Payroll-tax cut out of GOP plan
The White House and Senate Republicans were near an agreement Thursday on a new economic rescue proposal during the pandemic that includes another round of stimulus payments to individuals, additional aid to small businesses and a partial extension of enhanced unemployment benefits, according to a summary of the agreement circulating on Capitol Hill.
The draft summary reflects a significant retreat by the White House after days of infighting among Republicans. It does not include a payroll-tax cut, a favorite idea of President Donald Trump that administration officials backed away from amid tepid support from Republicans in Congress. It includes $16 billion in funds for new testing that the administration had opposed, and conditions only a portion of education funding on schools reopening.
Treasury Secretary Steven Mnuchin, speaking on CNBC about the payrolltax cut, said “it won’t be in the base bill," killing the idea for now. The cut would have been in the tax that finances Social Security and Medicare.
“The president is very focused on getting money quickly to workers right now, and the payroll tax takes time,” Mnuchin said at the Capitol. Only Sunday, Trump said in a Fox News interview that “I would consider not signing it if we don’t have a payroll-tax cut.”
Sen. Mitch Mcconnell, R-KY., the majority leader, who had hoped to roll out his bill early Thursday, instead spent the morning continuing to negotiate with top White House officials over its central elements.
Among the final sticking points was language surrounding the amount of additional benefits that the unemployed would continue to receive after a program providing $600 per week in extra aid expires at month’s end.
Republicans agree that they want to slash the jobless payments, which they argue discourage people from returning to work. But while Mnuchin said in a television interview that they would seek to limit the new payments to 70% of a worker’s wages, the outline suggests the level could rise to 100%.
“We cannot allow there to be a cliff in unemployment insurance given we’re still at about 11% unemployment,” said Sen. Rob Portman, R-ohio.
The summary also includes $26 billion for vaccine development and deployment, $20 billion in direct payments to farmers and a total of $105 billion for education, $30 billion of which would be reserved for institutions that reopen. There is no new money for state and local governments to plug budget holes and avert layoffs, but the outline notes that such funds are expected to be added in negotiations with Democrats, who have insisted on hundreds of billions of dollars.
The document did not specify who would receive the direct payments or how much the checks would be.
It includes a substantial expansion of a program to aid small businesses. The proposal would also more heavily restrict the number of businesses that were eligible, including by requiring evidence of steep revenue losses during the recession.
Mcconnell's $1 trillion package is an opening GOP bid in talks with top Capitol Hill Democrats — who back a $3.5 trillion House bill that passed two months ago — in a negotiation that could be rockier than talks in March that produced a $2 trillion rescue package. Democrats say the Republican plans are not nearly enough to stem the health crisis, reopen schools and extend aid to jobless Americans.
“Our Republican colleagues have been so divided, so disorganized and so unprepared that they have to struggle to draft even a partisan proposal within their own conference,” said Democratic leader Chuck Schumer.
The must-have centerpiece for Mcconnell is a liability shield to protect businesses, schools and others from coronavirus-related lawsuits.
The bill is likely to be silent on the potential housing crisis as a federal eviction moratorium on millions of rental units expires in days.
One key holdup in the talks was Trump’s push for a payroll-tax cut, according to a Republican granted anonymity to discuss the private talks. Hardly any GOP senators support the idea. Instead, Mcconnell and some other Republicans prefer the direct $1,200 cash payments to Americans.
Sen. Marco Rubio, R-fla., said there will be another boost for small business lending in the Paycheck Protection Program. “It’s going to be big,” he said.
The bills will also include tax breaks for businesses to hire and retain workers and to help shops and workplaces retool with new safety protocols. A document circulating among lobbyists claims the package would increase the deduction for business meals to 100%, offering help to the restaurant industry.
The breakthrough on testing money was key after days of debate between Republicans and the White House. Republicans wanted $25 billion, but the Trump administration said the $9 billion in unspent funds from a previous aid deal was sufficient. The two sides settled on adding $16 billion to the unspent funds to reach $25 billion, senators said. There will also be fresh funds for vaccines.
Of the $105 billion for education, Republicans want $70 billion to help K-12 schools reopen, $30 billion for colleges and $5 billion for governors to allocate. The Trump administration wanted school money linked to reopenings, but in Mcconnell’s package the money for K-12 would likely be split between those that have in-person learning and those that don’t.
In their package, Democrats are calling for $430 billion to reopen schools, bigger unemployment benefits and direct-aid checks and a sweeping $1 trillion for state and local governments. They also want a fresh round of mortgage and rental assistance and new federal health and safety requirements for workers.
The severity of the prolonged virus outbreak is upending American life. Schools are delaying fall openings, states are clamping down with new stay-home orders and the fallout is rippling through an economy teetering with high unemployment and business uncertainty.
Still, some Republicans said they are unlikely to approve any new aid.
“I just don’t see the need for it,” Sen. Ron Johnson, R-wis., told reporters Wednesday.
Information from The New York Times and The Associated Press was included in this story.