As senators returned to Washington this week to an unusually sparse and eerie Capitol, resistance began to mount against Trump’s favored form of putting more money into workers’ pockets, with lawmakers noting that a payroll tax cut helps only those gainfully employed at a time when record numbers of Americans are filing jobless claims. The payroll tax funds the Social Security and Medicare programs.
The intraparty rift on a payroll tax cut comes as the Democratic-led House scrambles to produce additional coronavirus legislation with perhaps another massive price tag. Senate Republicans, meanwhile, made it clear they will hit pause on any rescue package as they begin to scrutinize the effectiveness of previous rounds of aid sent to states, hospitals, consumers and small businesses.
The bipartisan opposition to a payroll tax cut has not deterred Trump, who has continued to tweet about his idea even as growing opposition from his own party that came into sharper view Tuesday.
“I’m not a particular fan of that,” said Senate Majority Whip John Thune (R-S.D.), the Senate’s No. 2 Republican. He added: “I guess I’m open to being persuaded that it’s something that could be effective, but I think some of the things that we are currently doing are having a bigger impact.”
Other senior Republicans, some even allies of the president, were similarly lukewarm to the idea. Sen. John Barrasso (R-Wyo.) said a payroll tax cut would not address all the economic issues crippling the nation and called Trump’s proposal “kind of one arrow in the quiver.”
“I’ve never thought that really would be effective,” Sen. Susan Collins (R-Maine), a key swing voice, said Tuesday about the payroll tax cut. She instead said she is focused on working with Democrats and Republicans in both the Senate and the House on a on a state and local aid package.
Rather than indulging Trump’s insistence on a payroll tax cut, GOP senators have instead shifted their focus to liability protections for businesses, demanding that they be protected from what Republicans view are frivolous lawsuits as private employers try to reopen their doors in the coming weeks.
Top Democrats have said they will oppose such sweeping protections, on which Republicans are insisting in exchange for another massive infusion of state and local aid.
The standoff shows no immediate signs of abating, as House Democrats assemble a massive new rescue package expected to exceed $2 trillion that would include around a $1 trillion commitment for states, cities and municipalities. Money is being eyed for a large array of other provisions including housing, social services, law enforcement, tribal government needs, food security, the Postal Service, rural broadband, rent and mortgage relief, as well as veterans issues.
Democrats have also discussed another round of checks to Americans and another extension of unemployment insurance, and are keeping an eye on the Paycheck Protection Program and a separate small-business emergency loan and grant program to see whether supplemental funding will be needed.
The immensely popular Paycheck Protection Program was replenished with an additional $310 billion late last month. That second round of funding has helped back 2.2 million loans totaling $175 billion, according to administration and congressional officials.
Sen. Marco Rubio (R-Fla.), who chairs the Small Business Committee, said earlier this week that the program may need a third round of funding. His aides, who have been tracking how much of the small-business money has been disbursed, said the new PPP money would probably not run dry this week, but probably will later this month.
A vote on a House Democratic bill could come as early as next week, Majority Leader Steny H. Hoyer (D-Md.) said Tuesday, although there are divisions in the caucus between moderate Democrats growing spooked over an excessively large price tag and liberals who want even more. Some are also reluctant to vote on an enormous package that has no chance of becoming law and would like to see a bipartisan product like the four coronavirus bills Congress has passed, totaling nearly $3 trillion.
There are no active negotiations between House Speaker Nancy Pelosi (D-Calif.) and the administration.
But the parties’ diverging priorities threaten to make finding consensus much more difficult this time around.
“If there’s any red line, it’s on litigation,” Senate Majority Leader Mitch McConnell (R-Ky.) told reporters Tuesday, even though he was asked about Trump’s desire for a payroll tax cut.
Sen. Roy Blunt (R-Mo.), also a member of McConnell’s leadership team, told reporters Tuesday that he remained unconvinced that a payroll tax cut was the best option now.
“I think we looked at that early on, and I think we just didn’t think that would have the desired impact,” Sen. Shelley Moore Capito (R-W.Va.) said in a recent interview.
Senate Republicans noted during a closed-door meeting on Tuesday — held in a cavernous hearing room in the Hart Senate Office Building to allow for social distancing among dozens of senators — that significant portions of the rescue money that has already been signed into law have yet to be doled out, according to a person in attendance who spoke anonymously to discuss a private meeting.
White House legislative affairs director Eric Ueland also indicated no immediate urgency from the administration, telling reporters that with nearly $3 trillion in new spending approved, “we also need to understand exactly how successful that spending’s been before committing to new spending ideas.”
Senate Minority Leader Charles E. Schumer (D-N.Y.) urged McConnell to move with alacrity and continued to criticize the majority leader for his insistence that liability shields for businesses accompany any additional state and local aid.
“This idea of drawing red lines — particularly when they're not really related to what the needs of people are, particularly when they side with big corporate interests as opposed to individual workers, as Leader McConnell's red line — it’s not productive and it’s not going to work,” Schumer said. “People have real needs.”