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Stimulus Package Update: Republicans Unite On Second Stimulus Check, Balk Over Payroll Tax Cut

July 22, 2020

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Mitch McConnell has coalesced Senate Republicans around a second stimulus check, but hasn't been able to bridge the divide with the White House over a potential payroll tax cut. — Mitch McConnell has coalesced Senate Republicans around a second stimulus check, but hasn’t been … [+] able to bridge the divide with the White House over a potential payroll tax cut.

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Republican and White House leaders are struggling to gain internal consensus on an initial stimulus package proposal. During a lunch meeting on Tuesday, Senate Republicans repeatedly clashed with each other as well as with Treasury Secretary Steve Mnuchin and Trump Chief of Staff Mark Meadows over the bill. One lawmaker recounted the lunch as “messy,” and Senator Roy Blunt (R-Missouri) noted that “about 15 different members wanted to make a point, and they made them.”

Republicans balked at various aspects of a potential relief bill including the overall cost, the inclusion of a payroll tax cut, and the exclusion of funding for coronavirus testing. Senators were, however, coalescing around other provisions, including sending a second stimulus check to Americans, although details on the size and scope were still hazy. Senate Majority Leader Mitch McConnell, who is spearheading the legislation, told a news conference on Tuesday, “I’m going to introduce a bill in the next few days that is a starting place, that enjoys fairly significant support among Republican senators – probably not everyone.”

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Republicans Now Support A Second Stimulus Check

Republican support for a second stimulus check is a marked departure from their opposition several months ago. In May, Republicans were unified and vocal in arguing against a second payment. However, a worsening economic outlook, coupled with a dramatic rise in coronavirus outbreaks, is the likely impetus of the Republican about-face.

On Tuesday, McConnell officially endorsed another stimulus check for the first time. “We want another round of direct payments – direct payments to help American families keep driving our national comeback,” he said during a press briefing on the Senate floor. There is still some lingering reticence to include another stimulus check. “There was some support and some opposition, both, to the direct payments,” said Senator John Cornyn (R-Texas); however, McConnell’s strong push should be able to corral a majority.

While it is now more likely than not that a second stimulus will be included in the Republican relief proposal, many details still need to be worked out. For example, McConnell did not offer particulars on whether a second payment would be as large as the first round of checks or if the eligibility criteria would differ. Individual filers earning less than $75,000 were eligible to receive a full $1,200 stimulus check when the CARES Act was passed, but McConnell has indicated some interest in reducing the income eligibility for a second stimulus, presumably to keep the overall cost of the new relief bill down.

Leaving some of the details ambiguous will also provide McConnell with additional levers to pull during upcoming negotiations with Democrats.

Republicans Balk At Trump Payroll Tax Cut Demand

Aligning on a second stimulus check may have been the easy part for Republicans. Discussions over the inclusion of a payroll tax cut were much more contentious. In recent days, Trump and administration officials indicated that a payroll tax cut was a red-line issue for the next bill, with Trump telling Chris Wallace during an interview that he “would consider not signing it if we don’t have a payroll tax cut.”

Republicans Resist Payroll Tax Cut

Mnuchin had initially indicated that a payroll tax cut would be included, going so far as to say it was “in the bill on Monday”. However, Senate Republicans steadfastly refused to rally around it, indicating during Tuesday’s briefing that they were not onboard with the idea. “Mnuchin and Meadows were met with so much blowback to the idea at the Senate GOP lunch Tuesday that Mnuchin didn’t try to persuade anyone to reconsider,” according to The Washington Post.

High-ranking Senate Republicans voiced their concerns publicly. “I’m not a fan of that,” said John Thune (R-South Dakota), the second-ranking senator, speaking of a payroll tax cut. “If it’s a choice between doing checks and payroll tax cut, I think it’s pretty clear the checks actually have a more direct benefit to the economy.” Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) also spoke against the provision, arguing that the extra money wouldn’t reach voters quickly.

A small group of Senate Republicans does support including a payroll tax cut, mainly because of the perceived ease of implementation. “This doesn’t require any action, it requires less, it requires doing less of something not doing more of something,” said Senator Kevin Cramer (R-North Dakota).

White House Walks Back Red-Line

The White House appeared to walk back its insistence on the payroll tax cut after the onslaught of resistance from Senators. “I don’t know that in any negotiation that there are red lines but there are certainly high priorities and it will remain a very high priority for the president,” Meadows said. Mnuchin added that they were still “in discussions” about the payroll tax, although he indicated to reporters that the White House had not dropped the issue.

Notably, McConnell did not mention a payroll tax cut when describing the stimulus package to reporters on Tuesday, indicating the fluidity of the situation. “There are some differences of opinion on the question of the payroll tax cut and whether that’s the best way to go,” he remarked during a press briefing. “And so, we’re still in discussion with the administration on that.”

The Upshot

Republicans will need to reach internal consensus and draft a proposal before negotiations with Democrats can begin in earnest. The intra-party infighting will mean a delay not only in releasing an initial version of the bill, but also in engaging in discussions with Democrats, a process that will be equally, if not more, complex. Senator Chuck Grassley (R-Iowa) summed it up best, remarking the “only thing I can say is this whole process is the art of compromise.” Let’s hope Congress can compromise quickly.