A fifth round of coronavirus stimulus is likely on the way. However, the White House and Republicans have very different views on how to move forward with the GOP proposal.
Senate Republicans planned to release their proposal for another coronavirus relief bill on Thursday. However, they scrapped the release after disagreements with the White House knocked the project off schedule. Now, GOP lawmakers say they will release their proposal next week. This gives the Republicans time to work out their differences over the weekend.
The postponement makes the compressed legislative agenda even more urgent. Congress is set to go into yet another recess after the first week of August, and expanded unemployment benefits are set to expire on July 31. Many lawmakers are hoping to pass a new round of relief before that deadline expires. Although, with less than a week left until the deadline, it’s going to be a tight squeeze.
The Cause of Discord in Stimulus Talks
Most of the discord between the president and legislators centers around expanded unemployment benefits and cash direct payments. The unemployment issue has drawn particularly strong criticism because it pays most recipients more money than they make at work. As a result, many economists believe the expanded benefits are encouraging Americans to stay home and collect unemployment as long as they can.
Republicans agree that the time has come to taper down the expanded benefits. However, they’re still working to hammer out the specifics. Treasury Secretary Steve Mnuchin said the Trump Administration is proposing a 70% wage replacement to replace the current $600 flat-rate system.
A percentage-based wage replacement would prevent recipients from collecting more benefits than they earn at work. Therefore, it seems like a logical approach. However, Democrats argue that it’s not a viable option. Labor Secretary Eugene Scalia has previously indicated that swiftly transitioning to a percentage-based wage replacement policy is not feasible. However, the Senate plan calls for an interim flat-rate benefit of $200 to ease the transition to the new system.
The Senate Plan
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The Senate plan proposes adding a 50% federal benefit on top of each state’s weekly payment rate. For example, if state benefits cover half of the recipients’ lost wages, the federal benefit would bring the total to 75%. This also seems like a more economically viable option than the current flat-rate system. Although, it’s slightly more generous than the White House plan.
Mnuchin said the GOP proposal also includes another round of direct payments. However, Democrats are pushing to expand the distribution pool. The Democrats included college students, adult dependents, and noncitizens in their proposal, but the Republican plan will likely not go too far outside the limits of the first payment. However, an inside source told the Wall Street Journal that the Republican plan will probably include adult dependents as a slight concession. Democrats were also hoping to expand the benefit for qualified dependents to $1,200, but the Republican plan will likely hold steady with a $500 rate for dependents.
No Payroll Tax Cut?
The Republican plan will not include the payroll tax cut that President Trump had been pushing for, but Mnuchin said it’s because the president had a change of heart. “[President Trump] wants to get money into people’s pockets now because we need to reopen the economy,” Mnuchin said. “One of the issues, I think you know, about the payroll-tax cut is, people get that money over time. So, the president’s preference is to make sure that we send out direct payments quickly.”
Trump told reporters on Thursday that he would have liked to include a payroll tax cut, but he didn’t think it would pass the Democrat-controlled house. “I think a payroll tax would be good, but you’re not going to get from it the Democrats,” said Trump.
The disorganization is not a good look for the Republicans. Democrats and mainstream media are having a field day attacking them for the delays, and that’s the last thing the GOP wants with an election just a few months away. Republicans need to get their act together and put out a responsible stimulus plan before the recess, or Democrats will use the shortfall as political ammunition for months to come.
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