Republicans back stimulus checks but payroll tax cut in question

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Republicans crafting their own plan for a new U.S. virus-relief bill broadly endorsed a fresh round of stimulus checks to individuals, extended supplemental jobless benefits and more money for testing while voicing doubts over President Donald Trump’s desired payroll tax cut.

The details remained in flux Tuesday as GOP senators hashed out their opening bid in negotiations with Democrats on legislation to prop up the hobbled U.S. economy. The differences between the GOP and White House threatens to push any action on the stimulus into August.

Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows started the day saying their goal was to get a stimulus bill out of Congress by the end of next week. But after getting pushback from Senate Republicans on several issues, including the payroll tax cut, they were dialing back expectations.

“I don’t want to put any deadlines on it,” Meadows said before heading to a meeting with House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer.

Mnuchin and Meadows met earlier over lunch with Republican senators, but no outline for legislation emerged. Louisiana Republican Senator John Kennedy said the two Trump advisers discussed a lot of ideas, but “we haven’t reached a conclusion on anything.”

Schumer and Pelosi said the lack of consensus among Republicans means real negotiations cannot start yet to bridge the differences between the GOP plan for $1 trillion stimulus and the Democrats’ proposal for a $3.5 trillion package.

“They are not close to getting ready to negotiate,” Schumer said after the meeting with Mnuchin and Meadows, laying the blame on Trump.

Pelosi said, “their delay is their disarray.”

Trump expressed confidence that a deal would emerge.

“We’re working very hard on it, we’re making a lot of progress,” he said at a White House briefing. “I also know that both sides want to get it done.”

The White House and Congress have only a few weeks to come up with another stimulus before lawmakers take a scheduled August break and the $2.9 trillion flood of federal money passed by Congress earlier in the year begins to dry up.

A linchpin for Republicans is Trump’s insistence on cutting or suspending the payroll tax paid by employers and employees, which funds Social Security and Medicare.

Mnuchin said it would be included in the Republican proposal, but some GOP senators, such as South Dakota’s John Thune, said they remain skeptical.

“I’m not a fan of that,” said Thune, his party’s second-ranking senator. “If it’s a choice between doing checks and payroll tax cut, I think it’s pretty clear the checks actually have a more direct benefit to the economy.”

Although Trump has suggested he might not sign a bill without the payroll tax cut, Mnuchin and Meadows indicated some flexibility in talks.

“I don’t know that in any negotiation that there are red lines but there are certainly high priorities and it will remain a very high priority for the president,” Meadows said. Mnuchin said they were still “in discussions” about the payroll tax.

There were signs of possible compromise on extending the supplemental unemployment insurance that was part of the stimulus measure passed in March and is set to expire at the end of this week.

It gave laid-off workers $600 a week in additional benefits, but Republicans argued it created a disincentive for returning to work in some areas — because unemployed individuals could get more than they earned at their jobs. Some GOP lawmakers have floated lowering the supplement to $200 or $400.

House Majority Leader Steny Hoyer said there would be “some discussion” about how big that amount should be in the next legislation.

“I don’t have a red line,” the Maryland Democrat said. “I have an expectation of what I think is decent policy.”

White House Press Secretary Kayleigh McEnany said the administration favors some type of additional unemployment aid, along with direct checks to individuals and a payroll-tax holiday for “middle and low-income Americans.”

Senate Majority Leader Mitch McConnell said the GOP plan will include a second round of the Paycheck Protection Program for small businesses, but it would be “targeted” to businesses most affected by the pandemic. He said there will be funding to reimburse businesses for the costs of “safe workplaces,” including personal protective equipment, testing, cleaning and remodeling “to protect workers and entice customers.”

There also will be money for some child-care assistance and funding for a vaccine, McConnell said. The Republican plan also will have $105 billion to aid schools in safely reopening.

McEnany said the White House would support funding for “targeted testing,” an apparent shift from the weekend, when the administration had balked at providing additional money for testing and contact tracking. McEnany said there is $10 billion left over from the previous stimulus law for testing and the White House simply wants to ensure any new money is spent wisely.

— With assistance from Laura Davison, Daniel Flatley, Jordan Fabian and Billy House

Bloomberg News