- The Washington Times
Sunday, July 26, 2020

The White House and Senate Republican leadership have a proposal coming out Monday that would extend unemployment insurance benefits as part of another round of coronavirus stimulus.

White House Chief of Staff Mark Meadows said the proposed unemployment insurance extension would not maintain an extra $600 per week sum, as Democrats have called for, but instead would amount to “70% of whatever the wages you were [making] prior to being unemployed.”

Mr. Meadows told ABC that he met with Republicans on Capitol Hill throughout the weekend and expected Senate Majority Leader Mitch McConnell, Kentucky Republican, to announce the proposal Monday.

“Honestly, I see us being able to provide unemployment insurance, maybe a retention credit to keep people from being displaced or being brought back into the workplace, helping with our schools,” Mr. Meadows told “This Week.”

“If we can do that along with liability protection, perhaps we put that forward, get that passed, as we negotiate on the rest of the bill in the weeks to come,” he said.

House Speaker Nancy Pelosi, California Democrat, has indicated that she is unwilling to adopt a short-term extension of an unemployment boost while policymakers hammer out other aspects of a coronavirus relief package.

House Democrats have advocated for a more than $3 trillion spending package on coronavirus relief that would maintain the $600-per-week addition to unemployment benefits through January.

Mrs. Pelosi said Sunday that she thinks Republicans have delayed the release of their proposal and have harmed children who are hungry. Mrs. Pelosi told CBS’s “Face the Nation” that she would not negotiate any deal with Republicans in public but her chamber would also not gavel out at the end of the month absent an agreement.

“We can’t go home without it,” Mrs. Pelosi told CBS. “But it’s so sad that people should have this uncertainty in their lives.”

The White House-Senate leadership proposal will also face hurdles within the Republican Party.

Sen. Ted Cruz, Texas Republican, said Sunday that he is not on board with the proposal.

He told CBS that small-business owners in his state cannot persuade workers to return because existing unemployment benefits are greater than their paychecks. Mr. Cruz said Mrs. Pelosi’s alternative is far worse and is designed to give tax breaks to those living in blue states ahead of Election Day.

“We’re 100 days out from the presidential election. The only objective Democrats have is to defeat Donald Trump,” Mr. Cruz said on “Face The Nation.” “And they’ve cynically decided the best way to defeat Donald Trump is to shut down every business in America, to shut down every school in America.”

Mr. Cruz’s concern is echoed by economic analysts who have forecast hundreds of more companies filing for bankruptcy before the November elections and many businesses buoyed by previous coronavirus relief programs running out of money this summer.

Conservative allies of Mr. Trump also are warning him that a deal with massive spending and no tax cuts could hurt him and fellow Republicans in November.

More than 3,400 U.S. companies filed for bankruptcy in the first half of 2020, according to a Financial Times study, nearly matching the level of bankruptcy filings at the same point during the 2008 economic downturn.

Many other businesses that have struggled to stay afloat may soon go under. A Goldman Sachs survey of more than 1,500 business owners in 49 states found this month that 84% of the businesses that received aid via the federal Paycheck Protection Program said they will run out of funds in the first week of August.

Alongside overcoming lawmakers’ complaints, the Trump administration will need to surpass institutional barriers to implement its unemployment insurance proposal as well. Mr. Meadows said the federal government recognizes that some state computer systems responsible for administering unemployment benefits are “antiquated,” so he and Treasury Secretary Steven T. Mnuchin have a goal of ensuring that such computer systems do not prevent people from collecting unemployment benefits under the new proposal.

Mr. Mnuchin said the Trump administration has already made concessions to Democrats to advance the unemployment insurance extension and is prepared to leap any hurdle in its way. Mr. Mnuchin told “Fox News Sunday” that Mrs. Pelosi and Senate Minority Leader Charles E. Schumer, New York Democrat, refused to pursue a payroll tax cut as part of any compromise so the Trump administration has agreed to table that discussion until later this year.

“We need to make sure that we don’t have frivolous lawsuits for schools and universities. We want to make sure with the expiring unemployment insurance, we have the technical fix, so people don’t get paid more to stay home than they do to work,” Mr. Mnuchin told Fox. “And we can move very quickly with the Democrats on these issues. We’ve moved quickly before, and I see no reason why we can’t move quickly again, and if there are issues that take longer, we’ll deal with those as well.”

Conservative allies of Mr. Trump are warning that the emerging coronavirus relief package could split the Republican Party if it fails to include a payroll tax cut and if it renews a significant extension of unemployment benefits.

Conservative economist Steve Moore, an outside adviser to the president, said if the $1 trillion Senate Republican proposal contains mostly new spending and no new tax cut, “then I think you’re going to see a very divided Republican Party and a lot of conservative opposition to that bill.”

“That’s not a good look for the party as it goes into the November elections. We need unity,” Mr. Moore, co-chair of the Committee to Unleash Prosperity, told reporters Friday on a conference call.

Former Ohio Secretary of State Ken Blackwell said the package must “create incentives for people to work and employers to hire.”

“That’s why the payroll tax holiday is so important,” he said.

The president said last week that he had abandoned his push for a payroll tax cut because of opposition from Democrats. Some Republicans also oppose the idea.

Mr. Moore and Mr. Blackwell said no bill would be better than renewing the unusually high unemployment benefits and adding trillions of dollars to the record budget deficit.

Mr. Moore said many Republican lawmakers believe a payroll tax cut is the “single most important feature” of an economic stimulus bill. He said conservatives haven’t given up on trying to include it in the final deal. Mrs. Pelosi and other Democrats are pushing for the six-month extension of the $600 benefit because it will preserve a major disincentive for people to go back to work and hurt the president politically, he said.

“They’re not stupid,” Mr. Moore said. “They know that if you pay people not to work, you’re going to get less people working, and it’s going to impair Trump’s reelection prospects. That’s why Republicans have to fix this problem.”

He warned, “We can’t live with an unemployment insurance system that’s paying people in many states twice as much money for not working as working. It is bad economics, it’s unfair to people who are working. We will not have a job recovery in the fall if Republicans don’t fix the unemployment insurance.”

Mr. Moore likened the emerging bill to the “very bad budget deal” that President George H.W. Bush struck with congressional Democrats in 1990. It included a tax increase and was blamed in part for Mr. Bush’s defeat in 1992.

“That happened because conservatives were so deflated by a bad budget deal, and I think Trump has to be very careful,” Mr. Moore said. “Donald Trump has been so adept at keeping his base happy and really fulfilling the promises that he made. But this is a big deal. This bill could add $2 trillion of spending … without any significant tax cut. Not only would that be really bad for the economy, but also I think it would potentially hurt Trump politically.”

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