Trump demands payroll tax cut in relief bill
GOP eyes slash to unemployment benefits with previous assistance set to expire soon
President Donald Trump sought to draw a hard line on the coronavirus relief bill Sunday, saying it must include a payroll tax cut and liability protections for businesses, as lawmakers prepare to plunge into negotiations over unemployment benefits and other key provisions in coming days.
“I would consider not signing it if we don’t have a payroll tax cut,” Trump said in an interview on “Fox News Sunday.” Democrats strongly oppose a payroll tax cut, and some Republicans have been cool to it, but Trump said “a lot of Republicans like it.”
Trump also said “we do need some kind of immunity” in the bill. Senate Majority Leader Mitch McConnell, R-Ky., has repeatedly insisted the legislation must include liability protections for businesses, health care providers, schools and others. Democrats oppose this, too.
Trump downplayed the spikes in coronavirus infections nationwide, arguing they are because of high levels of testing, something health experts in his own administration dispute. He also argued the economy is “expanding and growing beautifully,” blaming Democratic governors for shutdowns he insisted were designed to hurt him in November.
Trump’s comments come as
Senate Republicans are exploring new limits on emergency unemployment benefits for people who were high earners before losing their jobs, according to two people who spoke on the condition of anonymity to discuss details of internal planning.
If the White House and Senate GOP priorities make it into the bill, the legislation would effectively cut taxes for people who have jobs while cutting benefits for the unemployed.
Plan coming this week
McConnell is expected to introduce an approximately $1 trillion stimulus bill in coming days that will include a limited extension of the federal unemployment benefits approved by Congress in March. Those benefits are set to expire as soon as this week.
Republicans are seeking to curb the current infusion of federal spending on unemployment benefits as they try to constrain the overall cost of the relief package, which is likely to include expensive priorities such as state aid and school funding, among other urgent policies to deal with the pandemic.
With a substantial number of conservative Republicans wary of spending too much additional federal money, GOP lawmakers have discussed proposing the federal benefit be cut from an additional $600 per week to between $200 per week and $400 per week. McConnell is expected to release the legislation this coming week.
McConnell and House Minority Leader Kevin McCarthy, R-Calif., will meet Monday to discuss the emerging legislation with Trump and Treasury Secretary Steven Mnuchin, White House chief of staff Mark Meadows said Sunday.
“It looks like that, that new package will be in the trillion-dollar range, as we
have started to look at it, whether it’s a payroll tax deduction, whether it’s making sure that unemployment benefits continue, without a disincentive to return to work,” Meadows said.
House Democrats passed a bill in May that would extend the $600-per-week threshold through January. That bill would increase spending by roughly $3 trillion, and Trump threatened to veto it.
White House officials and GOP lawmakers have argued the current benefit creates a disincentive to work and must be phased out because they say Americans could make more money while collecting unemployment than in the workforce.
Democrats and many economists have called for extending the $600-perweek increase to pump money into the economy and provide a financial lifeline for more than 30 million households.
Another stimulus check?
One idea discussed by Republican policymakers is to eliminate or curb the amount of additional federal unemployment benefits allocated to people who earned above a certain income threshold before losing their jobs. Exactly what that number could be remains unclear. Republicans are exploring similar measures to target another round of $1,200 stimulus payments for those toward the bottom of the income distribution, although it’s unclear how that would combine with Trump’s insistence on a payroll tax cut.
Limiting unemployment benefits to those further down the income distribution would help the GOP bring down the overall price tag of their bill. It could also raise new complications for the state unemployment offices that have already been overwhelmed by the complexity of getting funding out to an unprecedented surge of jobless Americans.
The weekly payment to workers will depend on the overall amount devoted to
unemployment benefits in the bill. GOP lawmakers have considered spending between $200 billion and $300 billion toward unemployment benefits through the end of the year in the coming stimulus package, according to one of the people who spoke on the condition of anonymity.
Multiple other issues also remain to be fought out in the coming three weeks McConnell has designated for crafting what will likely be the final major coronavirus relief bill before the November election. The first four bills — totaling around $3 trillion — passed nearly unanimously in March and April, but McConnell has acknowledged that negotiations on the upcoming package will be much more difficult as partisan tensions mount with the election approaching.