| | | GOP Delays Rollout of Coronavirus Stimulus Plan; Trump Dumps Bid for Payroll Tax Cut
The White House and Senate Republicans failed to reach final agreement Thursday on their proposal for a coronavirus relief package, forcing them to delay a planned rollout of the legislation even after administration officials dropped their demand for a payroll tax cut.
Treasury Secretary Steven Mnuchin told reporters that the negotiators had a “fundamental agreement” on a deal but that the legislative text of the proposal still had to be finalized. Other policy disputes reportedly had yet to be hashed out as well, with differences over the extension of federal unemployment benefits a primary sticking point.
Speaking from the Senate floor on Thursday afternoon, Senate Majority Leader Mitch McConnell said that Republicans had “assembled the framework” of their package but that the administration requested additional time to review the details. “We have an agreement in principle on the shape of the package,” McConnell said, adding that Republicans would lay out their plan in a series of bills “early next week.”
In an indication of the fragile state of negotiations, the White House had earlier floated the possibility of breaking the package into smaller bills focused on just three elements: keeping enhanced unemployment benefits in place, funding for school reopenings and protecting businesses against coronavirus lawsuits. That idea was shot down quickly by both parties. “No, no, no,” House Speaker Nancy Pelosi said. “This is a package. We cannot piecemeal this.”
The Washington Post reported that the White House also complicated the talks by renewing a push for language related to the location of the Federal Bureau of Investigation building in downtown Washington, D.C., which is catty-corner from the Trump International Hotel. “It was unclear what this had to do with the coronavirus. A White House spokesman declined to comment,” the Post reported.
The GOP scramble leaves the fate of the broader deal — and the $600 weekly unemployment benefits that have provided a lifeline for millions of Americans — still in some doubt. Politico’s John Bresnahan and Marianne LeVine called the GOP delay “an embarrassing setback that could have serious consequences for millions of unemployed Americans.”
The key parts of the GOP plan: We'll have a more complete breakdown once the plan is released, but the emerging proposal, expected to come in at a cost of about $1 trillion, is reportedly set to include another round of $1,200 stimulus checks just like those provided in March. It would also replace the expiring unemployment benefits with scaled-back payments equivalent to 70% of workers’ previous wages, which reportedly would work out to roughly $200 a week. And it would provide $105 billion for education, including $70 billion for elementary and secondary schools, with half of that tied to schools reopening classrooms. Of course, it would also include the liability shield for businesses.
The plan would not provide large-scale aid for state and local governments, but would allow them more flexibility in using the $150 billion allocated in March and add $16 billion in new funding to improve coronavirus testing. The Paycheck Protection Program of loans to small business would reportedly receive another $90 billion.
Roll Call reports that the plan would also set up "rescue committees" charged with overhauling the government’s Medicare, Social Security and highway construction trust funds.
No payroll tax cut: The White House dropped its demand to have a payroll tax cut included in the package after the idea met continued resistance from key Senate allies. “The president is very focused on getting money quickly to workers right now, and the payroll tax takes time,” Mnuchin told reporters. He said the administration still believes the tax cut is a “very good pro-growth policy.”
The president had been pushing for the cut and had said in an interview on Sunday that he would consider not signing the relief bill if it didn’t include the tax cut. In a tweet Thursday, Trump tried to lay the blame for the tax cut being dropped at Democrats’ feet: “The Democrats have stated strongly that they won’t approve a Payroll Tax Cut (too bad!). It would be great for workers. The Republicans, therefore, didn’t want to ask for it. Dems, as usual, are hurting the working men and women of our Country!” But The Washington Post reports “it was Republicans who actually shot the idea down.”
Mnuchin told CNBC that there could be still another coronavirus relief package that might include a payroll tax cut. Senate Majority Leader Mitch McConnell has said this package will be the final one to address the pandemic.
This was supposed to be the easy part: Republicans haven’t even started to negotiate with Democrats, and the two sides remain trillions of dollars apart. The GOP’s inability to reach consensus on their proposed starting point for those talks doesn’t bode well for that next stage, which is likely to be even more challenging.
Democratic leaders blasted the Republicans for their failure to come together on a proposal and for failing to provide funding for food assistance, rental assistance (as a federal eviction moratorium is set to expire), more aid to state and local governments or hazard pay for essential workers, among other elements.
“They have been so divided, so disorganized, so unprepared that they have struggled to even draft a partisan proposal within their own conference,” Senate Minority Leader Chuck Schumer (D-NY) told reporters, noting that he and Pelosi had urged their counterparts to start negotiations weeks ago. “Even after all this time, it appears the Republican legislative response to Covid is un-unified, unserious and unsatisfactory.”
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| Jobless Claims Rise for First Time in Months as Lawmakers Battle Over Payments
More people applied for unemployment benefits last week than the week before, the first time jobless claims have increased on a weekly basis since March.
The 1.42 million claims for the week ending July 18 — an increase of 109,000 from the week before — raise fears that the labor market recovery in May and June, when roughly 7 million jobs were added to the economy, has run out of gas. Applications for Pandemic Unemployment Assistance, which provides aid to workers who are usually ineligible for benefits, also rose last week, to 975,000.
The number of people receiving some kind of unemployment aid remains near highs recorded in June. According to economist Heidi Shierholz of the Economic Policy Institute, 34.3 million workers are either receiving benefits or waiting to learn the results of their applications for assistance.
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| | A July swoon? A recovery tracking index at Oxford Economics fell slightly last week as indicators softened. “While the rebounds in retail sales, employment, and industrial production through June were alluring, policymakers should not fall under the spell of rear-view-mirror economics,” Oxford analysts said Thursday. “As of mid-July, the economy is emerging quite frail from its first rehabilitation phase, and the risks of a renewed downfall are real.”
Robert Brusca, an independent economist quoted by Bloomberg News, said Covid-19 played a central role in the increase in job losses. “Because of resurgence of the virus, a lot of firms that thought they were going to be opening up are instead not opening up,” Brusca said. “While parts of the economy are still recovering, doing better, there are substantial parts, like in the service sector of the economy, that are really feeling the pain.”
Economist Andrew Husby told Bloomberg that while seasonal factors may have influenced the latest data, conditions have been deteriorating for several weeks. “The results reinforce the current high stakes as Congress negotiates the next aid package, including enhanced jobless benefits due to expire next week,” Husby added.
Unemployment benefit boost running out: The $600 per week in additional unemployment benefits provided by Congress in March run out at the end of the month, with the final checks for most beneficiaries going out this week. Democrats passed a bill in the House that would extend the payments into next year, but Republicans want to cut the payments and, as we noted above, are still debating how to handle the issue.
Mnuchin told CNBC that Republicans will propose to replace the $600 weekly payments with a smaller amount based on 70% replacement of worker earnings. It’s not clear, however, that state unemployment offices are capable of handling that sort of approach — the flat $600 benefit was passed in March in part because of concerns about states’ abilities to handle anything more complicated — and Mnuchin said they would have a "backup plan” if a solution cannot be worked out.
Democrats said they would continue to push for the higher level of support for the unemployed. House Majority Leader Steny Hoyer (D-MD) said Thursday that the 70% wage replacement proposal is not “the policy we ought to pursue.” However, he also said that said that the plan is “not a dealbreaker.”
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Senate Passes $740 Billion Defense Bill, Despite Trump Veto Threats
The Senate passed the National Defense Authorization Act Thursday, just a few days after the House passed its own version of the same bill. The Senate NDAA authorizes defense spending of $740.5 billion in the 2021 fiscal year, including $636.4 billion for the Defense Department’s base budget and $69 billion for the Overseas Contingency Operations account, which is used for war fighting, among other things.
Like the House version, the Senate NDAA contains language calling on the Pentagon to change the names of military bases named after Confederate leaders from the Civil War. The bill lays out a plan to “remove all names, symbols, displays, monuments, and paraphernalia that honor or commemorate the Confederate States of America ... or any person who served voluntarily with the Confederate States of America from all assets of the Department of Defense.”
Trump has threatened to veto the bill due to the renaming provision.
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| Quote of the Day
“We’re spending a lot of money on massive testing, and I’m okay with it. The experts are saying it’s a good thing to do. But we’ve done 50 million tests and India, pretty big country, 1.4 billion people, they’ve done, uh, one third of the number of tests that we’ve done, one fourth of the number of tests that we’ve done. So I’m okay with it if they want to do it, but again, it makes us look bad, but they say it’s good. I don’t mind looking bad it it’s a good thing. But think of it – if instead of 50 million we did 25 million, we’d have half the number of cases. The cases would be down. Here would be the normally headline – not for me it wouldn’t be, but for anybody else: they’d say, ‘Cases cut in half.’"
– President Trump, in an interview with Fox News
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| | | | | | | - The Open Secret to Reopening the Economy – Anne O. Krueger, Project Syndicate
- The Economy Needs an Injection From Congress, Stat – Mark Gongloff, Bloomberg
- Why Economists Don't Like the Idea of a Payroll Tax Cut – Dion Rabouin, Axios
- We’re All in Big Trouble Without Renewed Jobless Benefits – Noah Smith, Bloomberg
- Pfizer Vaccine Deal at $20 a Dose Sets Ceiling for Rivals – James Paton et al, Bloomberg
- Congress’s Steadfast and Stupefying Refusal to End Surprise Billing – Libby Watson, New Republic
- Congress Needs to Revitalize the Supplemental Security Income Program for the Elderly – David A. Weaver, The Hill
- Thanks to the PPP, Small Business Owners Could Face a Huge Tax Bill This Year – Gene Marks, The Hill
- Publicly Funded Vaccines Must Be Priced Fairly and Available for All – Dr. Jonathan Fielding, The Hill
- Is Trump on Track for an October Vaccine Surprise? – Adam Cancryn, Politico
- The Fed May Not Recognize Inflation Until It's Too Late – Tim Duy, Bloomberg
- God Help Us if Judy Shelton Joins the Fed – Steven Rattner, New York Times
- Congress Must End Blank Check to Use on Government Farm Subsidies – Vincent H. Smith and Joseph W. Glauber, The Hill
- Republican Feuding This Week Represents Broader Reckoning Over Party’s Future as Trump Sinks in the Polls – Seung Min Kim and Rachael Bade, Washington Post
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