With a resurgence of the coronavirus threatening a nascent rebound of the U.S. economy, the White House and Congress are under increased pressure to come to terms on another round of stimulus.
Thursday’s Labor Department report, which showed a bigger than expected increase of 4.8 million jobs in June, didn’t lessen the sense of urgency for another round of stimulus in Washington. The report is a snapshot of economic conditions in the middle of the month, before business reopenings screeched to a halt amid rising virus cases around the country.
“Our work is not done,” Treasury Secretary
Negotiations won’t begin in earnest until the Senate returns from recess on July 20. Senate Republicans want to wrap up legislation by the end of the month, though it could spill into August.
But what the next stimulus bill will look like remains an open question. House Democrats packed a comprehensive list of demands into a $3.5 trillion measure passed in May. Senate Republicans have dismissed that plan and are discussing a package of as much as $1 trillion in total spending.
Most of the discussion in Congress and the Trump administration about the next round of relief has focused on several key items: Additional aid for businesses and the unemployed; another round of checks to individuals; liability limits for employers; health care and infrastructure funding; and aid to state and local governments.
Here’s the state of play on the leading proposals:
There already is plenty of bipartisan support for the Small Business Administration’s Paycheck Protection Program, which is designed to forestall job cuts at small businesses struggling during the pandemic.
Senate Small Business Committee Chairman
Mnuchin said the administration would work with the House and Senate to “repurpose” about $130 billion in remaining PPP money. “There are going to be a number of businesses that are particularly hard-hit, and we’ll be looking to give those businesses additional money.”
The next phase of pandemic relief “will be much more targeted” for businesses that continue to struggle, Mnuchin said.
There are also proposals for tax incentives to stimulate demand such as for travel and restaurant meals. Trump has said he favors such incentives, including cutting the payroll tax, but diving into tax law would complicate the legislation.
The most difficult talks will be over whether to extend a $600-per-week boost to unemployment benefits approved by Congress in March that expires July 31. Democrats have sought to extend it into next year with possible phase-outs linked to improving state economic numbers.
Congressional Progressive Caucus Chair
But Republicans contend that in many parts of the country, the boost is providing a perverse incentive for workers to remain unemployed since they earn more when out of work.
Senate Majority Leader
The White House has pushed back on an extension. “We don’t like the $600 plus-up on unemployment, it’s a disincentive to work,” Trump’s top economic adviser
Some Republicans suggest that one possible solution could be to cut the added amount to $200 or less.
“The way forward is some kind of compromise. The amount was just way too much,” said North Dakota Senator
As a counter-point, Senate Minority Leader
Republicans are showing openness to another round of direct payments to individuals. House Democrats in their May bill proposed repeating the $1,200 payments to individuals making less than $75,000 per year, with as much as $6,000 per family.
Mnuchin said Thursday that the talks would “seriously consider” a new round of direct payments. Asked what the current need is among American families, he replied: “I think it’s too early to tell, and that’s the reason why we’re waiting.”
Trump on Wednesday endorsed the idea, telling Fox Business, “I want the money to get there quickly and in a non-complicated fashion.” And the amount, he said, should be larger than what Democrats have proposed, though he wasn’t specific.
That aligns him with liberal Democrats, who have also proposed government-funded hazard pay for essential workers and direct housing assistance, which should ease the way for it to be included.
Yet some of Trump’s most conservative allies like
The employer liability shield that McConnell calls his “red line” in stimulus negotiations will be contentious in negotiations with Democrats.
Employers could look to the best available guidance, whether it be from the federal Centers for Disease Control and Prevention or a different federal, state or local governmental entity. Cornyn said there are conflicts among the safe-practices guidelines available to employers, and that companies should be allowed to make their own determination.
The White House also is behind liability limits, with Mnuchin citing it again Thursday as a priority.
State and Local Aid
Democrats in both chambers say state and local governments need about $1 trillion in aid, about the same amount Republicans say they’re willing to spend on an overall stimulus plan. They are backed by many governors and mayors, who’ve warned that millions of public employees, including essential workers, could lose their jobs because tax revenue has fallen while expenses have risen.
Republicans, particularly McConnell, have suggested such aid would amount to a gift to Democratic-led states that were facing budget pressures even before the pandemic.
The White House has opened the door to some state aid, specifically for expenses directly related to the pandemic, but has indicated it doesn’t want the measures to turn into a rescue for states with pre-existing financial pressures, such as pension shortfalls.
“I don’t think the Republicans want to be in a position where they bail out states that are, that have been mismanaged over a long period of time,” Trump told the New York Post in May.
Mnuchin said Thursday that he’d consider including state and local aid.
Health Care and Infrastructure
The bill is likely to have some provisions to finance direct efforts to fight the Covid-19 pandemic but the shape of that is very much in dispute. Pelosi has called for a massive expansion of testing and contact tracing as well as a national response plan, and the House bill has $75 billion for this effort.
“We are going to be asking what kind of money do you need once you have vaccines particularly and tests and therapeutics as well that they are generally free and fairly available to people,” he said.
Portman said the recent jump in cases in many states has more Republicans embracing the idea of a strong infusion of funds into health care. “There’s a realization that we need to do more,” he said.
While there has been much enthusiasm -- expressed by Trump and others -- of putting infrastructure spending in the next round of virus relief, that is appearing less and less likely to be included. Some Republicans argue the economic benefits of spending on projects such as roads and broadband would be too slow to give the economy the quick jolt needed.
Mnuchin also said they’ll consider funding for schools.
“We want to make sure that kids are safe,” he said, adding he thinks most schools will be able to reopen safely. “If there is money that schools need to spend to safely have people in classrooms, social distance, spread things out, change hours, these are all the things we’re looking at.”
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