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Top GOP senator says stimulus check would ‘do more economic good’ than payroll tax cut

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  • GOP Sen. Chuck Grassley said a stimulus check would benefit the economy more than the payroll tax cut Trump is seeking.
  • “I think when a person has a check in his hand… I think that’s going to do more economic good than if we dribble out $30 every paycheck,” Grassley said, according to CNN’s Manu Raju.
  • Experts say a payroll tax cut would not direct aid to struggling people quickly enough, since the wage bump would be distributed across paychecks.
  • Visit Business Insider’s homepage for more stories.

Republican Sen. Chuck Grassley of Iowa said on Monday afternoon that a stimulus check would “do more economic good” than the payroll tax cut that President Donald Trump has staunchly advocated for.

Grassley, the chairman of the Senate Finance Committee, said a direct payment would be more beneficial to the economy than temporarily reducing the amount of taxes paid by workers. 

“I think when a person has a check in his hand… I think that’s going to do more economic good than if we dribble out $30 every paycheck,” Grassley said, according to CNN’s Manu Raju.

A stimulus check, he said, would help enable a quicker boost in spending “because people are going to notice it and maybe take some action as a result.”

Read more: The $600 weekly coronavirus unemployment boost is about to end. 3 analysts share predictions for how Congress will replace it, including a special bonus for going back to work.

In recent days, Trump has repeatedly called on lawmakers to enact a payroll tax cut, which he has sought since early March when the coronavirus pandemic demolished the economy. During a Fox News interview which aired Sunday, the president warned he may not sign the stimulus package if it didn’t contain the tax break. He expressed support for it on Monday as well.

“It’s been proven to be successful and it’s a big saving for the people” Trump said, calling it “very important” to him. Yet Democrats roundly oppose it, along with numerous Republicans.

Payroll taxes are the 7.65% of earnings taken out of employee paychecks and another 7.65% that’s levied on employers to fund the Social Security and Medicare trust funds. President Barack Obama last trimmed the tax by 2% for workers for two years starting in 2011.

Seth Hanlon, a senior fellow at the liberal Center for American Progress, recently told Business Insider a payroll tax cut wouldn’t benefit the nearly 20 million Americans that are out of work due to the pandemic. He also said it would disproportionately favor wealthier people.

“It’s a policy that’s designed to benefit people who are working, it benefits people who are earning more and it doesn’t do anything for people out of work,” Hanlon said.

Over the past few weeks, Republicans have been split on another round of $1,200 stimulus checks and whether they should be modeled after the initial wave approved in March. Experts say the federal payouts led to a boost in consumer spending and helped struggling people buy groceries and cover bill payments. Trump approves the measure.

Earlier this month, Senate Majority Mitch McConnell floated a $40,000 income cutoff for a second round of stimulus checks. It still remains unclear to what extent, if any, the GOP would seek to limit eligibility for additional direct payments.

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