the new Congress takes office on Jan. 3—to forgive those repayments. That would make the election a referendum on middle-class taxes. Mr. Trump can give Americans a tax cut now, and sign it into law later.
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