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On Thursday, United States Treasury Secretary Steve Mnuchin told reporters outside the White House that the Republican COVID-19 relief package will not include a payroll tax cut.
President Donald Trump has insisted in the past that such a provision be included in any future relief package.
However, Mnuchin told reporters that the relief bill would not include a payroll tax cut so that it can be passed speedily in the Senate. The US$1 trillion bill is expected to be rolled out on Thursday.
“We’ve finalized the appropriations. We’re just going over some of the final text that went back and forth last night,” Mnuchin told reporters.
When asked whether the payroll tax cut will be included in the bill, Mnuchin replied, “Not in this, but we’re going to come back again. There may be a CARES 5.0."
Mnuchin added, “One of the problems with the payroll tax cut is it takes time, so we are much more focused right now on the direct payments.”
Payroll tax cuts would reduce the 7.65% tax that is deducted from the wages of workers to fund Medicare and Social Security. Some economists contend that such tax cuts may not be the best way to boost the economy right now.
Instead, the second stimulus bill will reportedly prioritize increasing unemployment benefits for Americans, ensuring liability protections for businesses that are reopening, providing aid for schools to reopen safely and allocating funding for COVID-19 testing.
Referring to the unemployment insurance, set to expire on July 31, Mnuchin said, “We’re going back up to see the new language and work through that."
Mnuchin told reporters that instead of continuing to give Americans US$600 per week the Republican proposal will replace 70% of their wages.
“We’re not going to pay people more to stay home than to work. So we’re looking at something that looks like a 70 percent wage replacement and working on the mechanics," Mnuchin said.
Senate Democratic leader Chuck Schumer contended that the Republican COVID-19 bill is “unserious” and “unsatisfactory.”
“Republicans are fighting with themselves over how much to cut unemployment benefits,” Schumer added.
Democrats and Republicans don’t agree on numerous portions of the bill, with unemployment benefits being just one of them.
Democrats are in favor of extending the US$600 per week unemployment insurance. In May, they passed a US$3 trillion COVID-19 relief package called the “HEROES Act” that included this provision, among others. However, the bill faces unanimous Republican opposition and won’t be passed in the Senate.
House Speaker Nancy Pelosi said of the unemployment benefits in a CNBC interview on Wednesday, “We should not be quibbling on $200, $400 or $600 when people are in desperate need and have great uncertainty.”
“You know how the markets and the business community doesn’t like uncertainty? We shouldn’t inject uncertainty further into the lives of America’s working families."
Mnuchin told reporters that the Republican relief bill will also include US$16 billion in COVID-19 funding, with US$25 billion in total funding for COVID-19 health care.
The relief package comes as total COVID-19 cases in the US have surpassed 4 million, with more than 146,000 deaths.
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