President Trump and Senate Republicans are beginning negotiations with House Democrats on a new round of pandemic fiscal relief. Here are some of the major policies under consideration:
Payroll tax cut
Trump strongly supports providing a payroll tax cut to workers and their employers, but the proposal is not popular with Senate Republicans or Democrats.
White House chief of staff Mark Meadows met with Senate Republicans on Tuesday and said the president is committed to including the payroll tax cut in the next relief bill despite the opposition in the Senate.
Republican John Cornyn of Texas, who advises Senate Majority Leader Mitch McConnell, a Republican from Kentucky, said inclusion of the proposal would be “problematic.”
Democrats also don’t support the measure. Democratic Sen. Ron Wyden from Oregon last week said the tax cut would benefit people who have jobs instead of helping those who are out of work.
“A payroll tax cut would do nothing to help the 20 million workers who have lost their jobs and little for those working significantly reduced hours,” he said.
The measure would also get bipartisan pushback in the House, according to a senior Democratic aide.
“There is bipartisan consensus that a payroll tax cut is not the most effective way to provide relief,” the aide told the Washington Examiner.
$600 enhanced unemployment payments
A major question looming over talks about fiscal relief is the fate of the $600 enhanced unemployment benefit that expires at the end of this month.
McConnell has publicly stated that he will not extend the $600 payment in the next relief bill, but the White House supports extending the program at a lower amount.
“We’re going to make sure that we don’t pay people more money to stay home than go to work,” Treasury Secretary Steven Mnuchin said on Monday.
The $600 payment has come under fire by Republican lawmakers because many workers who receive it get more from unemployment than they did at their prior job.
On average, unemployment benefits across the country were $385 per week in February 2020, according to the House Ways and Means Committee. When combined with the added benefit, jobless workers receive nearly $1,000 a week. The median salary for a grocery store cashier, an essential worker, is roughly $600 a week, according to Salary.com.
The White House would like to see the payment reduced to between $200 and $400, but it is not clear whether McConnell would support the provision at a lower payout.
House Democrats passed legislation extending the $600 payment through January of next year. However, Speaker Nancy Pelosi, a Democrat from California, last week signaled a willingness to be flexible on the payment amount. Its size could be reduced if the finalized bill includes direct stimulus payments to individuals and families, according to the speaker.
State aid
Democrats are eager to help states and cities, which have seen their budgets crushed by the pandemic, and face the prospect of mass layoffs of public workers.
The Republican Senate is not expected to include additional aid to state and local governments in its next relief bill.
Senate Republicans are concerned that state and local governments might use the money for non-virus issues, such as shoring up pension funds.
Trump, however, endorsed the idea of more relief last month. “We’re set up to do more if we want. I think we should because we are dominant,” he said at the White House.
Vice President Mike Pence in June said that the White House is open to providing aid to state and local governments in the next relief package as long as the funding goes to coronavirus-related expenses.
Without additional aid, 4 million jobs could be lost, according to a June report by Moody’s Analytics.
House Democrats approved nearly $1 trillion in state and local aid in the bill they passed in May. Moody’s states that this dollar figure is too high and projects that $500 billion in aid would be required. It also warns that doing nothing could shave 3% off of real GDP on an annual basis.
Testing
McConnell said on Tuesday that his legislation would provide funds for additional testing, but he did not disclose the amount.
The Senate proposal is very different from what the administration wants, which is to cut or totally eliminate the funds for testing.
Trump doesn’t want to provide more funding because states have yet to spend all the money allocated for testing in the CARES Act, which was enacted in March.
Also, Trump said additional testing would be “creating trouble” because the number of cases would likely increase in an interview with Fox News on Sunday.
Trump used his speech in Tulsa, Oklahoma, on June 20 to call for reductions in testing.
Trump will have a hard time forcing his position on this issue since the House in May approved $75 billion for testing, contact tracing, and isolation measures for people infected by the disease and forced into quarantine.
Some GOP senators have reportedly been angered by Trump wanting to erase funds for testing and are pushing to ensure that the money stays in the bill.
Relief checks
McConnell, on Tuesday, said his bill would include stimulus checks, but he did not say who would be eligible for them.
In the past, the majority leader has said his bill would provide a stimulus payment to people earning under $40,000. This figure is less than what was approved as part of the CARES Act in March. That package provided a one-time $1,200 payment for people who earned up to $75,000. Those earning more than this amount received a partial payment, which phased out at $99,000.
Trump has recently remarked that he is open to another round of stimulus payments. Democrats also support such payments and included in their bill that passed their chamber in May a $1,200 stimulus payment to individuals that topped at $6,000 for households.
Of all the differing positions between the White House, Senate, and House, this provision appears to be the easiest to settle since all three agree on providing some level of payment to individuals.
Liability protections
McConnell is expected to include a five-year liability shield for businesses in his bill. The measure would protect businesses, hospitals, and schools from lawsuits related to the coronavirus. It is expected to be narrowly focused to weed out establishments that act negligently from being protected. The coverage would begin in December of 2019 and last through 2024.
The president supports McConnell’s proposal. Democrats do not.
The Republican Senate and Democratic House don’t have a lot of time to reach a bicameral agreement on the next relief bill. Both chambers are bumping up against a monthlong break, with the House scheduled to leave town on July 31 and the Senate on Aug. 7.
