Dear Commons Community,
Nobel Prize Laureate Paul Krugman declared President Trump’s executive orders the hydroxychloroquine of economic policy. In a tweet (see above) and an interview with CNN, Krugman so labeled Trump’s latest efforts to boost the economy amid the coronavirus crisis.
The four executive actions Trump signed on Saturday included deferring payroll taxes — which fund Social Security and Medicare — from Sept. 1 until the end of the year for workers earning less than $100,000 annually. Trump also warned that he might terminate the tax if he’s reelected, which would kill the longstanding social service programs.
Deferring payroll taxes was such a “known bad idea” that it had already been dismissed by the GOP in the Senate, Krugman explained on CNN Sunday.
“Even Senate Republicans basically said, ‘Let’s forget about that. That’s a really stupid idea.’ And then Trump comes out with it,” Krugman said.
Krugman also warned that hobbling the payroll tax would starve Social Security and Medicare of much-needed funds.
Trump also reduced the enhanced unemployment insurance from $600 to $400 a week. His order would also require cash-strapped states to cover 25% of the enhanced payments, which will be unworkable, Krugman warned.
“This is just not going to happen,” Krugman said. “This is something that was thrown together by somebody who has paid no attention to how these things actually work, what it actually takes to get out money to people in need.”
Let’s hope Krugman is right!