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White House, GOP kill payroll tax cut but flounder on broader coronavirus bill

Senate Republicans now plan to roll out bill next week after continued fighting over numerous provisions

Senate Majority Leader Mitch McConnell (R-Ky.), left, wears a mask for protection against the coronavirus, next to members of security, as he rides the Senate Subway between meetings July 21 on Capitol Hill. (Jacquelyn Martin/AP)

The White House and Senate Republicans on Thursday failed to reach agreement on a broad coronavirus legislative package to offer Democrats as part of negotiations, stumbling over numerous provisions as factions in the GOP bickered over the path forward.

Their continued impasse will push them right up against a deadline for expiring unemployment benefits at the end of next week.

Sensing the potential economic calamity of pulling back these benefits for up to 30 million people all at once, Treasury Secretary Steven Mnuchin suggested Congress consider a smaller bill to keep these benefits in place while other details are negotiated on Capitol Hill. But Democrats and Republicans roundly dismissed that idea immediately.

“This terrible virus is still with us. It kills more Americans every day,” Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor late Thursday afternoon, hours after a planned rollout of the legislation was scratched at the last minute.

He said agreement had been reached on “a framework that will enable Congress to make law and deliver more relief to the American people that is tailored precisely to this phase of the crisis.” But Republicans didn’t provide specifics of many parts of that framework, and it appeared some elements remained in flux.

Republicans had hoped to present a unified GOP plan July 22, but factions within the GOP couldn’t reach an agreement and now they are hoping to have a united offer to Democrats on Monday. Late Thursday, they were still fighting over whether to include a demand by Sen. Lindsey O. Graham (R-S.C.) related to manufacturing and China.

“I guess the only way I could characterize it is, it’s a work in progress,” said Sen. John Thune (R-S.D.), the No. 2 Senate Republican.

“I think we’ll get something done before it’s all said and done, but like everything else in this process forever, it’s gonna be loud, messy, appear to be almost doomed on many occasions,” said Sen. Marco Rubio (R-Fla.).

As differences intensified and next week’s deadline neared, the White House agreed to scrap President Trump’s demand to include a payroll tax cut in the package after the provision was met with fierce resistance by Republicans.

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The delays on Capitol Hill came amid more grim developments about the coronavirus’s fierce grip on the United States and its economy. There have been 4 million confirmed U.S. cases of the virus, far more than any other country. More than 140,000 people have died, including 3,000 since Tuesday. In addition, 1.4 million people filed for unemployment benefits last week, up from 1.3 million the week before, the first time there was a week-over-week increase in several months.

House Democrats passed a $3 trillion measure in May to send Americans new stimulus checks and help cities and states, but the White House and Senate Republicans delayed negotiations until recent days. Since then, they have floundered over what the package should look like. They had said they wanted the package to be roughly $1 trillion, but the GOP plan has fueled fierce internal divisions about the size and scope of the government response as lawmakers have digested grim polling news about the party’s standing ahead of the November elections.

Mnuchin and White House Chief of Staff Mark Meadows emerged from a morning meeting with McConnell to insist there was “fundamental agreement” on the overall deal. But they then immediately said it might make more sense to break the bill into multiple pieces so they could address the expiring unemployment benefits.

Democrats and Republicans immediately shot down the idea.

“No, no, no,” House Speaker Nancy Pelosi (D-Calif.) said. “This is a package. We cannot piecemeal this.”

Complicating matters, the White House renewed its push for language related to the location of the Federal Bureau of Investigation building in downtown Washington — which is cater-cornered from Trump International Hotel on Pennsylvania Ave NW — according to two people with knowledge of the talks who spoke on the condition of anonymity to discuss them. Trump has expressed interest in the location of the FBI’s headquarters for some time.

The details were unclear, but the Trump administration previously scrapped a plan to move the FBI headquarters to the suburbs, instead seeking to rebuild a new FBI building in its current location. It was unclear what this had to do with the coronavirus. Trump said Thursday he wanted the FBI to be able to rebuild at the current site. He even mentioned the possibility of installing a running track on top of the building because “FBI people like to work out a lot.”

He said, though, that the language might not make it in this bill and could be addressed at a later date.

Unemployed workers on July 22 rallied outside Senate Majority Leader Mitch McConnell's house and the Capitol to demand an extension of the $600 relief payments. (Video: The Washington Post)

In his floor speech McConnell said the GOP proposal would include a new round of stimulus checks, aid for schools, money for testing, changes to unemployment assistance rules, more money for small businesses, and liability reform setting up legal protections to make it hard for employees to sue their employers if they become sick at work. Democrats have rejected this last idea as a nonstarter.

Ahead of a stimulus spending fight between Senate Republicans and House Democrats, elected officials spoke on July 19 about the spread of the coronavirus. (Video: The Washington Post)

One of the few things that was ironed out was an agreement to jettison any payroll tax cut from the final deal. Trump had insisted that this payroll tax cut be included and suggested he might not sign a bill unless it was included, but Senate Republicans refused his plea and the White House acknowledged defeat Thursday. Trump attempted to blame Democrats in a Twitter post, but it was Republicans who actually shot down the idea.

The broad outlines of the shifting GOP proposal would replace the expiring unemployment benefits with a new arrangement that pays jobless Americans roughly $200 per week instead of $600 on top of the state benefit. In March, Congress approved an additional $600 weekly benefit for unemployed Americans, but it is set to expire next week. The unemployment rate in June was 11.1 percent, down from its high several months ago but still higher than at any point during the financial crisis.

“We don’t want this to expire next Friday,” Mnuchin said. “It’s not a difficult concept. You don’t get paid more to stay home than you do when you have a job.”

Democrats want to extend the $600 payment through January.

The retreat on the payroll tax idea marked a big setback for the White House.

“The president is very focused on getting money quickly to workers right now and the payroll tax takes time, so we’ll come back and look at that later,” Mnuchin told reporters at the Capitol.

He said the decision was made to instead focus on sending another round of stimulus checks to Americans, because that approach would put money in people’s pockets more quickly.

Stephen Moore, a conservative economist who advised on Trump’s 2016 campaign, said he was “very discouraged” that the GOP package would leave out the payroll tax cut but include the $1,200 stimulus payments, arguing the president risked alienating his conservative base over the move.

“We’ve gone in less than 10 days from Trump saying that he won’t sign a bill without a payroll tax cut to the bill they’re drafting not having a payroll tax cut,” Moore said. “There is no benefit from dumping money from helicopters into people’s laps.”

Democrats and Republicans had already supported sending another round of stimulus checks, and now that idea appears to be one of a few areas where there is bipartisan support.

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Democrats slammed Republicans for the delay in releasing their legislation.

“Our Republican colleagues have been so divided, so disorganized and so unprepared that they have to struggle to draft even a partisan proposal within their own conference before they talk to a single Democrat,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said on the Senate floor. “It appears the Republican legislative response to covid is un-unified, unserious and unsatisfactory.”

The emerging GOP bill also was expected to include $70 billion for elementary and secondary schools, with half of that money connected to schools physically reopening their classrooms. No new money for state and local governments was expected, but instead the legislation would allow local leaders more flexibility in spending $150 billion allocated in the Cares Act in March. Tax credits were expected to encourage businesses to retain workers and help them enact safety protections in workplaces. Another round of funding for the small-business Paycheck Protection Program was also expected.

Trump pushes payroll tax cut while GOP eyes benefit cuts for unemployed

Election-year politics have complicated the talks as a handful of vulnerable senators up for reelection push for more generous spending, while fiscal conservatives in the Senate GOP conference oppose spending any more money after Congress already pumped about $3 trillion into the economy in March and April.