Senate Republicans will work with Treasury on another stimulus package in response to the coronavirus pandemic, despite failing to agree on passing a House-approved bill that would provide tax credits to employers that grant paid sick leave.
Senate Majority Leader Mitch McConnell, R-Ky., told reporters March 17 that he has created three Republican-led task forces to address different areas in the third stimulus bill they will be drafting with the help of Treasury.
McConnell, who spoke to reporters after having lunch with Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow, didn’t get into specifics about what each group will be tackling. But in an earlier Senate floor speech, he said Republicans will focus on more direct help for workers and small businesses, and more help for medical professionals.
Mnuchin told reporters that the stimulus pitched by the Trump administration would be costly. “This is a big number. This is a very unique situation in this economy,” he said.
Mnuchin didn’t directly discuss how much it might cost, but estimates are up to $1 trillion. “This is a combination of loans; this is a combination of direct checks to individuals; this is a combination of creating liquidity for small businesses,” he said.
Mnuchin also discussed the possibility that airlines and others in the travel industry will receive relief, but he didn’t specify whether it would be tax related.
House-Passed Bill
Before moving on to the third bill, the Senate is expected to pass the Families First Coronavirus Response Act (H.R. 6201), which was approved by the House March 16 with more than 90 pages of technical changes to a previous version.
Not all Senate Republicans are happy with the bill that was sent over, with some expressing concern that the tax credit won’t provide immediate relief for employers. Some Senate Republicans have suggested combining the third package being worked on with the House-approved proposal.
McConnell, however, poured cold water on that idea, telling reporters that the Senate will vote on the House bill without any amendments. He told Republicans opposed to the measure to “gag and vote for it anyway.”
That would likely lead to those with objections to promote their own proposals during negotiations for the third stimulus package. McConnell encouraged those “with good ideas” to funnel them to the working groups.
Republican Proposals
Many Senate Republicans are already putting forward proposals for the next stimulus package.
Finance Committee member Steve Daines, R-Mont., is calling for a tax relief payment for workers and small businesses equal to 7.65 percent of six months’ salary for workers and six months’ total salary for all employees for small businesses. He also proposed giving healthcare professionals and first responders an additional $1,000 and suspending Small Business Administration loan payments for three months.
Sen. Josh Hawley, R-Mo., introduced a bill March 17 that would give refundable family relief credit payments equal to the IRS’s monthly standards for household expenses based on family size. “With 30 million children out of school as of today and parents straining to cover work and childcare, Congress needs to provide additional, targeted relief to parents — and soon,” Hawley said.
Hawley also expressed concern with giving airlines relief without demanding they shift some of their workflow to the United States.
Republicans, however, appear to have coalesced around an idea to provide direct cash payments for a number of months to taxpayers. Sen. Mitt Romney, R-Utah, was the first Republican to propose the idea, but other Republican senators, including Finance Committee member Todd Young of Indiana and Marco Rubio of Florida, signaled their support.
The proposed direct cash payment to taxpayers appears to have replaced talk of a payroll tax holiday. “There were a lot of mixed feelings about the payroll tax,” Finance member John Cornyn, R-Texas, said.
Democratic Input
While Republicans will take the lead on drafting the legislation, Sen. John Thune, R-S.D., a Finance Committee member and Republican whip, noted that Democratic support will be needed to achieve 60 votes in the Senate.
Some Democrats have also already proposed direct cash payments to taxpayers. Finance Committee members Sherrod Brown of Ohio and Michael F. Bennet of Colorado, along with Sen. Cory A. Booker of New Jersey, want to give taxpayers direct cash payments that would last 3½ months and provide $2,000 for every adult not on Social Security.
House Speaker Nancy Pelosi, D-Calif., wants the third package to increase the scope of allowable uses of family and medical leave and has proposed increasing the refundable tax credits available to self-employed workers, gig economy workers, and others with nontraditional employment.
Rep. Rosa L. DeLauro, D-Conn., and Sens. Patty Murray, D-Wash., and Kirsten E. Gillibrand, D-N.Y., announced a joint bill targeting paid leave. The bill would reimburse employers that pay for their employees’ leave without tax credits, as is currently the plan in the House-passed bill.
Businesses have opposed reimbursing through tax credits because it’s unclear how long it would take for them to receive the money.
House Ways and Means Committee member Earl Blumenauer, D-Ore., proposed a temporary employee retention tax credit for businesses to encourage them to keep paying their employees. His proposal also would allow businesses that continue to pay their employees to use 2020 net operating losses to obtain a tax refund for prior years, among other things.