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.
Next-gen social sports platform Break the Love recently raised $2.5 million in seed funding. Break the Love's platform and iOS app allows users to discover and book group-based tennis activities, to either learn, train, or compete. The new company has already gotten support from a few big names in the world of tennis, including the coach of Naomi Osaka, as well as the United States Tennis Association and the brand Wilson. Break the Love founder and CEO Trisha Goyal joins Cheddar News' Closing Bell to discuss.
The world of NFTs and cannabis are colliding as luxury cannabis company Peakz gears up to launch a digital dispensary in the metaverse. CEO Jessie Grundy and Tiffany McBride, managing director of social equity ventures at The Parent Company, an investor in Peakz, joined Cheddar to break down exactly how a digital dispensary would work. Grundy also talked about offering low-cost NFT courses in an effort to help Oakland, California, residents not miss out on new investing opportunities, and McBride discussed why the tech-forward vision of Grundy was worth investing in for The Parent Company. "He comes with really fresh ideas that he's vetted, that he's experienced in, and I really believe the thinking along Jessie's lines is the future of cannabis," she said. "He's more than just flower and a story. He comes with concepts that are new that are innovative, and that is easy for us to get behind."
Daniel O'Brien, president and global head of enterprise at HTC America, joined Cheddar's "Closing Bell" to discuss new products and services the virtual reality brand showed off at CES 2022, including a wrist tracker — in lieu of controllers — for more accurate interactions connected to its all-in-one headset, the VIVE Focus 3. O'Brien also described a cloud-based, 5G content delivery system. "We partnered up with Lumen Technologies and from six miles away we delivered high bandwidth VR to a headset directly in the Wynn Hotel during CES," he said. "And people were able to walk around in their virtual experience through a wireless signal."
Samsung unveiled a slew of new electronics and upgraded designs at CES 2022. With a heavy focus on gaming and the future of work, the company showed off its all new Odyssey Ark, which boasts a massive 55 in. curved display designed to give users a more immersive and captivating experience. Sang Kim, SVP, Samsung Electronics joined Cheddar's Michelle Castillo to discuss the company's biggest launches as well as major trends to watch in 2022.
Tesla's Austin, Texas-based gigafactory could be days away from opening its doors and beginning production. Dan Ives, managing director of equity research at WedBush Securities, joined Cheddar to talk about his estimate that the EV company will be running its factory within a week and noted that Tesla has been in a good position despite ongoing semiconductor shortages. "They're really almost Teflon-like relative to other automakers," he said, calling its production delays "containable." Amid another shortage — labor —, he said he thinks Tesla positioned itself well for access to talent months ago with expanded hiring amid the move to Texas from California.
The UK's Information Commissioner's office is scrutinizing Facebook's parent company Meta over child safety practices linked to the Oculus headset, according to a report. The agency is looking to question the tech giant about how it's protecting children from harmful experiences in virtual reality.
Hall of Fame quarterback Troy Aikman joined Cheddar's "Between Bells" to talk about his own brand of organic light beer called Eight (his jersey number with the Dallas Cowboys) and explained that he's had an interest in the industry since his days working for a distributor during college. "These brands that are on the market have been there for a long time and [I] felt that it was time for something fresh, something new, and I thought that we could do it in a way that was a better-for-you beer' and that's what we've done," he said. Aikman also provided some insight into the upcoming NFL playoffs and noted that he doesn't see a clear frontrunner for this year's Vince Lombardi trophy.
Disney has secured a patent for a digital world simulator for headset-free augmented reality expected to be accessible in parks by tracking smartphones and projecting personalized 3D displays, an indication that the entertainment giant is gearing up for its entry into the metaverse.
It has been a record year for luxury automaker Rolls-Royce despite the industry struggling to meet demand overall due to the ongoing semiconductor chip shortage. CEO Torsten Müller-Ötvös joined Cheddar to discuss the driving factors behind the company's 2021 success. He said after the pandemic forced the closure of factories in 2020 and people stopped making large purchases, they were open to spending more in 2021. "The entire luxury sector was fueled by there's money available, and people are prepared to spend money," he said.
