Trump Dumps Bid for Payroll Tax Cut

By Yuval Rosenberg

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.”

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.

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.”

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.

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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