The measure would include more than $500 billion in “general stimulus,” a congressional aide said, or direct tax cuts for households, which could take the form of payroll tax cuts or some other mechanism. An additional $200 billion would be for expanded loans to small businesses, plus some $50 billion in aid to the cash-strapped airline industry.
Treasury Secretary Steven Mnuchin plans to discuss the proposal Tuesday at Senate Republicans’ weekly policy lunch. Both the administration official and congressional aide spoke on condition of anonymity to discuss plans that haven’t been made public yet.
President Donald Trump has been seeking a payroll tax holiday through the end of the year. Various iterations have been discussed, ranging from total elimination of the 6.2% tax paid by workers and employers, at a roughly $800 billion cost, to smaller cuts in just the workers’ share of the tax.
“That holiday would be through the end of the year, and I’m reluctant to price it out. It won’t be less than $400 billion,” White House National Economic Council Director Larry Kudlow said Monday. “There’s always bickering about cost.”
Democrats have said a payroll tax holiday would be poorly targeted, deliver bigger tax cuts to higher-income workers and leave out retirees, tipped workers and those who are unemployed.
Another option promoted by some Democratic economists as well as by Sen. Mitt Romney, R-Utah, is a $1,000 tax rebate to all Americans. Mnuchin has said the administration would consider alternate forms of tax relief.
“The president wants to get economic relief to the right people. The payroll tax is one way of doing it, and he likes that,” Mnuchin told Fox News’ Chris Wallace on Sunday. “The president is also willing to consider refundable tax credits, which in essence are another way of getting money to people. That has certain advantages of we can inject money really quickly.”
Meanwhile, the airline industry has been bleeding cash at a rapid clip due to canceled bookings. United Airlines, for example, announced it would take a $1.5 billion revenue hit this month compared to the same time last year.
The main trade group for U.S. airlines on Monday released a wish list consisting of over $60 billion in cash grants, loans and tax relief for passenger and cargo carriers, dwarfing the $15 billion airline bailout enacted after the Sept. 11 terrorist attacks.
As part of the administration request, the Department of Veterans Affairs wants $16.6 billion in supplemental appropriations, which would be used for medical care and infrastructure changes in anticipation of a potential 20% increase in patient care related to COVID-19, congressional aides said.
Combined, such a package would be larger than the 2009 stimulus package, which at the time the Congressional Budget Office estimated would cost $787 billion, not counting interest payments on the debt.
Mnuchin also said he plans to discuss the smaller economic aid package passed by the House early Saturday morning and then revised Monday night with, among other changes, expanded tax credits for small businesses that would be required to offer paid leave. The Joint Committee on Taxation said those tax credits would offset about $105 billion in wages that otherwise wouldn’t be paid.
But a broad coalition of business groups wrote to Senate leaders Monday arguing instead for direct government aid to workers forced to stay home due to illness or to care for family members. They said some companies won’t be able to stay afloat if they have to pay workers for up to 12 weeks of leave, even at reduced pay and with tax credits to defray the cost.
Critics also say the bill’s exemption for companies with 500 or more employees will give huge corporations a pass from the requirement and leave millions of workers without paid leave. Sen. Tom Cotton, R-Ark., said Monday the House bill couldn’t pass the Senate as currently drafted, though that was before changes were unveiled late Monday.
It was possible the two packages — the smaller bill and the much larger measure currently under discussion — could be combined into one and sent back to the House. Democratic leaders in that chamber told the rank-and-file Monday that they won’t come back from recess until a bigger coronavirus aid bill is ready for consideration.
A Senate GOP aide said Republicans would discuss whether to try to pass one giant bill or keep them separate at lunch Tuesday with Mnuchin.
On the floor Tuesday morning, Senate Majority Leader Mitch McConnell, R-Ky., said his chamber won’t recess until it passes a broader stimulus package.
“It’s my intention that the Senate will not adjourn until we have passed significant and bold new steps above and beyond what the House has passed to help our strong nation and our strong underlying economy weather this storm,” McConnell said.
McConnell said Senate Republicans will continue working with the White House to provide “direct assistance to American workers and families,” take steps to ensure the nation’s “economic foundation, especially small businesses,” and continue providing aid to medical professionals.
Senate Minority Leader Charles E. Schumer, D-N.Y., has outlined what he says is much as $750 billion in economic assistance, but more targeted at government programs and cash assistance to households rather than tax cuts. Speaking on the floor Tuesday morning, he sought to discourage Republicans from amending the House-passed coronavirus package.
“If we change the bill, it will go back to the House, be delayed and delay the aid it contains for American families coping with the impact of the virus,” Schumer said. “We will have other opportunities to legislate. And there will be a great need for them, but let’s move this now.”
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