Payroll tax cuts are the ‘hydroxychloroquine of economic policy’: Nobel economist
President Donald Trump has issued an executive order suspending the collection of Social Security payroll taxes from September 1 until the end of the year. Liberal economist and New York Times columnist Paul Krugman is highly critical of the move in a Twitter thread, slamming payroll tax cuts as the “hydroxychloroquine of economic policy” — a reference to the drug that Trump has been touting as a miracle treatment for combatting COVID-19 even as health experts warn that using it could be dangerous.
According to Krugman, payroll tax cuts “won’t do anything to solve the employment crisis, but will have dangerous side effects. Yet Trump remains obsessed with them as a cure.”
In his thread, Krugman notes, “We’ve lost millions of jobs, not because employers lack incentives to hire, but because many activities, like bars, indoor dining, inessential travel, elective medical care have been put on hold because of the risk of contagion. Letting employers keep money they were supposed to be paying into Social Security and Medicare — no good reason to believe they’ll pass the savings on to workers — does nothing to remedy this problem.”
Krugman goes on to offer some more reasons why he considers Trump’s decision bad economic policy, warning that it will “undermine the finances of programs that are absolutely crucial to the lives of older Americans. If you measure the quality of policy ideas on a scale of 1 to 10, this is a minus 5 or worse.”
The economist adds that even some Senate Republicans “consider this a terrible idea.”
“So where’s Trump getting it from?,” Krugman tweets. “The immediate answer seems to be Stephen Moore, whose previous greatest hits include predicting that tax cuts would create a Kansas economic miracle.”
Moore co-founded the right-wing Club for Growth and was an economist adviser for Trump’s 2016 presidential campaign. Krugman is being brutally sarcastic when he speaks of a “Kansas economic miracle,” as the Kansas tax cuts that Moore championed led to severe budgetary woes in that state.