President Trump on Wednesday reversed his position on cutting payroll taxes to spur economic growth, telling reporters on the White House lawn that "we don't need it."
The reversal comes after days of mixed messages from the administration. The White House had first denied that it was considering a cut to payroll taxes since the economy, top officials claimed, was sound. However, on Tuesday, Trump said "payroll tax is something that we think about and a lot of people would like to see that."
In another about-face on Wednesday, Trump announced that he is "not looking at a tax cut now." The remarks follow a growing number of economists who have publicly warned that a recession in the U.S. is on the horizon.
"I don't think [Trump] is particularly concerned if what he says one day disagrees with what his advisors said the day before," said Brian Brenberg, the chair of the Program in Business and Finance at The King's College. "It's classic message testing by the president" to see how the media and markets react.
Recession concerns largely emerged last week after the U.S. Treasury's yield curve inverted; in other words, short-term investments in government bonds are now expected to pay more than long-term ones. The inversion — the first since the economic collapse of 2007-2008 — sent the markets plummeting.
A survey released this week by the National Association for Business Economics also found that 74 percent of U.S. economists believe the country will go into a recession by 2021.
"We don't need [a payroll tax cut]. We have a strong economy," Trump said Wednesday.
Payroll taxes, which apply to both employers and employees, are ubiquitous in the U.S. economy and fund major federal programs like social security and medicare. The taxes were lowered as part of the economic stimulus package following the Great Recession a decade ago, and the cut was extended by President Obama in 2012. Republicans initially opposed the cut at the time, citing concern over the federal deficit.
Yet today, many economists caution against cutting payroll taxes given the country's historically low unemployment, the current strain on social security spending, and the government's growing deficit, which has ballooned under Trump following policies like the 2017 tax cuts.
"Payroll taxes are a significant source of government revenue, and payroll tax cuts have been found to have little to no impact on long-term economic growth," the Tax Foundation said on Twitter.
On Wednesday, moreover, the Congressional Budget Office said that the federal budget deficit is accelerating faster than expected. The agency updated its deficit forecast to $960 billion in 2019 and over $1 trillion in 2020.
Cutting payroll taxes, experts say, will also not address the core concerns of investors: tariffs and trade.
"Most investors are unified in believing the only thing that's really going to meaningfully change the conversation around recession is doing something on trade," Brenberg said, noting that Trump's remarks on Tuesday did little to boost the markets.
Adam Michel, a tax policy analyst at the conservative Heritage Foundation, said that "high tariffs and trade uncertainty" were the main impediments to economic progress. "If the administration wants to boost the economy, they should start there," he said.
Compass Inc. reported its Q4 earnings on Wednesday, noting a 31 percent surge in quarterly revenue year over year. The real estate brokerage platform allows agents to promote and market their properties online and saw a 90 percent agent retention rate as well. Compass CEO Robert Reffkin joined Cheddar News to discuss the company's earnings, what ongoing inflation means for the housing market and how they help agents directly. "Let me start by saying my mom is actually a real estate agent, has been the majority of my life. She's a real estate agent today at Compass, and so I built Compass with her in mind," Reffkin said. The goal for an agent is to grow their business and have a better quality of life, more income to support their family, more time to be with their family, and it's not just software. It's a platform of software and services."
While many are excited to watch the final two NFL teams square-off and see which one ultimately takes home the trophy, some, on the other hand, are there for another mian attraction -- the commercials. Companies during this year's game are looking towards the future From electric vehicles, to robots, and crypto-currency, several first-time advertisers are expected to join long-time advertisers like Pepsi, Budweiser and Doritos during the NFL's biggest game. Tom Morton, Global Chief Strategy Officer at R/GA, joined Cheddar News' Big Game Special to discuss.
Americans are expected to spend nearly $24 billion in 2022 for Valentine's Day, and many of those gifts will be in the form of chocolate. John Galloway, interim president of the Americas and CMO of Godiva, joined Cheddar's Opening Bell to discuss what chocolate trends the brand is seeing this year, plus the impact of inflation and supply chain issues on the industry.
Darren Schuringa, Founder & CEO, of ASYMmetric ETFs, talks about the strength of the U.S. consumer and discusses how tension between Russia and Ukraine is impacting the energy market.
Robert Conzo, CEO of The Wealth Alliance, breaks down the major headwinds impacting markets and highlights areas within technology showing potential growth.
Nissan is revving up its commitment to electric vehicles. the Japanese automaker announcing plans to invest $500 million to transform its assembly plant in Mississippi to build two all-new EV models starting in 2025. It's all part of Nissan's goal to have 23 electrified models for the Nissan and Infiniti brands globally by 2030. Ashwani Gupta, Nissan's COO, joined Cheddar's Opening Bell to discuss this announcement and the company's EV goals moving forward.
Blue Apron CEO Linda Findley joined Cheddar News to talk about the meal kit company’s Wellness 360 holistic wellness campaign and previewing Q4 and end of year results to be released next week. "Really the concept here is about holistic wellness and health," Findley said. "So thinking through not just what you're eating, but also mental health and financial health. And so we try to bring lots of tools to people so that they can think about ways to manage that balance."
Cepton made its debut on the Nasdaq under the ticker symbol ‘CPTN’ on Thursday. Jun Pei, the co-founder and CEO, joined Cheddar News to discuss going public and its lidar-based solutions for improving safety in autonomous features in cars. "It's really just a huge benefit in addition to radar and camera, and becomes an entire sensor suite that will bring cars to a higher level, both for safety and autonomy."
