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COVID-19 Pandemic Relief Legislation: Update on the Extension (or Expansion) of the CARES Act

By July 22, 2020January 17th, 2022Cares Act, COVID-19

As both parties continue negotiations on continued virus relief, Republicans announced their own plan for a new U.S. virus-relief bill broadly endorsing a fresh round of stimulus checks to individuals, extended supplemental unemployment benefits and additional funding for COVID-19 testing while also voicing doubts over President Trump’s desire for a payroll tax cut.

The details remain in flux as GOP senators hashed out their opening bid in negotiations with Democrats on legislation to prop up the slowed U.S. economy. The differences between the GOP and the White House regarding the payroll tax cut threatens to push any action on the stimulus into August.

Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows started this week by saying their goal was to get a stimulus bill out of Congress by the end of next week (July 31st). But after getting pushback from Senate Republicans on several issues, including the payroll tax cut, both ended the day Tuesday dialing back expectations.

Mnuchin and Meadows met Tuesday (July 21st) over lunch with Republican Senators, but no outline for legislation emerged. Louisiana Republican Senator John Kennedy said the two Trump advisers discussed a lot of ideas, but “we haven’t reached a conclusion on anything.”

Democrat Senators Chuck Schumer and Nancy Pelosi said the lack of consensus among Republicans means real negotiations cannot start yet to bridge the differences between the GOP plan for $1 trillion in stimulus funds and the Democrats’ proposal for a $3.5 trillion package.

All the while, President Trump has expressed confidence that a deal will emerge saying “We’re working very hard on it, we’re making a lot of progress. I know that both sides want to get it done.”

The White House and Congress have only a few weeks to come up with another stimulus package before lawmakers take a scheduled August break and the $2.9 trillion flood of federal money passed by Congress earlier in the year begins to dry up.

The crux for Republicans is the President’s insistence on cutting or suspending the payroll tax paid by employers and employees, which funds Social Security and Medicare.

Mnuchin said it would be included in the Republican proposal, but some GOP senators, such as South Dakota’s John Thune, said they remain skeptical. Thune has stated “I’m not a fan of that. 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.”

Although Trump has suggested he might not sign a bill without the payroll tax cut, Mnuchin and Meadows indicated some flexibility in talks.

There are signs of a possible compromise on extending the supplemental unemployment insurance that was part of the stimulus measure passed in March and is set to expire on July 31st.

Section 2104 of the CARES Act provided individuals who were unemployed as a result of COVID-19, $600 a week in additional unemployment benefits, completely funded by the federal government. Republicans argued it created a disincentive for returning to work in some areas because unemployed individuals could get more than they earned at their jobs. Thus, some GOP lawmakers have floated the idea of lowering the supplement to $200 or $400 as part of the new package.

White House Press Secretary Kayleigh McEnany has said that the administration favors some type of additional unemployment aid, along with direct checks to individuals and a payroll-tax holiday for middle and low-income Americans.

Senate Majority Leader Mitch McConnell said the GOP plan will include a second round of the Paycheck Protection Program for small businesses, but it would be targeted to businesses most affected by the pandemic. He said there will be funding to reimburse businesses for the costs of safe workplaces, including personal protective equipment, virus testing, cleaning and remodeling to protect workers and entice customers. Additionally, there also will be money for some child-care assistance and funding for a vaccine. The Republican plan also will have $105 billion to aid schools in safely reopening.

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Mike Parker

Author Mike Parker

Mike has 30 years of experience in unemployment cost control management, and has been with Thomas & Company for 25 years. He is the primary contact with state agencies building strong relationships, lobbying for opportunities that increase quality of service and efficiencies, and insuring compliance with state specific requirements. He works with the client service team, answering technical questions related to the unemployment insurance programs administered by the individual states and oversees the processes associated with wage audits and fraudulent claim inquiries. Mike is a member of the SIDES Operations Committee and currently sits on four Operations Committee subcommittees.

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