It’s Tuesday, the traditional day for elections and for our pause-and-consider newsletter on politics and policy. 

A trader works at the New York Stock Exchange in New York, the United States, on Aug. 5, 2019. Photo by Guo Peiran/Xinhua via Getty Images

It’s Tuesday, the traditional day for elections and for our pause-and-consider newsletter on politics and policy. We think of it as a mini-magazine in your Inbox.

THE IDEA OF A PAYROLL TAX CUT, EXPLAINED
By Lisa Desjardins, @LisaDNews

Rising concerns about the economy are also raising an old recession-fighting idea at the White House: The payroll tax cut.

“[The] payroll tax is something that we think about,” President Donald Trump told reporters today, confirming earlier reports that the idea was under discussion, “And a lot of people would like to see that, and that very much affects the workers of our country.”

The concept may be one of the most potent tools the government has to stimulate the economy. Other traditional measures, like interest rate cuts, are already near or close to being maxed out.

How would the payroll tax work?
* The government would temporarily cut the 6.2 percent tax that is automatically taken from Americans’ paychecks in order to pay for Social Security.
* Congress and the president would have to agree to the cut.

Why it’s under consideration
* A payroll tax cut is a fast, direct shot to the economy. Under President Barack Obama, the rate was cut to 4.2 percent for two years in an effort to keep the economy growing.
* The Congressional Budget Office estimated in 2010 ([link removed]) that every dollar cut in the payroll tax leads to $0.30 to $0.90 in new spending. That is a wide range, but allows for a potentially significant impact almost immediately. In contrast, other stimulus, like infrastructure spending, can take months or years to boost the economy overall.
* It would be temporary.

The problems
* The price. The Committee for Responsible Fiscal Budget estimates ([link removed]) that a payroll tax cut the size of the Obama-era cut would cost roughly $300 billion. (Before interest.)
* How government would handle the price. As mentioned above, the payroll tax funds Social Security. If it were cut, Congress and the president would need to decide if those lost funds would come from Social Security’s Trust Fund or if the Treasury would repay them. Either way, it is likely red ink. This could lead to difficult political debate in a time of historic deficits ([link removed]) .

The oddity
* The economy is in a positive, almost enviable state in many ways. Unemployment is low and Gross Domestic Product is growing consistently, if not robustly.But some economists fear that recent stimulus measures -- including low interest rates and tax cuts -- will not be enough to override the drag from the continued trade battle with China. And, as you’ll read below, they are looking at possible flags for a recession.

RECESSION TALK
By Alexandra D’Elia, @ ([link removed]) Alex_DElia11
Politics production assistant

There’s been a lot of talk this past week about a looming recession, in part due to a slowing global economy and uncertainty around the continuing trade war between the United States and China.

Though Trump has pushed back against the warnings, his administration is paying attention ([link removed]) . Here’s what economists are looking at.
1. The Yield Curve: What has historically been a strong forecaster of recessions, the yield curve reflects the interest rates of U.S. Treasury bonds. When investments in short-term, three-month Treasury bonds exceed those of long-term, 10-year bonds, the yield curve is inverted. This has already happened. An inverted yield curve is a bad sign for the economy because it indicates that investors are nervous about the long-term prospects of the U.S. economy. As The Washington Post’s Karen Tumulty ([link removed]) explained on the NewsHour ([link removed]) last week, an inverted yield curve has preceded six of the last six recessions. (Read more about the yield curve ([link removed]) from our own Gretchen Frazee).

2. Consumer spending: Whether Americans are opening their wallets is pretty telling of where the economy is headed. Are American consumers -- whose spending makes up about two-thirds ([link removed]) of the U.S. economy -- able and willing to buy? According to the Bureau of Economic Analysis ([link removed]) , consumer spending has steadily decreased since March of 2019.

3. Industrial Production: The Institute for Supply Management (ISM) index, ([link removed]) which analyzes companies’ movement (inventory, hiring, etc.), indicates whether the manufacturing sector is growing or contracting. If the index reads above 50, the sector is growing (last month, the index read 51). If the index reads below 50, the manufacturing sector is contracting. While the manufacturing sector does not have the same pull on the U.S. economy as it once had, (i.e. the mini industrial recession ([link removed]) that occurred in 2015 to 2016), an ISM reading below 50 can still signal an economy in dangerous waters.

4. Housing Market: Softness in housing market -- (likely) the biggest purchase the American consumer will make in their lifetime -- can indicate an economic recession. The market for single-family homes has weakened across the country ([link removed]) , similar to what occurred before the recessions in the 1990s and early 2000s.

5. Auto Sales: Car sales have slowed down in 2019 after many years of growth, indicating consumers are timid to make a large investment. As vehicle prices rise to record levels, consumers are struggling to keep up. While recent forecasts ([link removed]) show a slight increase in auto sales for July 2019 from the previous month, sales have decreased ([link removed]) year over year.

6. Aggregate Hours Worked: The number of total hours that full and part-time employees work over a week also gives economists a look into the fate of the economy. Measured by the Bureau of Labor Statistics ([link removed]) , if workers punch in fewer hours, that suggests companies have less need for their labor and also means workers have less money to spend.

7. Unemployment: The unemployment rate currently holds at a low 3.7 ([link removed]) percent in the United States -- Trump’s greatest selling point for his reelection bid in 2020. A spike in unemployment and an economic recession can come hand-in-hand.

FIVE OVERLOOKED POLITICAL STORIES FROM THE PAST WEEK
By Alexandra D’Elia, @ ([link removed]) Alex_DElia11
Politics production assistant

Harry Reid: The filibuster is suffocating the will of the American people ([link removed]) -- Aug. 12. The Democrat and former Senate majority leader has called on the Senate to “abolish the filibuster in all its forms” and for his party’s presidential candidates to do the same because it has led to legislative gridlock. Why it matters: Ending the filibuster gives even more power to the party that controls the Senate by taking away the biggest tool to force compromise. -- The New York Times

Marcia Fudge endorsement widens Kamala Harris' lead with CBC lawmakers ([link removed]) -- Aug. 15. Sen. Kamala Harris now leads the Democratic primary field with 10 endorsements from the Congressional Black Caucus. Why it matters: African Americans made up roughly 24 percent of Democratic primary voters in 2016, making them a key demographic for any presidential candidate. Harris has worked to win their votes while defending her record as a sometimes tough-on-crime prosecutor. -- Politico

‘This will be catastrophic’: Maine families face elder boom, worker shortage in preview of nation’s future ([link removed]) -- Aug. 14. The labor force in Maine is experiencing the impacts of being a “super-aged” state, with large older populations and fewer workers or caregivers. Why it matters: Over the next decade, more states will join Maine in having a fifth or more of their populations older than 65. -- The Washington Post

Joseph Kennedy III reportedly eyeing Ed Markey’s Senate seat ([link removed]) -- Aug. 17. The Massachusetts representative and member of the Kennedy dynasty may contest fellow Democrat Sen. Ed Markey in the upcoming 2020 Senate race. Why it matters: This potential high-profile race would highlight the generational conflict within the Democratic party -- older, long-term lawmakers being challenged by younger politicians. -- Boston Herald

Lawmakers accuse State Dept. of defying federal law by missing deadlines for Yemen reports ([link removed]) -- Aug. 16. Last week, State Department officials missed a second deadline to disclose efforts by Saudia Arabia and the United Arab Emirates to alleviate the humanitarian crisis in Yemen. Why it matters: The Trump administration continues to prove a strong ally and protector of the Saudi kingdom, even as Republicans and Democrats in Congress decry U.S. support of its role in Yemen. -- The New York Times

#POLITICSTRIVIA
By Kate Grumke, @KGrumke ([link removed])
Politics producer

On this day in 1935, a politician from Texas was born. He was a U.S. representative and ran for president three times. In 2010, The Atlantic called him “The Tea Party’s Brain.”
Our question: Which politician are we describing?

Send your answers to [email protected] (mailto:[email protected]) or tweet using #PoliticsTrivia. The first correct answers will earn a shout-out next week.

Last week, we asked: On this day in 1918, women enlisted in the U.S. Marine Corps for the first time.What was the first branch of the U.S. military to allow women to enlist?

The answer is the Navy. Women were allowed to enlist in March of 1917.

Congratulations to our winner: Paul Taylor on Twitter!!

Note: We received multiple answers from some individuals but consider only each person’s initial answer in the contest. (There are just five military branches after all, so an industrious reader could have tried them all.)

Thank you all for reading and watching. We’ll drop into your Inbox next week.

[link removed]
Experts reject Trump’s call for mental hospitals to fight gun violence ([link removed])

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