Clyburn objects to payroll tax deferral: “we can’t worry about giving a payroll tax [cut] to people who are working”

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WASHINGTON, D.C. – President Trump has signed an Executive Order for payroll tax deferral, which has met with objections from some detractors, including House Majority Whip James Clyburn (D-SC).

Until the recent adjournment of the Senate on August 6, members of Congress met 11 times in an effort to come to an agreement on a coronavirus relief package.

According to Treasury Secretary Steve Mnuchin in an interview with Fox Business’ Chris Wallace, the negotiations reached a stalemate due to the Democrats’ refusal to talk “until they get their trillion dollars for the states.”

Mnuchin stated that he and his colleagues came to President Trump with a recommendation for executive action in order to help the American people.

On August 8, the President signed a number of Executive Orders, including a payroll tax deferral plan.

Noting the economic burden for American workers during the COVID pandemic, the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster stated, in part:

“While the Department of the Treasury has already undertaken historic efforts to alleviate the hardships of our citizens, it is clear that further temporary relief is necessary to support working Americans during these challenging times.  

“To that end, today I am directing the Secretary of the Treasury to use his authority to defer certain payroll tax obligations with respect to the American workers most in need.

“This modest, targeted action will put money directly in the pockets of American workers and generate additional incentives for work and employment, right when the money is needed most.”

The order calls for deferral of withholding, deposit, and payment of payroll taxes for workers earning under $4,000 every two weeks, pre-tax, between September 1, 2020 and December 31, 2020.  There are to be no penalties or interest on the withheld amounts.

With reference to the tax payments coming due after the deferral period, the Executive Order goes on to say:

“The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”

White House economic adviser Larry Kudlow estimated that the average worker would save approximately $1200 over the deferral period.  Fox Business reports a maximum benefit of $2,149.  JP Morgan Chase estimates $40 billion total added to Americans’ paychecks.

Also in the Fox Business interview, Chris Wallace addressed with Secretary Mnuchin three concerns raised by opponents to the deferral plan.

First, according to Wallace, some objectors pointed out that suspending payroll taxes did not help the millions of people who were out of work.

Mnuchin responded that the $400 weekly in unemployment benefits were already in place for the jobless.

Second, Wallace cited a concern that businesses would be hesitant to pass the deferral on, preferring to hold on to the money in preparation for its coming due after the deferral period.

Mnuchin replied that the President plans to enact a forgiveness of the deferred payroll taxes when re-elected.  He also pointed out that the Executive Order, as quoted above, already calls for work on permanent forgiveness of the deferred taxes over the 4-month time period.

A third concern was for the funding of Social Security and Medicare in light of the deferred tax payments and their potential for forgiveness.

Mnuchin stated that the funds for Social Security and Medicare would come from an “automatic contribution from the General Fund” so that there would be no reduction in Social Security and Medicare benefits.

Another detractor had a unique objection to the payroll tax deferral in light of the coronavirus epidemic.

In an interview with Neil Cavuto, House Majority Whip James Clyburn (D-SC) indicated that the presence of the coronavirus pandemic factored into his approach to current economic conditions.

Clyburn stated:

“We have a health care crisis, but we have an economic crisis….And you cannot solve one without the other.”

When Cavuto asked if Clyburn felt like he appeared “indifferent” by not supporting President Trump’s stimulus measures, Clyburn responded:

“Come on. A payroll tax only affects people who are on payrolls. If you aren’t on a payroll, the payroll tax doesn’t do anything for you.”

Cavuto pressed Clyburn on his support for the two payroll tax cuts under President Obama, asking:

“And a payroll tax cut, if it was warranted then, not only once, but twice, under Barack Obama, why isn’t it warranted now?”

Clyburn responded:

“We now have a pandemic. We have got people who are sick. We have got over 160,000 people who are dead. That’s why.

“The times are different. And so what we have got to do now is get people well, get people out of these nursing homes, out of these hospitals, and back to work.

“So, we can’t worry about giving a payroll tax [cut] to people who are working, when you have got people in hospital beds.”

Clyburn did not explain in the interview why the presence of a pandemic and illness supersedes the need for economic relief for currently working Americans.

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Here is our latest editorial on Pelosi’s reaction to Trump’s executive orders:

The do-nothing Speaker of the House is apparently fuming mad that President Trump is helping out Americans when she failed to.

This Sunday morning, August 9, on CNN’s “State of the Union” House Speaker Nancy Pelosi (D-CA) commented on President Trump’s executive orders he issued on Saturday regarding the economic state caused by the COVID-19 pandemic.

She said they were “absurdly unconstitutional.”

Trump says his executive order will provide $400 more a week and extra benefits.

The catch here is that the states must chip in 25% ($100) of the $400 for each person. This is for each week and the state must agree to the terms before this goes into effect.

The executive order also directs the Department of Education to extend the CARES Act through the end of the year. Right now federal loan payments are paused and interest is suspended up to September 30, the order extends these actions.

The other two actions were regarding a payroll tax holiday for those making less than $100,000 a year or less and assistance for renters and homeowners.  

Pelosi told CNN:

“First of all, he is saying states have the money. No, they don’t. They have expenses from the coronavirus.

Because of that they are firing health care workers, first responders, teachers, and the rest, sanitation, transportation because they don’t have the money. Second of all, everything is left out — our assistance to the schools, feeding the hungry, helping people who are going to be evicted.”

House Speaker Pelosi commented that there is confusion in this executive order, the President doesn’t know what is needed to meet the needs of the American people.  Except… he’s helping them at the moment, and she’s blocking help.

House Speaker Pelosi was asked if the executive orders were legal or not. She said:

“The fact is, is that whether they’re legal or not takes time to figure out. I associate my remarks with what the senator who says, they’re unconstitutional slop.

Gut right now our focus … meeting the needs of the American people. …. Sufficiently allocating resources to send children to school, not threatening schools that if they don’t have actual attendance, they won’t get federal dollars.”

Senator Ben Sasse was the Senator who said the new actions are “unconstitutional slop”.

These orders came as Congress and the President were unable to come to a vote for a stimulus package for the states. President Trump bypassed Congress and asserted his executive powers by signing four actions on COVID-19 relief.

The talks about the stimulus package came to a standstill on Friday afternoon when Trump rejected the offer form Democrats to agree to a stimulus package of around $2 trillion.

There are many questions surrounding Trump’s executive actions and whether states have the funding for those benefits. Now the states will be required to create a new system to deliver the additional aid.

President Trump did not sign an unemployment insurance benefit and is not already in place in the states’ unemployment insurance programs.

The Democrats might challenge the executive actions in court, according to CNN.

Senate Minority Leader Chuck Schumer would not comment on whether Trump’s actions are legal or not but did say his actions were “meager”. In an interview with ABC’s “This Week” Schumer said:

“The event at the country club is just what Trump does, a big show but it doesn’t do anything, and as the American people look at these executive orders they’ll see they don’t come close to doing the job.”

He later added:

“I’ll leave that up to the attorneys, it doesn’t do the job. It’s not going to go into effect in most places for weeks and months because it’s so put together in a crazy way.”

Nancy Pelosi said:

“Everything is left out, our assistance to the schools, feeding the hungry, helping people who are going to be evicted. The President’s moratorium, he just did a study or a look at a moratorium. So again, something’s wrong.”

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