Peter Navarro: Faced with coronavirus pandemic, Congress should pass Trump’s $800 billion payroll tax cut

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President Trump’s proposal to waive the payroll tax until the end of the year is the best insurance policy against a possible coronavirus recession. Members of Congress should put aside their partisan and ideological differences now and immediately pass this strategic initiative, or American workers and businesses will bear the brunt of any coronavirus economic pain.

Make no mistake. The structural adjustments now taking place in response to combatting the virus – from the closing of restaurants, theaters and schools, to shuttered sports arenas, travel restrictions, and empty conference centers – will negatively affect both the global and U.S. economies over the next three to six months.

There is no cause for despair here. These are both necessary and temporary adjustments to slow and mitigate the spread of the virus during a time of national crisis. The overriding goal of both President Trump and Congress now must be to protect our public health and safety first.


During this difficult time, it is equally important that we put in place swift and strong measures to defend our economy against these structural adjustments. The centerpiece of any such measures, and the single most effective form of fiscal stimulus, must be a temporary waiving of the payroll tax, as the president has proposed – providing an $800 billion economic stimulus.

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Presently, the payroll tax of 15.3 percent is split equally between workers and employers. Waiving the tax is essentially a direct 7.65 percent raise for American workers, or the equivalent of an extra week’s pay every four months. Middle-class workers will keep more of what they earn.

Waiving the payroll tax for employers works through a different but equally important channel. It provides a critical cushion to manage cash flows at a time of significantly heightened risk and uncertainty. It thereby represents an important insurance policy against a wave of possible bankruptcies or layoffs that could arise from a protracted slowdown.

Through these twin effects, the payroll tax cut represents a pure Middle America, middle-class, highly progressive fiscal stimulus that will provide swift and sure results. No one should react to such a proposal without soberly considering the latest forecast numbers.

Absent appropriate stimulus, the economy will be significantly challenged in the second quarter. If we swiftly enact the payroll tax cut, it would provide a powerful boost to real gross domestic product. This would greatly offset the coronavirus shock – and offer a perfect example of an effective fiscal stimulus.


A payroll tax cut will provide an immediate and powerful boost. Partisans in Congress may also use the coronavirus crisis as an opportunity to push other fiscal stimuli like an infrastructure bill. This may well be a very good idea and something to include in any bipartisan package.

With regard to other targeted measures, the president will, by executive action, postpone the due date for every American to pay up to $100,000 in federal income taxes due on April 15 until July 15, without interests or late penalties. This will help both families and firms possibly struggling to make ends meet.

The Trump administration will always stand with workers and their families. Most compassionately – and most sensibly with respect to controlling the rate of contagion – President Trump has taken action to provide financial relief to workers whose employment was impacted by the virus. He has called on Congress to pass legislation to extend paid leave to those who may become ill or need to tend to family members as a result of the coronavirus pandemic.


In the Trump administration – and a Republican Party that has now become the party of the working class – workers affected by coronavirus will not face the decision of whether to go to work sick or stay home and go broke.  With his stimulus package, the president will protect and advocate for each and every citizen.

We all must come together not as Democrats or Republicans but as Americans. A payroll tax cut needs to be passed now.