Trump's Payroll Tax Cut and the Arrogance of "Find Something New"

Mish

Trump says he will not sign another stimulus bill unless it contains a payroll tax cut. Congress has other ideas.

Trump's Red Line

The White House says Stimulus Bill ‘Must’ Include Payroll Tax Cut.

“President Trump wants to provide relief to hardworking Americans who have been impacted by this virus and one way of doing that is with a payroll tax holiday,” White House spokesman Judd Deere said Thursday in a statement. “He’s called on Congress to pass this before and he believes it must be part of any phase four package.”

White House Rationale

The rationale provided by Deere is flimsy. The real issue is that many people make more being unemployed on Covid stimulus than they did working. 

Anyone in in that group has no incentive to find a job and work. Trump has raised that point and I agree with Trump.

Understanding the Problem

  1. No one should have an unemployment insurance incentive to not work. 
  2. What about those who genuinely cannot find a job?

In regards to point number 1, We have had months to figure out a methodology to ensure no one makes more unemployed than they did employed, yet no one has even started looking.

"Find Something New"

In regards to point number 2, Trump's daughter, Ivanka, says "Find Something New".

New Career Silliness

Let's train Java programmers to be bricklayers and bricklayers to be Java programmers. Let's also train hotel housekeepers to be auto mechanics. 

Of course, we do not want to pay any money for this training, people should just go to FindSomethingNew and click on something like Aerospace engineering and operations technician to discover "Employment of aerospace engineering and operations technicians is projected to grow 4%."

You can also find pathways to develop apps in Swift, Apple’s powerful programming language, become a registered nurse, web developer, or even a wind turbine technician.

Voilla! 

You have all the key facts to find your new career.

What about the aerospace engineers, web developers, Apple coders, broadcast technicians , etc. etc, who are out of work?

That's the beauty of it all. They will not need much training to become hotel housekeepers or McDonald's servers.

It's Possible

Career change is possible. 

I went from grocery store assistant manager in Jr. College to a degree in Civil Engineering and work as an environmental engineer, to a computer programmer and eventually AVP at Harris Bank, to a computer consultant, to an economic writer with a series 65 investment license.

So, yes, it can be done, but ...

All Continued Unemployment Claims Top 32 Million Again

All Continued Unemployment Claims 2020-07-16

There are 32 million people on some form of unemployment assistance. 

For details and additional charts, please see All Continued Unemployment Claims Top 32 Million Again.

You would be lucky to retrain 200,000 of them, if that, and in what timeframe? 

More importantly, what will the rest of those 32 million unemployed do with their payroll tax cut?

Let Them Eat Cake

It is beyond arrogant to propose "Find Something New" as a general solution. 

This was Trump's "Let Them Eat Cake" moment.

Congress in Session on Monday

Congress is back in session on Monday. Senate republicans want to reduce business liabilities. 

Democrats want to extend pandemic assistance for something like forever, letting the purposely unemployed take advantage of the system. 

In the past 4 months no one bothered to address any of the flaws in the current programs.

And now, no one but Trump seems to want a payroll tax cut, but Trump says he will veto a bill without one. 

That's a bluff of course, and everyone knows it including Senate Republicans now willing to stand up to him. 

Cake for Everyone

The compromise will likely be some cake for everyone.

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Mish

Comments (84)
No. 1-31
Zardoz
Zardoz

As someone who happened to land in an industry that benefited from covid, and now gets to work from home for the same exorbitant pay.... thanks?

I should really donate it, but I probably won't.

lol
lol

Only 1/3 of the population (soon to be 1/4)work at all,and the vast majority of those who do work,work for the govt.Plus DC is running trillion dollars in red ink every month!!!But I get,Trump is the swamp's bitch and anything that helps the 1% he's all in!

Six000mileyear
Six000mileyear

Hello, DC? I'm the taxpayer. Don't I have a say how my tax dollars are spent? After all, I worked so that you could collect taxes from me.

tokidoki
tokidoki

Mish, unless you are of a certain age, employment in IT will be difficult. It's obvious that you haven't been in the computer industry in years, but nowadays getting a job in the industry involves solving a series of exam like questions/problems that's clearly targeted to younger people coming out of college.

So yeah Finding Something New or #JustLearnToCode will not work for most people.

At 30 million people, I would suggest banding together and revolting instead. Upend the social order for the ultimate solution.

Stuki
Stuki

Payroll taxes are plain idiocy to begin with, so lowering them to zero forever cannot even possibly be a bad thing.

Same goes for all other taxes on economic activity, though. Taxing economic activity, is as 100% straight up theft from productive people, and productive activity, by and for nonproductive leeches, as it is humanly possible to get.

You simply can not create a more destructive and value destroying taxation scheme than that. Doesn't matter if it is income or sales taxes. Corporate or individual ones.

Viable, hence profitable, economic activity, is the one and only means by which any new wealth, hence any improvement on the overall human condition, is made possible. Taxing that, hence making it less affordable, less viable and less attractive; in favor of handing money to free shit army members doing nothing but destroying value; truly is as backwards as things can even theoretically get.

borderdenizen
borderdenizen

I fear I have is that the (coding) job I love with great benefits (i.e. healthcare) will be the last job I have with benefits because of age discrimination that is built into the tech industry (yes experience and problem solving are a plus, but I see age discrimination in tech industry hiring every single day).

So what the genius Ivanka is saying to me is that when I am eventually sacked I will need to look into the exiting and dynamic of field of Wal Mart greeting or go into hardcore debt to the EDU cartel to get retraining.

KansasDog
KansasDog

#1: I'm tired of all this get off your ass get a job talk when there's 4 unemployed per 1 job opening

#2 I'm tired of get off your ass get a job during the pandemic which is at its worst yet and projected to get much worse it's as if everyone totally forgot about in 2 months

#3: I'm sick of this retrain crap. Yeah right. People with homes and families........yeah you could spend the next 5 years at least trying to do something worthwhile while your family lives in a van down by the river.

It's all a bunch of crap. Do whatever you can to protect yourself and take whatever they give while they're giving.

ToInfinityandBeyond
ToInfinityandBeyond

Have the past payroll cuts been on both the corporate portion and the individual’s portion of social security tax? If so, is this just another back handed way of dealing more pork to Wall Street? Just curious.

Greenmountain
Greenmountain

Cutting payroll taxes also helps to speed up the bankruptcy of Social Security. Trump does need to say a work about SS, just speed up its collapse. Win Win. Story of today's America. No debate, no compromise, just toss the problem to tomorrow and hope you are gone when the ???? hits the fan.

CautiousObserver
CautiousObserver

President Trump's nepotism bothers me a lot. Every time I see Ivanka or Jared interacting with the public or other members of government because of their family connection to the President and not because someone unrelated selected them based upon their qualifications, I count it as a strike against Trump. They should at least stay out of view until after the election.

Realist
Realist

I have mentioned this before, but a good portion of my time and philanthropy is devoted to a charity that is focused on helping people acquire the skills needed to function in our ever-changing society.

In my country (as in other countries) there are many people who become unemployed because their jobs disappear due to automation, competition, or social change. We are a low cost solution to training people to adapt to our changing world. Still, we are just a drop in the ocean of need. But I prefer to be part of the solution, rather than part of the problem.

Having said that, no amount of training is going to make a difference if there are no jobs to go to. As such, it is imperative that the pandemic be brought under control in each country until a vaccine is ready. No economy can grow and create jobs while it is being ravaged by a pandemic.

The USA is currently the epicentre of the pandemic. It is spreading out of control in many states and will keep getting worse until Trump actually does his job, and leads the country in the battle to control this virus.

The country can’t create jobs until the pandemic is under better control.

So what is Trump doing to stop this virus from ruining the US economy?

Nothing. He is on the golf course. He is busy promoting Goya beans, and moving pictures in the White House. He is too busy tweeting to get off his toilet and do his job. He will leave it to individual states, cities, hospitals and businesses to deal with the pandemic.

He is going to cut funding for testing and tracing, because he believes cases will disappear if he stops the testing.

And if he can’t stop testing, he will attempt to take control of the testing data, to make it look like the virus is disappearing.

The US has the worst president ever during a critical time in US history. And millions are suffering as a result.

Herkie
Herkie

Thirty two million plus on some sort of unemployment, and probably another 10-15 million (we will never know for sure) that have lost work but have been rejected for unemployment for whatever reason, I know here in Florida MANY legitimate covered people have been denied. In many cases the employer cannot be reached, and even though the employee was covered if they can't contact the employers TFB, go get a job you lazy bum.

On the other hand: The rationale provided by Deere is flimsy. The real issue is that many people make more being unemployed on Covid stimulus than they did working.

Thursday my garage door decided it was a great day to give up the ghost. I just got home from Home Depot and the garage would not open, I went to Walmart and bought 9 volt batteries because I thought it was a dead remote. New battery made no difference so I used the key to go in through the front door. Pushed the button on the garage wall nothing happened. So back to Home Depot to get a new garage door opener, because I called around and a repairman with garage door companies all said it would be weeks. Why? No workers. So I bought a new opener and went to get a handyman to install it. Nope, no workers doing this now.

FUCK! Nobody wants to work, they make more on their UI than working, and some are making less, but still using UI as vacation pay because they otherwise have no benefits and no vacation time.

So I have this garage door opener sitiing in my garage and no way to install it. All I really lack is a ladder. But I can't buy a ladder and transport it in my BMW. Delivery costs twice as much as the ladder does.

So, yesterday I decided to open the pool filter, clean the cartridge, and get it working right again, something I put this off because I knew how neglected it had been and it was going to be a major job. Sure enough, the drain plug was stuck as if it had been welded. I am out there for hours trying to work it lose and zip, in 95* heat with Florida humidity, heat index 109* and OMG was it a pain in the ass. The drain plug finally collapsed and broke without ever moving a single atom. Well, once broken you can move on and it took all my strength and another hour to get the top half of the assembly off the bottom and I am sweating the thought the O ring will be ruined.

Got it off eventually and went to hose out the filter cartridge, it had YEARS of crap in it. Dog hair alone. It must have been 3 or 4 years since it was serviced. But, once clean all I had to do was get that old drain plug out and put it all back together.

Nope. The drain plug was two inches from the wall and I could not get at it to drill out what remained to put in the new plug. So I had to remove the bottom assembly from the top, thus the need for the wrench. Even with a borrowed rwrench I could not budge the couplings, so the plumbing pipes have to be cut and my frustration level is through the roof, I just wanted to clean the goddamned filter because nobody had done it in years. I ended up buying a whole new flilter system at Pench a Penny for almost 600 bucks, but can find no installers that can do it before mid week next week. By which time the pool will be green. WHY? Because so many are taking a well needed vacation. Those that are left working are like the Shirk Brothers from the movie The Money Pit. Show up in a limo and demand 35 year old bourbon, then say it is going to be three prices and will take months to do. And I am Tom Hanks wondering how to pay for it.

So I now have a pool filtration system sitting in the garage and no way to install it.

So, I am on the way to Home Depot around 230 today to buy my own tools to get those stuck couplings to move, or PVC parts and pipe dope to install the new filter unit which I really did not have to spend the money on othere than the fact that I can't hire someone to come fix the old unit, and a thunderstorm blew up a few miles from the house and I had the top down on the old BMW so I ducked into the Walmart parking lot to stop and put the top up. Viola, halfway up it quit. You can't drive the car with the top stuck in the halfway position, so I had to call roadside assistance to have the car taken to BMW of Ocala, the nearest dealership. But by the time the truck arrived it was less than a half hour till BMW closed till Monday so we had to take the car to my house till next week. BMW actaull said I should take the car there and drop it off in the covered area outside the service bay, with the top halfway open. Right, I am leaving my BMW open all weekend in Ocala while I am stuck at home without even a rental car.

So the guy goes to put the car on the tow truck flat bed and says he needs my towing eye hook that screws into the bumper for towing. Of course it is in the trunk which will not open while the top is in the halfway position. It took a while but he agreed to take it to my house without the hook.

BMW told me that they have a staff of ten techs normally but due to Covid six are off collecting unemployment. They are weeks behind. The manager told me that cars have been there for more than a week that have still not been seen. And GEICO says my roadside assistance only covers 20 miles, it is 43 to the dealership.

Meaning I am going to have to pay about $250 to get the car to BMW on Monday morning where I will leave my car till who knows when and rent a car till it is right.

I will have no choice but to use my emergency high interest card to pay for it.

But there was a bright spot, the guy Mike is his name, called, I had emailed him from his Craigslist ad about handyman who could help me repair the rotting beams holding up the roof, he was sorry he had not got back to me sooner but he and his wife had been stuck in some airport waiting. They had been on vacation and just got back, but because of the car breaking down I could not see him today. He will be here Monday to look at the house and give an estimate that I just cannot pay.

The world has not stopped for Covid. When everyone was working there was work to go around. Now, it is all a mess. Some have 10% of the business they had this time last year and expect those who call now to pay a much higher price so they can stay in business. And if 90% of us can't or won't pay the new prices they still have plenty of work from people who will because they have no choice.

I could get all these things done today by simply saying there is a bonus in it for you, a few hundred tip. A thousand, a few thousand. There are 10% of the population that can and do pay it. All I have to do is win the Powerball tonight.

So, if you stuck with me this far I want to say that those who had regular jobs and got laid off because the business they worked for closed, or curtailed to 10% staff or whatever, yes, cover them and give them NORMAL unemployment, because unemployment is unemployment, they do not need an extra $600 per week because the reason is Covid. You understand that there are people in Massachusetts collecting over $100,000.00 per year on unemployment right?

Even in Kentucky they max out at almost $60 thousand per year and you think that is not a motive to stay home and not work? I wish I made that much. I am a 100% disabled veteran and the government has paid me $720 per week because that is all you need to live on and many in congress would slash that. Yet a Covid unemployed person gets $600 on top of state UI and other benefits equal to or greater than the benefits they got working. And the democrats want to basically make that open ended.

I want fairness. The Fed and federal government have given well north of $6 trillion to business, while that $1,200 stimulus check amounted to well under $300 billion.

It is the GFC all over again where all stimulus was channeled to Wall Street and which made our top 10% so much wealthier than they ever were, while 5 million people lost homes and credit. This is the GFC at warp speed and ten times the inequality.

People like me with no stimulus and no capacity to increase income are just flat out fucked, I will be homeless before this year is over because all the low interest largess will not filter down this far, we can't have moral hazard entering the economy can we? When I saw that $600 per week ($31,200 per year) on top of UI state compensation I nearly shit. Most of the people collecting UI were not making that much to start with. And if they were why does the government think your disabled vets can get by on less?

So not flimsy at all. There are tens of millions that would gladly go back to work and be grateful for any job if that $600 went away.

Stuff does not stop rotting, hair does not stop growing, things still get obsolete on a daily basis, fires happen, storms happen, accidents happen, it takes all of us to keep this running, you can't just take six months off because of Covid or anything else. As an older person at threat to dying because of the virus YOU and the government could have bought or hired limos to deliver food to me so those at real risk would not starve and it would have cost less than a single digit of what they have handed Wall Street for all this.

Rhett3
Rhett3

“You can also find pathways to develop apps in Swift, Apple’s powerful programming language, become a registered nurse, web developer, or even a wind turbine technician.”

If you ignore the fact that 30 million Americans have an IQ below 80. The minimum IQ to join the army, in any capacity, is 85.

PecuniaNonOlet
PecuniaNonOlet

20 years ago, a co-worker and I went out to lunch. The coversation turned to China and the observation I made at the time was that China had over a billion people and most lived off of 50 cents per day. The amount most live off of now is up to a few dollars per day but my argument at the time was that there would be no way Americans would be able to compete with that type of labor wage. I further made the argument that if China ever got its act together and educated their people in engineering, medicine, technology, etc there was no way America was going to keep up.

Now we have 1 billion Indians also competing with Americans. Africa is on its way to having 1 billion people as well and latin america has about 650 million. The wage arbitrage is too enticing to any company wanting to boost profits so here we are at unemployment land at a much accelerated rate because of cv19. On Netflix there is a great documentary called “The American Factory” - spoiler it doesnt end well.

Trump’s key philosophy seems to be shut borders and international trade via tarriffs to boost American workers jobs and wages and while that may work in the short term, it will not work over the long term.

There is no easy answer to competing against 7 billion people now and in another decade, that number will only go up.

Like Mish, I have spent most of my life re-inventing myself as the world changes. I am currently in a nice niche and hope I can ride it out to retirement but who knows, there is a 20 year old kid somewhere in the world hungry willing to do my job for 1/3 of the pay. At some point, it would be crazy not to hire the kid.

njbr
njbr

Ivanka..."I try really not to try to schedule anything on the weekends, though just because of what we're passionate about, Jared and I will go walk around neighborhoods and look at properties that he owns and that I own, but that's fun."

glennjones
glennjones

Or there are no jobs and the idea people do not want to work is a load of rubbish!

ColoradoAccountant
ColoradoAccountant

Eliminate all corporate taxes by turning them all into Subchapter S corps from C corps. Their earnings would be doled out to the stockholders as of the last day of the corps' fiscal year. Some, like pensions would be tax exempt, but many would be in the 39.5 percent bracket. Ouch to them.

Webej
Webej

Any vacation on FICA contributions (or funding social security from the general fund) feeds into a strong under-current that would like to abolish Social Security. That is probably why they are making such a point of it.

It was bad enough in the eighties when they increased the contributions to fund trickle down tax cuts for the rich, a bonanza to the financialization of the economy. Starting with Bush's attack on the Trust Funds (I didn't see any money there; as though he was expecting a quarry full of cash; does you bank or pension fund have rooms full of "money"?; does cash change hands when you buy a property or exchange stocks?; no, these things exist as a score on a ledger), there is a persistent call to privatize the Fund so that the finance sector has even more money to speculate and embezzle. Though it may sound well-meaning to introduce things such as means testing SS, all these measures only serve to undercut the principle involved, which is solidarity with old people who can no longer work, and who would otherwise (and used to) be consigned to penury and illness and a squalid death. Private pension schemes are proving unreliable (bankruptcies, mergers, private equity, shell companies), a trend that will soon become a storm.

And spare me the comments on how these people should have saved a nest-egg of $11 million to live off the bond interest coupons.

ToInfinityandBeyond
ToInfinityandBeyond

Always thought I would make a great brain surgeon. Where do I sign up for some college courses?

debracarter
debracarter

The problem the USA has today, is qualified workers, with or without being a college graduate. If, the gvmt would allow, the amount of money, that a SOC SEC receiptiant can earn, per year, instead of $25k or whatever the amount is, something to low, if you ask me, then, some of us could go back to work, or increase our hours, or help out more, until that time, your struggling & suffocating yourselves into oblivion! With all the deaths out there, & sickness, now, due to COV 19, & having to wait for the kids, to graduate or finish college, something's gotta give, or fill in for the lost loved ones. Trump is so cutting back the taxes for the rich, but, what about sharing a little bit more, to the past voters, that are still alive, a retired, disabled, or the elderly. We want a piece of pie too, instead of suffering with below poverty wages, from the social security dept, that we are grateful to, but, could add to the social security taxes, & help others, that are yet to come, & that way, maybe, their won't be that cut off date of 2034, now sooner, due to COV 19, when, I'm 80, & wondering, how, & when, the next check will ever come!

Montana33
Montana33

There is no evidence that people are turning down jobs to keep unemployment. Mish - you are usually evidence-based and this is disappointing. You should talk to people who can’t pay their rent. Please don’t over simplify this disastrous financial situation for hard working people who have no prospects. I know you have empathy for people. Honestly, it’s ironic that you complain about Ivanka here (which is right if course) and then you push for lower unemployment for people who have zero chance of finding work.

JanNL
JanNL

Finding something new will be a necessity for many. Work on your 'talent stack' as Scott Adams calls it. I don't see what's wrong with it. Is waiting and complaining better?

Wake up sheeple
Wake up sheeple

You have turned this into an I hate Trump site. It’s not going to solve anything.
If you actually are looking for a job in your industry and can’t, then try something new. I agree with that. I also agree that tons of folks just started looking.
I know several people who are home making more than many I know who work. This is not right. Let’s face it.

shamrock
shamrock

Instead of a flat $600 a week make enhanced federal unemployment benefits a match of 50c on the dollar of the state unemployment benefit. That tops it out at 60-75% of pay.

Casual_Observer
Casual_Observer

It isnt the people's fault for collecting checks and not working for less. This makes intuitive sense for households where both parents were working and have children in summer camp which is not open or too risky an option because of covid. Unemployment is going to stay high because school is going to be remote this fall. The Trump administration keeps pretending there is no pandemic but hospitals continue to pile up dead bodies. Coroners offices in Texas and Florida are ordering freezers because they cant keep up.

Bardenio
Bardenio

Well considering the mess we have, the pragmatic fix would be to allow businesses to take on those collecting and allow that money to continue while they work. It helps small business staff up without risk.

Nickelodeon
Nickelodeon

The question you have to ask yourself is if a tax cut in any form will save companies and jobs....then if you consider that Rothbard claimed that the "G" in the GDP calculation actually hurt the economy and you coupled a tax break with shrinking government it would seem to be a way to stimulate private sector growth.(or at least stop retrenchment)

But if you think reducing taxes doesn't help why not raise them then? Or for that matter increase gov't spending even more. Personally, I think it's laughable...but many, MANY people feel that gov't can actually spend us out of downturns. So I'm in essence a moron in their eyes.

I say why should they be pikers? Let them ramp up the taxing and gov't spending to show us all how it works. Don't even bother with half measures.

ToInfinityandBeyond
ToInfinityandBeyond

What is the problem that we are trying to solve? A huge number of people lost their jobs thru no fault of their own. I doubt very much that a payroll tax cut will get that many folk back to work if companies are not hiring. I also doubt they will spend the extra money in this economic climate. It is the unemployed that need help paying the rent and mortgage. I think Mish hit the nail on the head. No one should receive unemployment pay that exceeds the income from the job that they lost.

121263
121263

Wow! Probably one of the dumbest solutions, a payroll tax cut, to stabilize the economy when over 30 million people are unemployed and can’t go back to work because of lockdowns. If benefits aren’t extended watch the
Economy fall off a cliff and the Republicans get creamed in November. A Herbert Bush moment!

amigator
amigator

Finally! This is great news I hope he sticks with it. This is a Tax Cut that will benefit lower income especially if in acted now most high wage earners have already stopped paying! Make it permanent.

Drain the Swamp! This is a step in the right direction.

Bungalow Bill
Bungalow Bill

Since tariffs are taxes Americans pay, he could start there. That would be one way I could keep more of my money without him fighting with Congress on something that is nothing more than more pandering at this point.

His last tax cut was a joke and not the "biggest ever". Another missed opportunity delivered by Donald Trump...


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