Pelosi-Mnuchin Talks Open Sprint for a Last-Chance Stimulus Deal
(Bloomberg) -- Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi will kick off a first round of negotiations on the next virus relief plan even as Republicans are still hashing out an agreement among themselves.
With the pandemic surging across the country and economic data pointing to a stalled recovery, Pelosi and Mnuchin are scheduled to meet Tuesday afternoon, along with Senate Democratic Leader Chuck Schumer and White House Chief of Staff Mark Meadows.
Mnuchin and Meadows will meet earlier in the day with Senate Republicans, where the administration may face pushback from GOP lawmakers as they go over their ideas for getting schools reopened and businesses hiring.
The White House and Congress have only a few weeks to come up with another stimulus to prevent the economic rout caused by the coronavirus from deepening. The $2.9 trillion flood of federal money that’s been supporting the economy is about to start drying up while unemployment remains at levels not seen since the Great Depression.
The focus of the next phase of relief will be “kids and jobs and vaccines,” Mnuchin told reporters at the White House Monday. Along with money still untapped from earlier rounds of stimulus, Republicans are “starting with another trillion dollars. We think that will make a big impact,” he said.
Senate Majority Leader Mitch McConnell said at the Capitol that Republicans will offer a “starting point” for talks on the stimulus with Democrats “hopefully as early as this week.” In addition to reaching an agreement with Democrats, who’ve proposed a $3.5 trillion stimulus, the Kentucky Republican will have to overcome some divisions within his party on what to include.
House Republican leader Kevin McCarthy, who met with President Donald Trump at the White House along with McConnell, told reporters at the Capitol afterward that the initial GOP proposal would include cutting the payroll tax. That’s been a central demand of the president’s, and on Monday he called it “very important.” But it’s been a source of tension between the White House and some Senate Republicans, who don’t see it as a priority.
Senate Finance Chairman Chuck Grassley, an Iowa Republican, was non-committal when asked about the White House push for a payroll tax cut.
“You’d better ask me after tomorrow so we can hear from the administration if they’re really serious about it,” Grassley told reporters.
Senator John Cornyn, a Texas Republican, called a payroll tax cut “problematic” because that levy funds Social Security and Medicare, two programs “already on their way to insolvency.”
Some Republicans also were bristling at White House resistance to including a $25 billion initiative to help states with coronavirus testing and contact tracing.
“I just think that’s wrong,” Missouri Senator Roy Blunt, a member of the GOP leadership said. “If you’re going to get people back to school and back to work, having those kinds of tests are really important.”
He indicated that the administration also doesn’t agree with proposals for funding to distribute a vaccine. “The other thing they’ve questioned is money to distribute the vaccines,” Blunt said. “The vaccine is not very good if it’s not properly distributed.”
The GOP legislation also will include several tax credits to help companies that are re-opening after a prolonged shutdown, according to Mnuchin. That includes an expanded employee retention tax credit that was in the stimulus bill passed in March, which gives companies a tax break for keeping employees on payroll. The proposal also will include tax credits for personal protective equipment, workplace cleaning and testing.
Republicans also want to include money to help schools make modifications or pay for equipment needed to re-open classrooms in the fall. The GOP bill likely will include about $105 billion for education, according to an aide familiar with the emerging plan.
The White House and most Republicans are in agreement on trimming the $600 supplemental unemployment insurance payments from the last stimulus, which are set to expire at the end of the week. They’ve argued that the payments are a disincentive to work because some people got more in unemployment benefits than they were making at their jobs. Mnuchin said the unemployment-insurance program needed a “technical fix.”
The Republican plan to be drafted this week is already facing opposition from Democrats, whose votes will be needed to get any stimulus legislation through Congress. Democrats have sought almost $1 trillion for states and localities that face revenue shortfalls. The GOP is said to favor an alternate proposal to allow states flexibility in using $150 billion already allocated them in a previous bill.
Schumer said in a letter to his Democratic colleagues that they must stick together, as they did when the last relief package passed in March.
“It was our unity against a partisan, Republican first draft that allowed for significant improvements to be made,” Schumer wrote. “I hope we will not have to repeat that process. But we will stand together again if we must.”
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