The White House said President Trump acted with full legal authority to bypass Congress in providing more aid to Americans hurting from the COVID-19 pandemic, while no Democratic leaders stepped forward Monday to block the politically popular moves less than three months before national elections.
The president, at an evening news conference, said he will propose more tax cuts this fall for middle-class families and wants to reduce capital gains taxes. He contrasted his plans with presumptive Democratic nominee Joseph R. Biden, who he said would triple taxes on most Americans and businesses if elected.
“They want to raise corporate taxes, but they want to raise all taxes,” he said of the Democrats. “Under this crazy plan that these people are proposing, you will have a crash like you’ve never seen before.”
Mr. Trump said of his weekend executive actions cutting taxes and providing other relief, “We did something that’s very important, and frankly it’s been very well received.”
The president’s suspension of the payroll tax, effective Sept. 1, essentially will give 140 million workers a temporary pay raise of 7.5% through at least the end of the year.
House Speaker Nancy Pelosi, California Democrat, and Senate Minority Leader Charles E. Schumer, New York Democrat, offered no immediate legal challenge despite questioning the legality of the president’s move and complaining it would drain funds from Social Security and Medicare.
“Our economy and our people need this boost,” Mrs. Pelosi said at the time. “From a macroeconomic standpoint, the demand that is injected into the economy when people spend this money will be a job creator.”
“Does Biden really want to campaign this fall for a tax increase on every working American under $100,000 in income?” former House Speaker Newt Gingrich said in a Twitter post.
“The payroll tax is a big deal for people. It’s a tremendous saving for people,” Mr. Trump said. “We intend to terminate it at the end of the appropriate time.”
When Mr. Obama approved an extension of the payroll tax cut and emergency jobless benefits in 2012, he did so by signing legislation. The unemployment rate at the time was 8.3%.
Mr. Trump instead signed an executive action to circumvent Congress, facing an unemployment rate of 10.2% and a pandemic still not under control. He said weeks of negotiating with Mrs. Pelosi and Mr. Schumer failed to show any progress on expiring programs, including a moratorium on evictions, enhanced unemployment benefits and a renewal of the Payroll Protection Program.
White House officials cited legal justification for Mr. Trump’s actions. They said the federal tax code authorizes the Treasury secretary to suspend taxes for up to one year in cases of a “federally declared disaster,” similar to the action that Secretary Steven T. Mnuchin took to delay the traditional April 15 tax filing deadline until July 15.
White House press secretary Kayleigh McEnany said higher education law authorizes the waiver of student aid programs for people who have been affected by a national emergency. She also said the Stafford Act of 1974 authorizes the executive branch to provide unemployment benefits, when requested by states, for people affected by a major disaster.
“What we are doing is entirely within the executive capacity of the president,” Ms. McEnany said.
She also said Mr. Trump still wants to negotiate with congressional Democrats on providing emergency coronavirus aid to schools and a second round of direct payments of $1,200 to most Americans.
“There’s still much more that we’d like to accomplish,” she said. “The president would love to see the direct payments to Americans, the president would love to see the school funding.”
Mr. Mnuchin said the administration is prepared to strike a deal with Democrats this week on comprehensive coronavirus relief legislation but the White House won’t kowtow to every single demand.
“There’s a deal to do if the Democrats are reasonable and want to compromise,” Mr. Mnuchin said on CNBC. “If we can get a fair deal, we’ll do it this week.”
He said both sides have come to agreements in some areas, such as on money for cash-strapped small businesses, additional direct payments for Americans, and new money for food assistance, hospitals and vaccines.
“We’ve compromised,” he said. “We’re not stuck at the trillion dollars, but we’re not going to go to unlimited amounts of money to do things that don’t make sense.”
Mr. Schumer said it was Republicans who walked away from making a deal.
He said the suspension of the payroll tax, which helps fund Social Security and Medicare, will damage the two entitlement programs. He added that Mr. Trump campaigned in 2016 on not touching Social Security.
Earlier, he called Mr. Trump’s executive actions “laughable.” He said the unemployment benefits extension of $400 per week isn’t going to be operational for a month or two, “if at all.”
“So here we’re going to have through September all these people not getting the money,” Mr. Schumer said on MSNBC. “And the [previous benefit of] $600, you know, they have no respect for the American people and that’s part of the hard-right philosophy.”
Ms. McEnany said the White House hopes the renewed unemployment benefits will reach people “close to immediately,” but she couldn’t offer a timetable.
Senate Majority Leader Mitch McConnell, Kentucky Republican, blamed Democrats for demanding to advance a liberal, non-COVID-related agenda during coronavirus relief talks. He said Mr. Trump was forced to take action on his own to soften the blow to Americans in need.
“They held up important aid over non-COVID-related demands,” Mr. McConnell said on the chamber floor. “It’s about far-left ideology.”
He said states received $150 billion in relief from Congress earlier this year and have used only about a quarter of that.
Republicans tried in their proposal to send money to states to use for reopening schools safely. Mr. McConnell noted that education is one of the top two expenses for states. The other is Medicaid.
The National Bureau of Economic Research circulated a study Monday showing that failure to extend the $600 weekly unemployment bonus payment that expired last month would lead to a 44% decline in local spending.
The study also found that reducing the payment to $400 would lower spending by 12% and cutting it to $200 would reduce spending by 28%.
“We find that higher replacement rates lead to significantly more consumer spending,” said the study, written by economists affiliated with six universities.
Neither the House nor Senate is staying in session, though both have lawmakers on notice in case a deal is hammered out.
The House, which updated its schedule Monday, will be effectively out until Sept. 14 — unless a vote on a coronavirus bill is scheduled — which means lawmakers will come back with 11 legislative days until government funding expires.
⦁ Gabriella Muñoz contributed to this report.
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