President Donald Trump’s push for some form of yet to be fleshed out payroll tax holiday is stumbling out of the gate as lawmakers and the White House try to cobble together a quick stimulus package to help those adversely affected by the COVID-19 illness’ spread.
Trump, Vice President Mike Pence and top administration officials met with Senate Republicans at their weekly policy luncheon Tuesday to discuss tax cuts and other measures he pitched at a briefing Monday night, such as paid leave for hourly workers forced to stay home. Senate Republicans have taken a wait-and-see approach, deferring to the White House.
[Congress ‘struggling’ with questions of office logistics, travel and hygiene]
Senators emerging from the meeting voiced only tepid backing for cutting payroll taxes or other large-scale stimulus measures, however. “The payroll tax as a general stimulus: I’ll have to think about that,” said Lindsey Graham, R-S.C., a top Trump ally. “I don’t know if that’s the best way to do it.” Added Graham: “The president is pushing it. I’ll have to sit down and think.”
Others said they wanted more information first, including how much a payroll tax cut would cost and how long it would be in effect.
In 2011 and 2012, Congress and the Obama administration enacted a 2 percentage-point cut in workers’ share of the Social Security tax, which is borne by employers as well, at a roughly $120 billion cost per year. That cost would likely rise now that earnings subject to the tax have risen over the past eight years.
The top House Republican didn’t appear ready to embrace a broad new tax cut yet, either.
“Well, we’re looking at a number of measures,” House Minority Leader Kevin McCarthy, R-Calif., said Tuesday. “Remember, we have a very strong economy, very low unemployment, but we want to look at is there a surgical way that those who are hurt — hourly wages and others — is there an ability to help to keep the economy moving as strong as it is today.”
Speaking to reporters after the luncheon, Trump claimed “tremendous unity in the Republican party” for his stimulus initiative. But he didn’t mention specific proposals other than to say airlines and cruise lines that have taken a hit due to lost travel bookings should receive some help. “There’s a great feeling about doing a lot of things, and that’s one of the things we talked about,” Trump said when asked specifically about a payroll tax cut.
One Senate Republican that’s embraced a payroll tax holiday is Steve Daines of Montana, who this week drew a potentially tough Democratic rival in his November reelection campaign. Montana Gov. Steve Bullock, an erstwhile presidential contender, said he would challenge Daines.
For now, House Democrats look set to pursue their own separate track with an aid package that doesn’t include tax cuts but instead focuses on items like paid leave, extended unemployment insurance, nutrition assistance and funding to cover medical tests for those who can’t afford them, among other items. Speaker Nancy Pelosi, D-Calif., said the goal was to introduce a bill this week and pass it if there’s time before leaving for recess.
Senate Majority Leader Mitch McConnell, R-Ky., said that Treasury Secretary Steven Mnuchin, who has been the administration’s point man on recent budget deals, will negotiate directly with Pelosi. “They work well together,” McConnell said. “We’re hoping he and the speaker can pull this together so we’re not playing partisan games.”
Mnuchin met with Pelosi for about 30 minutes in Pelosi’s office after the Senate GOP luncheon.
Republicans and Democrats alike have expressed an interest in helping workers who lose out on pay from being stuck in quarantine or other measures imposed on them through no fault of their own. There’s also bipartisan interest in providing meals to children who would otherwise receive free and reduced price lunches at school if they’re forced to stay home.
Pence also told Senate Republicans that Medicare, Medicaid and private insurers have agreed to cover medical testing for those without health coverage, according to attendees.
Don’t panic?
Senate Appropriations Chairman Richard C. Shelby, R-Ala., said many Republicans don’t have much appetite for an Obama-style stimulus package, which Shelby said “wasted a trillion dollars.” He said he could back a major infrastructure package, but that generally, “I don’t think we should panic right now.”
Senate Majority Whip John Thune, R-S.D., told reporters Tuesday morning that he won’t rule out supporting a stimulus plan that includes paid sick leave. “At this point, I’m not ruling anything out,” Thune said. “Obviously, whatever we do, there has to be a really good rationale for it. And I’m going to make sure that we’re doing the types of things that’ll help ease the economic impact of the virus and hopefully get us through to a better time.”
Thune declined to predict a timeline for when a stimulus package might move forward, but said he should know more following a midday briefing from White House economic officials. “We’ll hear from them and take it from there,” he said.
On the Democratic side, lawmakers haven’t embraced the concept of either a payroll tax cut or tax rebate checks such as those enacted under President George W. Bush in 2008 (PL 110-185). Some prominent Obama-era economic officials have endorsed the latter, but sending out checks worth $500 or $1,000 or some other figure doesn’t seem to be in the mix for the aid package Democrats want to introduce this week.
“The administration seems to believe that the answer to any problem is another tax cut,” Senate Minority Leader Charles E. Schumer, D-N.Y., said on the floor. “But this is a health care crisis. It demands a health care solution.”
Rep. Stephanie Murphy, D-Fla., a Ways and Means member and leader of the moderate Blue Dog Coalition, said she questions the effectiveness of a broad-based tax cut at this time. “The demand isn’t there,” she said after a meeting of Ways and Means Democrats. “This virus is creating a demand-side issue by suppressing peoples’ desire to go out and spend money, travel, or even make investments in the face of uncertainty.”
Ways and Means members discussed options including paid leave, aid to overstretched local governments, extended unemployment insurance and other policy levers like a moratorium on water service cutoffs by local utilities. Lawmakers say constituents told to repeatedly wash their hands are using more water than they typically do, leading to higher bills.
Rep. Nydia M. Velazquez, D-N.Y., chairwoman of the House Small Business Committee, which was holding a hearing Tuesday on small businesses being impacted by supply chain problems, said a $7 billion disaster loan program included in last week’s emergency funding package (PL 116-123) probably can’t be expanded further. But she said states could be given more money to help small businesses with bridge loans or grants.
Airlines, cruise lines
There is some bipartisan backing for aid to travel industries affected by customers choosing to stay home instead of expose themselves to other passengers who may have come in contact with the virus.
Rep. Donna E. Shalala, D-Fla., whose district is home to 150,000 cruise industry jobs from Royal Caribbean, Carnival and Norwegian, said she worries more about the cruise industry than the airlines, because “the airline industry has a bit more cash.”
Rep. Rick Larsen, D-Wash., chairman of the House Transportation Committee’s Subcommittee on Aviation, said while he’s in nearly constant talks with the airlines, they have not yet asked for a specific type of stimulus. “I think it’s probably a three- to six-month time frame in terms of impact on the airlines,” he said.
Commerce Secretary Wilbur Ross told appropriators at a House hearing Tuesday that aid to specific industries might wait until after the next round of aid is enacted.
“The first obligation of the administration is to protect the American public,” he said. “Once that has been done, we can deal with the differential impact on different industries.”
Niels Lesniewski, Jennifer Shutt, Katherine Tully-McManus, Chris Marquette, Jessica Wehrman and Michael Macagnone contributed to this report.
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