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.
Tom Shannon, Bowlero CEO, joined Cheddar to discuss the decision to bring the company to the New York Stock Exchange via a SPAC merger with Isos Acquisition Corporation. Shannon said one of the goals of the public offering is to expand operations internationally, noting that Bowlero has the potential to reach worldwide markets due to the sport's popularity. "Bowling is a global market, and I'll give you an example. In South Korea, there are three million league bowlers and 1,200 bowling centers in South Korea alone," he said.
If you're looking for a date, 2022 might be your year. Online dating platform Bumble is buzzing with dating predictions from its latest survey. Shan Boodram, sex and relationships expert at Bumble, joined Cheddar to discuss some of the findings and what people can expect from the future dating landscape. Some of the results showed that public displays of affection are back on the rise as more people get vaccinated and that more users are opting for alcohol-free first dates. She also explained the trend of "explori-dating," a way that users are attempting to get out of their comfort zone. "People are willing to date outside of their city to get to that," she said.
Anthony Martini, Chief Music Officer of Slip.stream, and Jesse Korwin, CMO of Slip.stream, talk about the challenges creators have uploading music on Twitch and how 'Slip.stream' prioritizes artists by streamlining the licensing process.
Cheddar is looking back at the 12 biggest buzzwords of the year leading up to Christmas. The seventh term in the countdown is Transitory. Definition: (adjective) of brief gratification, not permanent.
More businesses are requiring workers to return to the office, but there is concern that many employees in the middle class, especially women and people of color, need remote work options for reasons including childcare and financial security. Joan Williams, director of the Center for WorkLife Law at the University of California, joined Cheddar to discuss why office mandates could be detrimental to the middle class. She noted that while companies claim a return to offices would help foster more collaboration and efficiency, reports show that they are successfully able to do their jobs from home.
Fresh Vine Wine, a maker of low-carb, low-calorie, and gluten-free wines, made its public debut on the NYSE. Celeb do-owners Nina Dobrev and Julianne Hough, alongside CEO Janelle Anderson, joined Cheddar's Azia Celestino to talk about their partnership, the decision to launch an IPO, and tout the healthy lifestyle market their product is going for.
The automotive industry continues to reel as the ongoing global semiconductor chip shortage continues to cause prices to rise. Ben Preston, autos reporter for Consumer Reports, joined Cheddar to discuss the state of the car industry. "I think that right now is a terrible time to buy a new car because dealership lots are looking a bit thin," Preston said. He noted that once manufacturers had initially halted production due to the pandemic, chip companies shifted toward providing service to tech companies, leading to supply constraints as every new car built needs about 30 to 100 chips in its construction.
